N. Korea's trade reliance on China deepens: KDI

SEOUL, July 6 (Yonhap) -- North Korea's reliance on China for trade deepened last year after South Korea cut almost all business relations with its communist neighbor following Pyongyang's deadly attack on a South Korean naval ship, a report showed Wednesday. South Korea cut its business relations with the North on May 24 of last year after a multinational team of investigators confirmed that the North torpedoed the South Korean warship Cheonan on March 26 near their disputed western maritime border, killing 46 sailors. The North has denied any involvement. According to the report by the state-run think tank Korea Development Institute (KDI), North Korea's trade with China came to US$3.47 billion last year, up 29.3 percent from a year earlier. That accounts for 56.9 percent of the reclusive country's total annual trade of $6.09 billion, up from 52.6 percent a year earlier, said the report. The KDI said that the report is based on an analysis by North Korea experts on the communist country's overall economic situation. Pyongyang's trade dependence on China had further deepened so far this year, the report noted. Trade between North Korea and China nearly doubled to $1.43 billion during the first four months of this year, compared with the same period a year earlier. In particular, exports of natural resources spiked, making up 72.4 percent of the total China-bound shipments, according to the report. "The North expanded its exports of such strategic materials as coal to China at the instruction by Kim Jong-il following the blocking of its trade channel with the South," the report said. "As a result, we think that the country is facing disruptions in running its economy such as a possible energy shortage during winter," it added. On North Korea's financial market situations, the report said that the currency exchange rate has nearly doubled since December amid market concerns over a lack of hard currency due to worsened business ties with South Korea. "The spike in the North's currency exchange rate seems to have resulted in a sharp rise in food prices, further crimping its citizens' livelihood," the report said.