Xi Jinping (R), Chinese president, holds talks with Kim Jong Un, chairman of the State Affairs Commission of the Democratic People’s Republic of Korea, in Beijing, June 19, 2018 - Photo by Xinhua

JAKARTA (TheInsiderStories) – A week after Singapore Summit, North Korean leader Kim Jong Un meet Xi Jinping, Chinese president met in Beijing on June 19. The two leaders had a candid and in-depth exchange of views on the current development of China and North Korearelations and the situation on the Korean Peninsula.

As known on June 12, United States president Donald Trump and chairman of the Democratic People’s Republic of Korea (DPRK) Jong Un have signed a joint document on the commitment to working the completion of denuclearization of the Korean Peninsula.

The document signed by the leaders at their historic Singapore Summit also says they will join hands to build a lasting and stable peace regime on the Korean Peninsula. And it says they will commit to recovering the remains of prisoners of war and those missing in action.

Both leaders conducted a comprehensive, in-depth, and exchange of opinions on the issues related to the establishment of new U.S – DPRK relations and the building of a lasting and robust peace regime on the Korean Peninsula.

President Trump committed to provide security guarantees to the DPRK, and Chairman Jong Un reaffirmed his firm and unwavering commitment to complete denuclearization of the Korean Peninsula.

Trump and Jong Un also committed to implement the stipulations in this joint statement fully and expeditiously. The U.S and the DPRK commit to hold follow-on negotiations, led by the U.S Secretary of State, Mike Pompeo, and a relevant high-level DPRK official, at the earliest possible date, to implement the outcomes of the U.S – DPRK summit.

Following the agreement, Jong Un and Xi agreed to safeguard, consolidate and develop China-DPRK relations, and jointly push forward the sound momentum of peace and stability of the Korean Peninsula to make a positive contribution to safeguarding world and regional peace, stability, prosperity and development.

Xi said that China was pleased to see the important summit between Jong Un and Trump in Singapore achieve principled consensus and positive results in realizing the denuclearization of the Korean Peninsula and establishing a lasting peace mechanism on the Peninsula.

He added, Jong Un’s visit to China showed the great importance he attaches to the strategic communication between the two parties and two countries, Xi said, expressing his appreciation to Kim.

Xi stressed that he and Kim had met three times in less than three months, which pointed out the direction for the development of the relations between the two parties and the two countries, and opened a new chapter in the development of China-DPRK relations.

Commenting on the Korean Peninsula disputes, Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit commenting, Trump signaled that economic sanctions on North Korea would be lifted once the DPRK has made significant progress with the denuclearization process.

At the conclusion of the US-DPRK summit, China signaled that some sanctions relief for the DPRK should be considered. China had imposed its own bilateral sanctions on the DPRK in 2017, including financial sanctions, in addition to implementation of UN sanctions.

While there are still considerable uncertainties about the DPRK’s timetable for denuclearization, if rapid progress is made this could create political momentum for a partial lifting of economic sanctions, potentially starting with some easing of China’s unilateral economic sanctions on the DPRK.

As President Trump has signaled, lifting of U.S and United Nation economic sanctions would be possible once significant verified progress has been made by the DPRK towards denuclearization.

He continued, assuming progress is made in US-DPRK peace talks and denuclearization, this could allow economic relations between South Korea and North Korea to warm.

Improving bilateral economic co-operation could eventually allow the operations of the Kaesong Industrial Complex to return to normal, restoring an important source of foreign exchange earnings for the DPRK.

In the medium term, there is considerable scope for significantly greater economic co-operation between South Korea and North Korea, which could substantially increase bilateral trade and investment flows with the DPRK.

The DPRK economy is currently one of the poorest in Asia, and stands to gain considerably from a durable peace process and denuclearization. In 2017, the per capita GDP of the DPRK was estimated at US$1,200 compared with $30,000 per capita for South Korea.

If a lasting peace deal can be implemented, the DPRK could receive considerable international development assistance to help build its economy, with South Korea and China likely to lead such an international aid initiative.

The lifting of economic sanctions and the re-opening of the Kaesong Industrial Complex, combined with international aid flows could trigger a period of rapid economic growth in the DPRK economy so long as the denuclearization process in genuine and verifiable.

Eventual lifting of UN and US sanctions would allow key sectors of the North Korean export economy, including mining, textiles and the fisheries industries that were hit by sanctions, to rebound strongly.

South Korea would also gain significant economic benefits from a durable peace on the Korean peninsula. South Korean companies would likely gain significant new export opportunities if the DPRK economy shows rapid growth, with South Korean companies in areas such as infrastructure construction, industrial machinery, autos and consumer goods likely to benefit if the DPRK economy liberalizes rapidly.

China would also benefit from stronger DPRK trade and investment flows, which will particularly help commerce in the Chinese cities located in proximity to the DPRK border, such as Dandong, a key entrepot for bilateral trade flows.

Email: linda.silaen@theinsiderstories.com

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The Insider Stories Founder Linda Silaen has a solid, proven history, established over more than a decade as a journalist with a leading internasional news organization, of being the first with the biggest economic news stories in Indonesia. Specializing in corporate news, Linda is also a veteran of some of the biggest macroeconomic and general news stories as Indonesia rapidly transforms into a major market economy. One of the founders of the original blog from which this company developed, Linda’s knowledge of investors’ information communications and data us developed from unrivaled networking skills that make her a well-known name among CEOs, bankers, government officials and private equity investors both in Indonesia and other countries.

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