No, China did not cut off N. Korea’s oil supply (corrected).

The Chinese government has announced that Xi Jinping will visit Seoul next month without having ever visited Pyongyang, a reversal of the usual sequence. Although Asian diplomats place great value on the symbolism of such things, it is also possible to make too much of it. Still, I draw a few inferences from the announcement that may be important.

First, the announcement of Xi’s visit would pose significant complications for Pyongyang if it plans to nuke off soon. Xi would feel constrained from visiting Pyongyang soon after a nuke test, and a test shortly after Xi’s visit would be a personal humiliation to Xi. I’m not going to go so far as to say that the announcement of Xi’s visit precludes a nuke test, but it does make it less likely in the near term. It could also mean that Pyongyang will look for another way to provoke.

Second, if there is no nuke test when one seemed inevitable, it would discount the analysis of those (including the Chinese themselves) who insist that China’s influence over North Korea is insufficient to stop the latter’s nuclear program. This view would be affirmed, on the other hand, if there is a nuke test despite evidence that China had cut off (or credibly threatened to cut off) North Korea’s material and financial support. For now, that evidence is inconclusive at best, but read on.

On a superficial and symbolic level, China has been relatively distant toward Pyongyang, and is making an ostentatious display of its affection toward Seoul. Heritage’s Dean Cheng even sees signs of a rift between China and North Korea, and cites a report that China didn’t export any crude oil to North Korea for the entire first quarter of 2014. If true, this would be unprecedented.

It’s also difficult to accept as true. For one thing, it’s irreconcilable with overwhelming evidence that China isn’t enforcing U.N. sanctions and has otherwise increased trade with North Korea. According to Yonhap, despite U.N. sanctions, “North Korea’s overall trade volume reached a new annual high in 2013 due largely to growing shipments to and from its closest ally, China.”

The North’s overall trade volume came to US$7.34 billion in 2013, up 7.8 percent from the previous year, according to the state-run Korea Trade-Investment Promotion Agency (KOTRA). “It is the highest amount since KOTRA began compiling data on North Korea’s annual trade volumes in 1990,” it said in a press release. 

The country’s exports jumped 11.7 percent on-year to $3.22 billion, with imports growing 5 percent to $4.12 billion. Bilateral trade volume between North Korea and China came to $6.54 billion, accounting for 89.1 percent of the North’s overall trade in 2013.

“North Korea’s dependence on China for trade has been increasing steadily since 2005 when its trade volume with China exceeded 50 percent of its overall trade,” KOTRA said. “In addition, it shows China’s pledge to tighten its customs check on shipments to and from North Korea, in protest of North Korea’s missile launch in December 2012 and a nuclear test in February 2013, did not have any significant effect on North Korea-China trade,” it added.

The large increase in North Korea’s overall exports was attributed to growing shipments of fuel, such as coal, which surged 14.9 percent on-year to $1.43 billion, accounting for 44.4 percent of the country’s total exports. Out of all energy exports, 97.2 percent were shipped to China.

Russia, another North Korean ally, was the country’s second-largest trading partner in 2013, with bilateral trade volume spiking 37.3 percent to $104 million. [Yonhap]

Why would North Korea go on selling coal to a country that cut off its oil supply? It didn’t make any sense to me, so I held this post until I could explain the inconsistency. Thankfully, the Daily NK has done that for us, via an intrepid investigative report informing us that Chinese oil still flows freely to North Korea:

Daily NK has confirmed that China is currently supplying oil to North Korea through a pipeline running between the two. Though there have been cases where Beijing has suspended such shipments in response to North Korean intransigence, particularly over nuclear issues, but this has not happened recently.

On April 10th, Daily NK visited an oil storage and pipeline facility in Dandong. There, our team interviewed Chinese Ministry of Public Security officials guarding the facility, which is owned by a subsidiary of China National Petroleum Corporation, or CNPC.

