China, North Korea, and Vanadium — World Trade and Weapons Proliferation Supply Watch

You can follow this link to a guest post of mine over on Metal Miner earlier today about how China intercepted 150 pounds of the rare earth metal vanadium -- which was most certainly destined for weapons programs -- on its way across the border to North Korea. Supply specifics aside (read the full above-linked article for the details), the situation is fascinating for a number of reasons. First and foremost, at least superficially, China appears to be getting stricter about enforcing -- or at least maintaining the perception of enforcement -- of at least some U.N.-based trade restrictions with North Korea. This is interesting for a number of reasons, but personally given what I've research and studied about the two trading partners, the entire thing reeks of hypocrisy if you ask me.

If you talk to some executives (as we have) in South Korea who contend China has no true private interest in a unified Korea regardless of what they say publicly -- in other words, a final resolution between the North and South -- they'll tell you that China is quietly helping North Korea from a weapons proliferation perspective. Why? Because China knows such moves help to destabilize efforts around any form of reconciliation between North and South, not to mention providing a clear and present threat to the US, which policy wonks will tell you China needs to engage with in non-direct military ways vs. direct ones. And most important of all, the last thing China wants is a strong, unified Korea that threatens their own interests as the primary export superpower on the Eastern side of the Asian mainland continent.

All in all, the story is fascinating because, to policy insiders, it shows China is adept at playing the high-stakes U.N. trade restriction game balancing the need for good PR with their actual behind-the-scenes objectives. On this note, perhaps another theory that is plausible regarding the seizure is that North Korea did something to really tick off their neighbor and this is fair warning for their fellow Communist brothers to get back in line if they hope to continue receiving assistance while maintaining porous trading borders. And despite the light-weighting properties of vanadium, there's nothing flimsy about that logic given how China typically plays the trade and foreign relations game.

Jason Busch

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