Books & Reports

[Asan Institute] In China’s Shadow_표지

This report is the product of a six-month long collaboration between the Center for Advanced Defense Studies (C4ADS) and the Asan Institute for Policy Studies to identify financial vulnerabilities of the Democratic People’s Republic of Korea (DPRK) by using cutting edge data mining methodology and network-centric analysis.

 

Executive Summary

North Korea’s overseas trading networks are evolving, and Pyongyang’s expansive business dealings with China, its biggest trading partner, are driving changes in the character, scope, and methods of these networks. As a result of these changes, North Korea and the entire Northeast Asian region face greater instability as regime elites in Pyongyang become increasingly willing and able to procure the strategic resources they need for regime security and weapons development.

North Korea has maintained a trade deficit since at least 1990, when researchers started to compile reliable data on the country’s international trade volume. Because some form of “invisible” or alternative sources of income are required to offset this deficit, this report argues that a significant portion of alternative revenue derives from overseas procurement and trade networks that have grown rapidly in size, sophistication, and scope. Wage earnings by North Korean workers overseas, revenue from various joint ventures between DPRK and foreign entities, and trafficking in weapons, illicit goods, and wildlife constitute further sources of hard currency. These illicit engagements have spanned the globe to include a range of rogue actors and proliferators, including Syria, Hezbollah, Libya, Pakistan, and Iran.

To map these growing overseas networks, this report used open source databases, including corporate registries; court filings; Equasis maritime database records; customs and trade data provided by Panjiva, a customs trade data aggregator; and real time data on ship activities provided by Windward, a maritime data and analytics platform. The compiled information was consolidated using Palantir’s Gotham network analysis platform. The resulting study consists of two parts.

In Part I, we focused on building bulk datasets on companies, individuals, and ships. By using corporate and tax registries in East Asian countries, we were able to identify significant points of convergence across seemingly disparate networks and identify 562 ships, companies, and individuals within one degree of separation from known DPRK illicit and regime entities.

In Part II, we identified key nodes from our expanded dataset for a more indepth investigation. We focused, in particular, on one Chinese trading conglomerate that has conducted over $500 million of trade with the DPRK in the past five years. Within this network, we were able to identify its subsidiary and affiliated entities that have transacted an additional $300 million with sanctioned Burmese and North Korean entities, helped maintain the cyber infrastructure of the DPRK, and traded in various goods and services that raise serious non-proliferation concerns.

Overseas networks are vital conduits of hard currency for the North Korean regime that remain exposed and vulnerable. Overseas North Korean agents and entities depend on a range of third-party facilitators for core business operations. We assess that this dependence can be leveraged and disrupted if more detailed information on the size, personnel, and modus operandi of such networks, especially the methods employed to circumvent sanctions can be generated. This report aims to bridge this gap by using open source data to map and expose the DPRK’s overseas networks.

 

About Experts

Woo Jung-Yeop
Woo Jung-Yeop

Security Policy Program / Center for Foreign Policy and National Security

Dr. Woo Jung-Yeop is a research fellow in the Center for Foreign Policy and National Security at the Asan Institute for Policy Studies. Previously, Dr. Woo was a Postdoctoral Fellow at the Korean Studies Institute at the University of Southern California and also an Associate Analyst for Gallup Korea and the Korea Research Company. Dr. Woo’s research focuses on foreign military intervention in civil wars and the relationship between foreign policy-making and public opinion. Dr. Woo received a B.A. from Seoul National University, M.P.P. from Georgetown University, and his Ph.D. in political science from the University of Wisconsin-Milwaukee.

Go Myong-Hyun
Go Myong-Hyun

Risk, Information & Social Policy Program / Center for Public Opinion and Quantitative Research

Dr. GO Myong-Hyun is a research fellow in the Risk, Information & Social Policy Program in the Center for Public Opinion and Quantitative Research at the Asan Institute for Policy Studies. Previously, Dr. Go was a postdoctoral researcher at the University of California, Los Angeles, Neuropsychiatry Institute, where he analyzed social networks, complex social interactions over space, and geospatial modeling of disease. His research applies these statistical perspectives to issues of national security to examine the role of mass protests and collective action in South Korean society and the structural stability of North Korea in the face of its failing economy. Dr. Go’s latest publications include “Beyond the UN COI Report on North Korean Human Rights,” (2014), “North Korea as Iran’s Counterfactual: a Comparison of Iran and North Korea Sanctions,” (2013), and “Economic Improvement in North Korea,” (2013). Dr. Go received a B.A. in economics-mathematics and M.A. in statistics from Columbia University and his Ph.D. in policy analysis from the Pardee RAND Graduate School.