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Beijing’s North-China-Russia triangle: What about their economies?

Published: 10 Sep. 2025, 00:02

Kim Byung-yeon

The author is a chair professor of economics at Seoul National University.

The Victory Day celebrations in Beijing were striking. Chinese President Xi Jinping stood on Tiananmen’s rostrum with Russian President Vladimir Putin and North Korean leader Kim Jong-un. The three projected a defiant message to the world. By hosting the Shanghai Cooperation Organization summit just before, China signaled its determination to resist U.S. pressure and even shape a new global order. Russia underscored its resolve to continue the war in Ukraine. North Korea, appearing among the “big three,” made clear it has no intention of abandoning its nuclear weapons.

Though commemorating victory over Japan, the subtext was unmistakably aimed at the United States. The timing was also deliberate. At a moment when Washington faces tensions with its allies over tariffs, Beijing, Moscow and Pyongyang wanted to show they stand united.

In this pool photograph distributed by the Russian state agency Sputnik, Russia's President Vladimir Putin (center R) and North Korea's leader Kim Jong-un (center L) leave after their meeting in Beijing on September 3, 2025. Putin on September 3 thanked Kim for sending troops to oust Ukrainian soldiers from Russia's Kursk border region, saying they fought ″heroically″. [AFP/YONHAP]

Among the three, Kim looked the most pleased. By sending weapons and personnel to Russia, he has raised North Korea’s geopolitical profile while securing military and diplomatic support in return. His weak ties with China were a problem, but this visit appears to have restored them. North Korea had expected trade with China to rebound after the pandemic, but in 2023, their trade volume reached only 78 percent of 2019 levels. Concerned about Pyongyang’s closeness with Moscow, Beijing had enforced United Nations sanctions more strictly. Now, Kim seems confident that this obstacle will soon fade. If China responds to his request for expanded economic cooperation, North Korea hopes to pair Chinese trade with Russian military technology to realize the long-cherished policy of “parallel development” ( byungjin) of nuclear weapons and the economy. Kim appears convinced that in a multipolar world, with China and Russia as strong partners, there is no longer any need to negotiate away his nuclear arsenal.

Chinese President Xi Jinping and Democratic People's Republic of Korea (DPRK) leader Kim Jong-un shake hands at the Great Hall of the People in Beijing, China September 4, 2025. [REUTERS/YONHAP]

But will the global order unfold as the Beijing trio desires? Much depends not only on U.S. policy but also on the internal economic conditions of Russia and North Korea.

The longer the war drags on, the more pressure Russia’s economy faces. After growth of 4.1 percent in 2023 and 4.3 percent in 2024, forecasts for 2025 fall to around 1 percent. The earlier growth spurt reflected aggressive fiscal spending financed by the sovereign wealth fund. At the end of 2021, that fund’s liquid assets equaled 6.5 percent of gross national income. Today it is down to 1.9 percent, barely enough to cover a year of deficits. The central bank’s policy rate has climbed to 18 percent as labor shortages fuel inflation. High rates stifle investment in nonmilitary industries, producing a vicious cycle of weak growth. If the fund’s reserves run out, the government will rely on oil and gas exports to finance the war. But with global crude prices hovering near $60 per barrel, revenues may prove insufficient. In a drawn-out conflict, the side with greater economic capacity is likelier to prevail. It is doubtful that Russia’s economy is stronger than that of Europe's, which continues to sustain Ukraine.

Life for ordinary North Koreans appears to have deteriorated. The Bank of Korea estimates that North Korea’s economy grew 3.7 percent last year, but this reflected growth in heavy industry that was tied to wartime production — not improved welfare. Before the pandemic, a typical North Korean household of four earned about 300,000 won per month, more than 70 percent of it from market activities. Yet the regime, worried that markets spread capitalist ideas and South Korean goods, has sought to suppress them. In late 2023, it raised official monthly wages from about 3,000 won to between 40,000 and 50,000 won to encourage formal employment. But the unintended consequence was severe inflation. The unofficial exchange rate soared from 8,000 won per dollar to over 30,000. Rice prices rose from 5,000 to 14,000 won per kilogram. Families reliant on official salaries saw their monthly income, converted to dollars, fall from $38 in 2019 to less than $2 today. Even if China provides aid, such policies prevent meaningful economic improvement. Nuclear arms alone cannot sustain the regime.

People wearing masks walk through a busy marketplace in Hyesan, Ryanggang Province, North Korea, on Sept. 5, 2020. The photo was taken from Changbai Korean Autonomous County in Jilin Province, China. [KYODO/YONHAP]

President Lee Jae Myung described himself as a “pacemaker” in his summit with U.S. President Donald Trump. Today, that metaphor is more relevant than that of a “peacemaker.” The era when Korea could run single-mindedly toward peace by focusing only on Pyongyang has ended. Seoul must broaden its diplomatic reach, deepen cooperation, and adopt what could be called a “three-dimensional strategy” that incorporates timing as well as space and quality.

Timing is crucial. The right moment to move decisively for peace on the Korean Peninsula will come when the Beijing trio’s unity begins to crack. Their alignment is not a constant but a variable, vulnerable to economic pressures at home. Now is not the time to walk or to sprint. It is a moment for poised stillness — preparing for greater peace with a strategy that works in multiple dimensions.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.