North Korea is shifting its foreign currency strategy in 2026, with trading units moving away from raw material exports to China and turning instead toward joint ventures with Chinese investors.
The source spoke to Daily NK on Wednesday and described a clear shift in recent months. North Korean trading units are changing how they earn foreign currency through trade with China.
In the past, forest products such as pine nuts, mushrooms and medicinal herbs typically went to China in raw form. Recently, more trading units have received Chinese investment to build production facilities inside the country. Local workers at these facilities process raw materials into finished goods before export.
“For the past few years there has been talk of moving toward finished goods, and now that shift finally appears to be happening,” the source said. Trading units are bringing in production equipment and processing technology from China for this purpose. Raw materials go through a domestic commercialization process, and traders add processing costs to the price as value added.
Formal trade expands as customs procedures replace smuggling
The shift coincides with a push by North Korea and China to expand official trade through customs offices. That marks a departure from the informal channels traders have long relied on.
“In the past, items like machinery, which faced international sanctions, were difficult to bring through customs,” the source said. Recently, more of these items have entered North Korea under the label of “aid.” They are carried by registered green cargo trucks that receive easier passage at the border. Goods once smuggled across the border are now moving through official channels instead.
Some Chinese traders worry the new approach could end up burdening them. Informal, smuggling based trade is giving way to official customs procedures that leave their businesses dependent on both governments’ approval.
In the past, traders needed only to pay for raw materials before smuggling them across the border relatively quickly. Now, Chinese investors must also invest inside North Korea and ship production equipment there. They must then secure approval from both governments before receiving the finished goods.
“Before, all we had to do was avoid getting caught at the border while smuggling goods across,” the source said. “Now we also need government approval and have to go through customs procedures at every stage.” Investing money and finishing production inside North Korea carries real risk, since authorities there could still withhold approval and block the goods from leaving.
“With smuggling, there was risk, but the deal only had to be settled between the two trading partners,” the source said. Trade has now shifted to official, state managed channels, so the business can be affected by more than cost alone. Relations between the two countries and shifting policy can also sway the outcome, and traders are keenly aware of that risk.
North Korea has for years promoted joint ventures that bring in production facilities and technology transfer as officials view this approach as a way to earn more foreign currency than simple raw material exports allow. Investment inside the country has picked up amid a recent thaw in North Korea China relations and traders say this export model appears to be taking hold, though its long term stability remains uncertain.
Reporting from inside North Korea
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