NORTH KOREA/CHINA: SMALLER-SCALE SMUGGLING ACROSS

C O N F I D E N T I A L SECTION 01 OF 02 SHENYANG 000078

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E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION
TAGS: PGOV PINR PREL KN KS CH
SUBJECT: NORTH KOREA/CHINA: SMALLER-SCALE SMUGGLING ACROSS
THE BORDER

REF: (A) SHENYANG 31

Classified By: CONSUL GENERAL STEPHEN B. WICKMAN. REASONS 1.4 (B/D).


1. (C) SUMMARY: Despite a recent crackdown by PRC and DPRK
authorities, Chinese smugglers--often partnering with local
North Korean military contacts--reportedly continue to
operate near Dandong. A fair amount of smuggling in the
area appears to be smaller-scale in nature, though profits
can nevertheless be significant in some cases. Undermining
PRC efforts to effectively crack down on these activities
are corrupt local officials. Our contacts almost
universally report that some local police are aware of
smugglers' operations. END SUMMARY.


2. (C) This cable builds on ref A and draws on two trips to
the PRC-DPRK border (March 12-15 and January 8-11),where
Poloff visited, inter alia: Dandong and the nearby
localities of Donggang, Hushan and Hekou; Yanji, capital of
the Yanbian Ethnic Korean Autonomous Prefecture; and Tumen.
It is based on firsthand observations, as well as
conversations with self-described smugglers and legitimate
border traders, as well as with local Chinese contacts
friendly with smugglers/traders.


3. (C) In a number of areas along the southern end of the
PRC-DPRK border, illicit cross-border smuggling persists,
complicating the extent to which official trade figures
fully capture the complex reality of PRC-DPRK exchanges--
official or otherwise (see ref A for detailed background on
the scope and vectors of cross-border smuggling). Poloff
on March 12 and 13 met with a number of possible small-
scale cross-border smugglers in the vicinity of Dandong--
this time in Hushan and Hekou, two villages in Kuandian
County--who work with local North Korean military contacts
stationed across from their houses on the banks of the Yalu
River.

SCOPE, PROFITABILITY, METHODS
--------------


4. (C) Scrap metal and antiques are among the staples of
smaller-scale smuggling around Dandong. Nearly 65
kilometers north of Dandong in Hekou, a local People's
Armed Police (PAP) border guard led Poloff to the riverside
house of a man the PAP guard described as a friend and
smuggler who has contacts with the North Korean military.
(NOTE: Poloff was put in touch with the PAP guard by a
contact in Dandong friendly with a number of security
personnel in the area. END NOTE.) On the banks of the Yalu
River, next to an industrial-use scale used to weigh
smuggled cargo, the PAP guard showed Poloff a cache of
spent North Korean tank-artillery shell casings and scrap
copper that his friend had procured from the North Korean
military, just a boat ride across the river. Two self-
described smugglers in Hekou and three elsewhere in
Kuandian County showed Poloff similar caches of scrap
copper and iron, in addition to small amounts of North
Korean antiques (e.g., porcelain vases, bronze bowls) that
they had smuggled into China, intending to sell the items
in Dandong's antiques markets.


5. (C) Profitability is difficult to discern. One Hekou
smuggler reported that copper--the price of which has
spiked considerably of late--currently fetched RMB 49 (USD
6.30) per kilo on the black market. According to one
Kuandian smuggler, the most successful smuggler in Hushan--
a full-time operator, unlike some others who smuggle only
to supplement their normal incomes--can afford to pay his
"employees" RMB 60,000 (USD 7700) per year, a large sum in
an otherwise depressed area. (NOTE: Hushan lies
approximately 20 kilometers north of Dandong and falls
under Kuandian County's administration; many of its
residents live on/near the banks of the Yalu and engage in
smuggling on a regular basis to supplement their incomes.
END NOTE.)


6. (C) Several self-described smugglers in Hushan and Hekou
told Poloff that they communicate with their North Korean
partners via mobile phones. But the communication is
almost always one-way: North Korean military personnel keep
their phones turned off during the day, the smugglers said,
and only call across the river at night once they have
something to sell. Only one smuggler (elsewhere in
Kuandian) told Poloff that he communicated with his North
Korean partners either by fixing a specific date after each
meeting or, on a more ad hoc (and less reliable) basis, by
signaling across the Yalu River with light-based codes.



CORRUPTION UNDERMINING CRACKDOWN
--------------


7. (C) PRC and DPRK authorities have started to crack down
on cross-border smuggling recently, according to two Hushan
smugglers. Local police, they said, recently announced
that those caught would face fines of RMB 5000 (USD 640).
Few smugglers Poloff encountered in the Hushan area or
beyond seemed terribly worried. A Hushan resident told us
one evening after dark, for instance, that a number of
small open-bed trucks parked outside several neighboring
houses were waiting to transport cargo that would be
brought over from North Korea later in the evening.


8. (C) Not surprisingly, the complicity of corrupt local
officials complicates PRC efforts to crack down on
smuggling. Consistent with Poloff's previous interviews
with smugglers (see ref A),interlocutors almost
universally reported that local police were well aware of
the smuggling and turned a blind eye. Many explicitly
noted that maintaining a good relationship with security
officials is absolutely essential to their operations. In
two locations, Poloff himself was personally directed to
smugglers by local PAP border officials either "on the
take" (in Qianyang in January) or friendly with local
smugglers (in Hekou in March).
WICKMAN