SEOUL, May 8 (UPI) -- North Korea's trade with foreign countries rose 5.1 percent last year, the highest figure since 1991, as the communist country slowly emerges from self-imposed isolation, South Korea's trade agency said on Monday.
But the North's trade deficit jumped 23 percent year-on-year due to more oil and food shipments from China, which may tempt Pyongyang to print more fake U.S. dollars to ease cash shortages.
Data from the Korea Trade-Investment Promotion Agency also shows that North Korea's reliance on China further deepened last year as U.S-led pressure forced North Korea to develop stronger ties with its communist ally for economic survival.
According to the KOTRA, North Korea's trade volume reached $3 billion in 2005, a 5.1 percent gain from a year earlier. If two-way trade with South Korea is included, North Korea's foreign trade was $4.06 billion.
North Korea recorded a trade deficit of $1 billion last year, up 23 percent from 2004 when the figure was $817 million. Imports increased 9.1 percent to $2.03 billion, while exports fell 2.1 percent to $998 million.
The Seoul-based trade agency attributed the drop in exports to plummeting overseas shipments of fisheries goods, one of the North's key export items, and a 19.7 percent annual decrease in shipments to Japan in the aftermath of political standoff over nuclear and abduction issues.
The North's imports grew on rising inbound shipments of energy-related natural resources as well as food from China. Beijing's increasing investments in the North also triggered a rise in machinery imports into the country, the agency said.
Lee Jung-chul, a senior fellow at South Korea's private Samsung Economic Research Institute, said the North's growing trade deficit was mainly caused by trade imbalance with China, its biggest market.
North Korea imported $1.1 billion worth of goods from China, up 36.5 percent from a year earlier, while exporting $497 million worth of goods, down 14.7 percent year-on-year. This resulted in a $600 million trade deficit, Lee said, citing Seoul's official Korea International Trade Agency.
The sluggish export to China was attributable to a decrease in prices of its goods shipped to China, Lee said. The average price of a North Korean good exported to China has decreased to $0.07 last February from $0.17 in March last year.
Increased imports from China were mainly due to higher energy bills from stronger oil prices, Lee said. North Korea imported a total of 523,000 tons of oil from China last year, a decrease from 532,000 tons in 2004. But its bill for the fuel sharply jumped 41.9 percent to $198 million from $139 million in 2004.
The average oil price North Korea imported from China was $0.38 a ton last year, up from $0.26 in 2004 and $0.16 in 2002, according to the KITA report.
North Korea paid $121 million to import 574,000 tons of oil from China in 2003 and $76.5 million for 472,000 tons in 2002. The North's oil imports peaked in 2001 when it bought 579,000 tons for $108.8 million, up from 389,000 tons in 2000 and 317,000 tons in 1999.
Lee said oil imports from China accounted for 86.8 percent of North Korea's total oil purchases last year. North Korea has also bought oil from Thailand and Russia, among others.
North Korea's trade deficit is expected to further swell as its trade volume with China has continued to increase.
The North's trade with China accounted for 52.6 percent of the North's entire trade volume last year, up from 48.5 percent in 2004 and 42.8 percent a year earlier, according to the KOTRA report, indicating the North's deepening economic reliance on China.
"North Korea was left with no option but to resort to China for economic survival as (U.S.-led) economic sanctions have been intensified," the KOTRA report said.
South Korea's central bank said the North Korean economy would have posted negative growth if it had not been for its rapidly growing trade with China.
The North Korean economy had shrunk for a decade before swinging into positive growth in 1999 when its gross national product surged 6.2 percent.
It grew 1.3 percent in 2000, 3.7 percent in 2001, 1.2 percent in 2002, 1.8 percent in 2003, and 2.2 percent in 2004. Last year's performance is not available yet.
North Korea's trade with Japan plunged 23.5 percent last year to mark $193.6 million, damaged by diplomatic standoff over the North's abduction of Japanese nationals decades ago.
The two-way trade has declined for four years in a row since 2002, when the North admitted to the abduction of Japanese citizens by North Korean agents. Two-way trade was some $1.3 billion in 2001.
North Korea's annual trade with South Korea surpassed the $1 billion mark for the first time last year on the back of their joint tour and industry projects. Inter-Korean trade volume reached $1.06 billion dollars, up from $697 million in 2004.
Trade, however, relies heavily on South Korean-funded projects in the impoverished North. South Korea shipped around $710 million of goods and services to North Korea while importing $340 million.
