Without China, Can North Korea's Economy Survive?

North Korea operates one of the world’s most unusual economic systems. Despite being one of the few nations possessing nuclear weapons, the country’s Gross Domestic Product (GDP) in 2024 was only US$26.6 billion. This figure is approximately 70 times smaller than South Korea’s economy, which reached US$1.86 trillion, and is only about one-fifth of the annual revenue of NVIDIA, the world’s largest trading company by value.

Due to a centralised economy that prioritises domestic production, North Korea is less dependent on trade compared to typical free-market economies, partly due to United Nations sanctions imposed in 2017 following its nuclear and ballistic missile programmes. Total imports and exports contribute only a small fraction of North Korea’s GDP, unlike South Korea, where international trade accounts for approximately 80% of the economy, according to the World Bank.

China plays an almost exclusive role in North Korea’s minimal trade dependence. According to the Washington-based think tank, The National Committee on North Korea, Pyongyang relies on China for up to 95% of its total trade and 85% of its exports. Almost all imports also originate from China. In 2024, North Korea’s legal imports reached only US$2.33 billion, a very small figure by global standards. As the country lacks domestic oil production, shipments from China include petroleum and other essential fuels required to keep the economy running, alongside food, textiles, machinery, electronics, and vehicles.

This provides Beijing with immense economic leverage over North Korean leader Kim Jong Un. A recent report suggests that US President Donald Trump is attempting to utilise this influence to bring Pyongyang back to the negotiating table regarding its controversial weapons programme. South Korean news agency Yonhap recently reported that Chinese President Xi Jinping is expected to visit Pyongyang in the coming weeks to act as a primary mediator between Trump and Kim.

North Korea’s legal exports are even less impressive. According to the Korea Trade-Investment Promotion Agency (KOTRA), North Korean exports reached only about US$360 million in 2024. These overseas sales are minimal, with wigs being the only significant product, accounting for approximately 40% of total exports, primarily to China, which then re-exports them globally. The nation pivoted to the wig industry to secure essential foreign exchange after sanctions blocked traditional exports such as coal and minerals, as wigs are not explicitly prohibited. The communist state also possesses an abundant supply of cheap, often forced, labour, which is suitable for labour-intensive, low-tech industries like wig manufacturing. Other goods, such as tungsten, frozen fish, iron, steel, and watch components, each contribute less to total exports by less than 10%.

Since sanctions were imposed, Pyongyang has lost approximately US$2.2 billion in export revenue annually, according to the Korea Economic Institute of America. Beyond small legal exports, North Korea generates significantly more hard currency through a shadow economy. The state sends tens of thousands of workers abroad, many to Russia and China, to work in construction, logging, manufacturing, and fishing. This programme is widely viewed by human rights groups and the UN as a form of forced labour, with the state seizing much of their wages, generating around US$500 million per year, according to a UN Panel of Experts.

Thousands of North Korean computer professionals also work remotely for companies based in the US, South Korea, and the EU, posing as legal freelancers using false identities. These individuals often earn high salaries that are subsequently diverted back to the regime. In 2024, these loyalty remittances generated approximately US$800 million for the state, according to the US Department of the Treasury. North Korea also operates one of the world’s most sophisticated and profitable hacking programmes. Last year, North Korean hackers stole a record US$2.02 billion in cryptocurrency, representing more than half of all global digital currency thefts, according to blockchain intelligence firm Chainalysis.

However, the largest and most difficult-to-track source of funds for the communist state stems from the war in Ukraine and the close relationship between Pyongyang and Moscow. North Korea has supplied Russia with millions of artillery shells, rockets, and ballistic missiles, bolstering the Kremlin’s war machine and generating between US$7 billion and US$13.8 billion for the Kim regime since 2023, according to the Institute for National Security Strategy South Korea. According to intelligence officials in Seoul, this revenue is used to accelerate North Korea’s nuclear and ballistic missile programmes, while also securing additional oil and food from China.