As part of its annual trade and aid package, Beijing purchases 90 percent of North Korea’s commercial exports and provides the Kim regime with 80 percent of its consumer goods, 90 percent of its energy, over $100 million in U.N. banned luxury goods and enough food to feed over a million people.
The $1.2 billion trade deficit with China is considered foreign aid since it is inconceivable it will ever be paid back. However, most money is derived from trade itself.

China’s exports to North Korea were $4.5 billion and its imports $3.3 billion in 2015. As China is trying to prop up the Kim regime we can assume it would undervalue its exports by at least a third, while North Korea, with the bulk of its exports in mineral products and textiles -- utilizing work camp labor -- may return a 90 percent profit.

Therefore, North Korea’s export profits were $3 billion and import savings $1.5 billion; this plus $1.2 billion in aid reveals an overall profit from trade and aid with China of $5.7 billion, or almost 95 percent of its $6 billion military budget.

This fungible trade and aid pays for North Korea’s nuclear missile program. Since the first nuclear test in 2006, China’s trade with North Korea has increased more than fourfold. The degree of animus or friendship between Beijing and the Kim regime is immaterial to this geoeconomic-based proxy relationship, which would surely dissolve if Pyongyang started selling weapons technology to Xinjiang rebels or the Dali Lama.

Shepherd Iverson, Ph.D., Center for Korean Studies, Inha University, Korea