Kim Watch: How China sold out its coal industry

Chinese mine rescue team gears up
Sept. 28, 2016: A rescue team prepares to aid miners trapped by a colliery explosion in Shinzuishan City. China's whole coal industry is in desperate straits (source: dpa)

North Korea earns $1 billion annually from exports of coal, according to testimony by Assistant Secretary of State Daniel Russel at a United States Senate hearing. Coal and iron ore made up 45 percent of North Korea’s exports to China in the first eight months of 2016, or more than one-third of the country’s total exports.

This news came as a shock to ordinary Chinese, who were justifiably incredulous. It is well known that China has enormous coal deposits of nearly 6 trillion tons, in contrast to its scanty oil and gas reserves. Domestic coal provides 94 percent of China’s primary energy supplies, as opposed to only 6 percent for oil and gas, which is mainly imported. The last thing China needs is to buy more coal from foreign countries.

The website of the China Nation Commercial Information Center (CNCIC) posts regular reports on the mining industry. One analysis from earlier this year concluded that the coal sector had fallen into a depression. Ninety percent of domestic producers are reporting losses, while prices continue to drop.

Shanxi is China’s biggest coal producing province. Wang Rulin, the local communist party secretary, complains that the profit from selling a ton of coal “would not cover the cost of a soft drink.” Other industry executives claim that it won’t even buy a kilo of cabbage, which sells for about 1 yuan.

One coal baron spent $12 million on his daughter's wedding a couple of years ago. Now he is bankrupt


Before 2014, when coal prices collapsed, Shanxi produced the most billionaires in China. One coal baron reportedly spent 70 million yuan ($12 million) on his daughter’s wedding a couple of years ago. Now he is bankrupt.

So why is China buying North Korean coal? Foreign Ministry spokesman Geng Shuang provided a useful explanation in September, when he told a media briefing that “trade in coal and other minerals between China and North Korea conforms to the provisions of relevant United Nations resolutions and Chinese laws and regulations.”

So it appears that China has subsidized North Korea’s nuclear weapons program by buying coal under the “livelihood” exemption in UN sanctions rules. In so doing, the authorities in Beijing have helped demolish their own coal industry.

Until an American told the truth, the Chinese public was in the dark – especially those coal miners in Shanxi. It speaks volumes about China’s government and its cozy relations with Pyongyang.

In Kim Watch, GIS Expert Kati Kang shares her insights into the policies of Kim Jong-un. For more, click here.

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