Despite the tensions between the two countries due to failed business ventures and China’s recent expression of concern and ‘regret’ with North Korea’s successful satellite launch, the Voice of America reports North Korea’s trade with China has expanded rapidly in 2011:

A new report says North Korea’s trade with China accounted for more than 70 percent of its total commerce last year, as the isolated nation deepens its reliance on its only major ally.

South Korea’s national statistics office said Thursday that Pyongyang’s bilateral trade with Beijing totaled over $5.6 billion in 2011. That is an increase of over 60 percent from the previous year.

Seoul says it is the first time that North Korea’s trade with China has topped 70 percent of its global commerce since it began tracking trade figures in 2000.

Meanwhile, the economic gap between South Korea and North Korea continues to be large. The report found South Korea’s gross national income per capita ($1239) was nearly 19 times that of the North in 2011.

According to the Los Angeles Times, analysts predict 2012 will be another year of trade expansion:

The dramatic increase reflects a conscious decision by Beijing in 2011 to prop up its failing ally. Shortly before his death a year ago, North Korean leader Kim Jong Il made three trips to China to secure support for rebuilding his ruling Workers’ Party, the equivalent of the Communist Party in China. The Chinese also have been keen to prop up Kim’s 29-year-old son and successor, Kim Jong Un.

“This is just the beginning of further big increases in Sino-North Korea trade,” explained John Park, an expert in China-Korean relations at MIT University. “The primary goal of the Communist Party of China is to more effective manage what is referred to as the North Korean instability variable.”

Park said that North Korean state trading companies are working in China, which enables the regime to generate new sources of revenue for its own ruling elite.

With Chinese help, the North Korean economy grew for the first time in three years, albeit a modest 0.83%. In the last year, Pyongyang has undergone its first significant facelift in decades, adding modern apartment blocks, a new airport terminal, stores and restaurants and a dolphinarium to the North Korean capital.

As trade increases, North Korea’s dependence on China also grows. The South China Morning post reports Beijing’s new politiburo may deal more firmly with Pyongyang:

Rising officials who hail from the northeastern provinces of Liaoning , Jilin and Heilongjiang understand the importance of perseverance to advance China’s agenda of North Korean economic reform. These officials, represented by Zhang Dejiang and Li Keqiang , now on the Politburo Standing Committee, and Sun Zhengcai in the larger Politburo, spent their formative years in close proximity to North Korea, and benefited from their time in local governments with long-term cross-border interactions with North Korean counterparts. They appreciate that patience and constant pressure are key to promoting reform in Pyongyang. This new generation of leaders is ostensibly better informed on North Korean issues and this fact may lead to some policy nuance – if not policy changes – from China.

Although the new leadership has made vague statements on North Korea (even after Pyongyang’s latest, controversial satellite launch), Chinese academics close to the matter are a useful gauge of the temperature in Beijing policy circles. These academics include Zhang Liangui of the Central Party School, Zhu Feng of Peking University, and Lu Chao of the Liaoning Academy of Social Sciences, among others. These Chinese experts who are allowed and encouraged to comment about North Korea in mainland news media have not been entirely favourable. Zhang Liangui publicly raised questions about reconsidering China’s policy towards Pyongyang just before North Korea’s missile launch in April. Even more telling, Zhang, another Kim Il-sung University alumnus, conducted this public debate in English.

Xi Jinping’s public comments suggest that the military elements of the alliance will remain strong, but within limits. China will reluctantly tolerate space rockets even though these launches enrage regional rivals, and will likely tolerate small-arms and weapons development within limits; it’s in China’s interest to keep the Korean People’s Army on its feet.

Although trade with North Korea has increased, China’s trade with South Korea has declined, from The Washington Post:

While Pyongyang’s economic exchange with Beijing has been on the rise since 2009, its trade with Seoul, North Korea’s second-biggest trade partner after China, has declined. About 20 percent of North Korea’s overall trade was with the South in 2011.

The national statistics office releases an annual report on North Korea’s economy, energy, trade, population and natural resources based on figures from various agencies at home and abroad. It releases the previous year’s data at the end of the following year. The figures for 2012 will become available toward the end of 2013.

North Korea’s trade data was gathered from official statistics figures in overseas countries through KOTRA, the Korea Trade-Investment Promotion Agency, the office said.

The office said North Korea’s population is estimated at 24.3 million as of 2011, about half of South Korea’s 49.8 million. Its economy expanded 0.8 percent in 2011 over a year earlier, while South Korea’s economy grew 3.6 percent.