The Chinese government announced on Thursday, September 28, through the Ministry of Trade China, that they will close all Chinese companies that are working in the North Korean territory until January next year. This is a severe economic blow to North Korea, since a significant amount of its economy, revolves around trade with China.

The action is motivated by sanctions imposed by the UN on the dictatorial regime of Kim-Jong-Un.The Security Council of the United Nations voted, on September 12, for the expansion of economic and diplomatic sanctions against North Korea.

North Korea and economic restrictions

The restrictions include the cancellation of exports from the textile industry and the limitation of fuel supply.The Chinese government also ruled that foreign-owned companies that have some connection with the North Korean Government should also be closed.

The move is a turning point in the geopolitical scenario, as China was considered one of the few allies of North Korea, which is now even more isolated.The Chinese government was being heavily pressured because of its soft stance on the nuclear threats coming from the Kim-Jong-un's government.

Earlier this year, Beijing had given indications it was cutting off relations with Pyongyang by blocking imports of coal, iron, and seafood at the border between the two countries.

How does the North Korean economy behave?

As North Korea [VIDEO] is a country closed to the outside world, the dictator government does not publish information about its economy. But the Central Bank of neighboring South Korea, when analyzing information from the intelligence service, estimates that last year the North Korean Economy had the fastest growth over 17 years, with GDP above 3.9%, even with international sanctions.

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Economists believe that the increase is due to the small shops and stores that have spread in the North Korean capital during the last decade. But that does not mean social growth since much of GDP is used to cover military spending, while the average population lives with very little.

Although the new sanctions are expected to have a significant impact on the economy, the action is not a total economic disruption. China may still trade oil with its neighbor, albeit in limited quantities. As a complement to Thursday's announcement, Foreign Minister Lu Kang said: "We are against any war on the Korean peninsula as well as sanctions. We should not emphasize one aspect while ignoring the other. "