By Kim Jae-kyoung
China is on alert over North Korea's attempts to forge its bills, as counterfeit Chinese notes are being circulated among travelers and merchants in some cities on the border between the two countries.
Experts speculate that North Korea was in the frame as the counterfeiter, citing Kim Jong-un regime's struggles in the wake of recent economic sanctions supported by its closest ally China.
According to sources and reports by multiple Chinese media, Beijing suspects that Pyongyang is the origin of fake new 100-yuan bills that have recently been circulated in several Chinese cities, including Shaoxing in Zhejiang Province.
Following the report of the fake bills, Hong Kong-based Phoenix Television raised the possibility that the bills could have been distributed by North Korea.
Du Ping, a commentator for Phoenix, said that chances are that the isolated country could carry out "something unimaginable" to overcome challenges triggered by international sanctions.
The television network pointed out that counterfeiting is one of North Korea's "three killer weapons" along with drug trafficking and nuclear weapons.
In mid November, China introduced a new 100-yuan bill with upgraded security features in a bid to fight counterfeiting. The 100-yuan banknote is the largest denomination of the country's currency.
Experts say that there are three reasons why Beijing suspects Pyongyang might be behind the circulation of the counterfeit banknotes.
First, the repressive country is equipped with world-class counterfeiting technology to manufacture banknotes of advanced countries, including U.S. dollars and Japanese yen; and has a record of currency forgery.
According to a 2009 U.S. Congressional Research Service report, up to $45 million in falsified $100 bills of North Korean origin are in circulation, and Pyongyang may earn between $15 million and $25 million a year from the practice.
Second, the nation has suffered from an acute shortage of foreign currencies after the latest United Nations Security Council sanctions. China's halt of purchases of its coal, metal ore and other minerals is disrupting cash flow into the economy.
Last, the value of Chinese yuan has been rising, another factor that may tempt the reclusive country into counterfeiting.
"North Korea has a history of multiple currency forgery and it has been proven that Pyongyang has counterfeited U.S. dollars," a Singapore-based source knowledgeable on North Korea-China relations told The Korea Times asking not to be named.
"This shows how desperate North Korea is following the U.N. sanctions."
On a recent talk show on Phoenix, Lu Chao, an expert on North Korea at the Liaoning Academy of Social Sciences in northeast China, said, "If it proves to be true that North Korea is distributing fake Chinese bills, it will deal a further blow to its trade with Beijing."
"This can be seen as the last move against international sanctions but it can be a very risky one."
William Brown, a professor at the Georgetown School of Foreign Service and expert on North Korea, said that counterfeiting is no longer a great option for the Kim Jong-un regime.
"Cross border trade will either go through the hands of traders or banks, both of which I'm sure are expert at detecting fake money and not at all tolerant of people trying to cheat them," he said.
"So I don't think that is much of an option for the regime. And even in the worst days ten or more years ago, the amount of money they could print and distribute was small compared to what they need.
China has been North Korea's closest economic partner but their relations are turning sour after Beijing joined the UN sanctions aimed at depriving Pyongyang of funds if it continues its nuclear and ballistic missile programs.
The reclusive state carried out a fourth nuclear test in January and launched a long-range rocket in February.
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