When asked about oil assistance to North Korea, one of the officers acknowledged, “We are continuously supplying oil (to North Korea),” but “cannot say how much we send each month or how much remains as of now.” [Daily NK]

Here’s a link to donate to the Daily NK.

So why does KOTRA show no exports in spite of this? Simple—China conveniently left it out of the trade statistics. According to the Daily NK’s sources, “these deliveries are not recorded in Chinese customs data, or in foreign trade statistics.” The Chinese give North Korea the oil for free and call it “aid,” which they don’t count in their export statistics because it’s not a commercial transaction. (One wonders whether China is paying for North Korean coal, or whether this has been restructured as a barter transaction to evade sanctions and foreign political pressure.)

What is the state of relations between China and North Korea today? I’d like to believe Cheng is right, and I can even agree that on a certain level, China is irritated with the North Koreans and with Kim Jong Un in particular, but I’m not willing to go as far as he is.

Christopher Johnson, “a former CIA China analyst” at SAIS, offers a more restrained view:

China is able to give North Korea what it wants, but the North apparently refuses to respect China’s interests in return, Johnson told foreign journalists at an event in Beijing organized by the Foreign Correspondents Club of China.

“There is a lot of debate about whether China’s policy toward North Korea has changed. Personally, I think that it’s a wasted debate,” Johnson said. “My own view is that they are moving away from a traditional and special relationship with North Korea to what they call a regular and normal state-to-state relationship,” he said.

Under the definition of the normal state-to-state relationship between North Korea and China, Johnson said, “China is a great power, and North Korea is a client.” “North Korea is not behaving like a client. This is fundamentally causing all kinds of tension, among other issues, in their relationship,” he said. [Yonhap]

Aside from Johnson’s statement that the debate is wasted, I can agree with much of this. China is probably irritated with Kim Jong Un’s obnoxiousness, inappropriate timing, ineptness as a ruler, and the risk that he could become a greater liability for China. It was obviously displeased when Kim Jong Un purged many North Koreans who had close personal and economic relations with China and its state-owned enterprises. Economically speaking, South Korea is more important to China than North Korea is today.

None of this changes the fact that strategically, China has a strong interest in keeping Korea divided, with a buffer state on its border instead of a rising, prosperous, powerful, and U.S.-friendly democracy. Besides which, North Korea’s coal still isn’t mined out. Better-informed people who have regular dealings with the Chinese government have told me that different parts of China’s government represent different Chinese interests, and that they often have very different and inconsistent world views. I tend to believe them about this.

Is China is done supporting Kim Jong Un? Hardly. China would prefer that he nuke up quietly. China will pressure North Korea on the margins, to get it back under control, but China still assesses its interests with respect to North Korea as fundamentally incompatible with ours.

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Updates: The original version of this post (since corrected) stated that Xi Jingping intended to visit Pyongyang after visiting Seoul. Thanks to a reader for identifying this error.

A reader (thank you!) forwarded me the KOTRA data on which Yonhap’s report was based. The truth turns out to be in between Yonhap’s report and the Daily NK’s, but much closer to the Daily NK’s version. The KOTRA data show zero crude oil exports from China to North Korea, but also show a huge increase in exports of refined petroleum products (such as gasoline, diesel, jet fuel, and fuel oil) compared to last year.

Now, I suppose it could be true that China is exporting crude to North Korea without reporting it, but then, why report the exports of gasoline and jet fuel? (Could North Korea’s refining capacity be off-line for some reason?) Also, the Chinese aren’t giving these products away to the North Koreans for free. They’re charging market prices, except for jet fuel, which they’re selling for below-market prices.

The most likely explanation is that the Daily NK actually uncovered the export of refined petroleum products, and that Yonhap’s correspondent didn’t keep reading past the line item for crude. Either way, the Daily NK gets the story mostly right, while Yonhap’s report is misleading, in a way that lets China off the hook undeservedly, right before Xi Jinping visits Seoul.