Currency Policy Statement Essay - Essay Prowess

Currency Policy Statement Essay


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Executive Summary

A statement of currency policy

The UN and the U.S. has initiated a number of sanctions to the Republic of North Korea (DPRK) aiming to force the country to abandon nuclear and missile threats it poses across the globe. However, these efforts are largely ineffective since China continue to offer trade and financial support to North Korea (Albert, 2017). Therefore, China can successfully introduce appropriate measures, which can force DPRK into a nuclear peace. It has to be the country that enforces the heaviest sanctions on the leadership of North Korea owing to their close ties.

Reasons for initiation changes

China is the leading trade partner and key source of energy and food for North Korea. In fact, North Korea procures about 85 percent of imports from China while 83 percent of its supplies are exported to China (Holodny, 2017). The trade value between the two economies stood at $2.6 billion in early 2017. They have also established major investment infrastructure such as bulk cargo and container shipping route, which was intended to strengthen Coal exports from North Korea to China (Phillips & McCurry, 2017).

Policy options to be considered

The first policy option is for China to cut down all the financial aid to Pyongyang. In the recent past, China has been one of the critical global foreign financiers to DPRK. The funds are majorly utilized in reinforcing its military (Huang, 2017). The policy will play a fundamental part in ensuring that North Korea finds it hard in pursuing its regular nuclear testing and development. It may also assist in compelling Kim Jon Un shelf or entirely eradicate his nuclear ambitions (Pacheco, 2017).

The second policy alternative will involve shutting down of the bulk cargo and container shipping route and the high-speed rail route that run from china to its border with North Korea. Temporary closure of these routes, which helps in transportation of goods between the two nations, will force the Kim’s regime to end constant nuclear and missile tests (Christensen, 2011).

The last policy decision is to use military actions in handling the DPRK’s missile and nuclear threats. In this respect, China will be required to send its military to its border with North Korea in readiness for attack should Kim’s administration continue testing and developing long-range missiles (Kim, 2016). The move may produce more politically instigated effects rather than economic impacts.

Pros and cons of each option

The pros of reducing the financial aid to Pyongyang will be quite successful since it will make it hard for Kim’s administration to enhance its military. In addition it will significantly leads to a decline in its GDP (Pacheco, 2017). On the contrary, it may create devastating social issues such as human trafficking and crime. Similarly, it may contribute to health-related issues and starvation in DPRK.

Shutting down of both rail and shipping route will be beneficial because it will facilitate economic contraction of DPRK hence it will not meet its financial goals. In addition, it will weaken its military capacity (Christensen, 2011). On the flip side, the policy may destabilize the country creating a refugee crisis in neighboring nation. It will also escalate tensions in the Korean Peninsula and retaliation.

The use of military policy is beneficial because it will instill fear to Kim’s regime and it may deteriorate economic performance of the country. However, it can encourage political tensions in Korean Peninsula and humanitarian crisis (Kim, 2016). Additionally, it will lead to loss of many lives in both China and North Korea.

Recommended course of action

The best policy alternative for China will involve cutting down on its financial aid to North Korea (Huang, 2017).

Reasoning for selecting that course of action

The main reason for using this strategy will ensure that Kim’s regime finds it difficult to access any financing that will help in strengthening its military. It will also guarantee that the government experience challenges in meeting basic needs for its civilians (Pacheco, 2017). More importantly, this policy is suitable because it will generate minimum tensions in the Korean Peninsula as compared to other options.


Albert, E. (2017). Understanding the China-North Korea RelationshipCouncil on Foreign Relations. Retrieved 26 December 2017, from

Christensen, T. J. (2011). The advantages of an assertive China: Responding to Beijing’s abrasive diplomacy. Foreign Affairs, 54-67.

Holodny, E. (2017). Finance: North Korea”s biggest trading partner is China — and it”s not even Retrieved 26 December 2017, from

Kim, M. H. (2016). Why provoke? The Sino-US competition in East Asia and North Korea’s strategic choice. Journal of Strategic Studies.

Pacheco, R. (2017). How North Korea is bringing the U.S. and China closerNewsweek. Retrieved 26 December 2017, from

Phillips, T., & McCurry, J. (2017). US and China agree to ‘maximise pressure’ on North Koreathe Guardian. Retrieved 26 December 2017, from


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