North Korea is slowly erasing its image as a risky, debt-ridden trading partner and is steadily rehabilitating its trade with Japan and other Asian nations.
Both its exports and imports rose considerably last year and show signs of increasing again this year, according to Japanese financial sources with access to trade statistics in several Asian countries doing business with North Korea.
Moreover, the Communist country is so far paying off its old debts, which were rescheduled two years ago after an economic slump that almost wrecked its dealings with the noncommunist world.
The upswing began after changes ordered in 1979 by President Kim Il Sung put some new life into exports, according to the Japanese sources.
"Since then, they have been pushing export promotions very hard," said one banker.
Despite the improvement, North Korea's past trading record is so poor that Japanese exporters still insist on being paid in cash on delivery. Business companies get paid promptly these days, either in British pounds or West German marks that the North Koreans are believed to have obtained by selling gold.
Japan's financiers are still advising their client trading houses to go slow and exercise caution.
The CIA calculated in 1978 that North Korean debts amounted to at least $1.4 billion with the noncommunist world and about $1 billion with the Soviet Union, which supplies a large portion of the country's crude oil. The debts to Japan alone amounted to about $350 million.
The Japanese debt was renegotiated in 1978 and spread out over a 10-year period. So far, Japanese sources say, those debts are being paid. As a result, both exports to and imports from Japan are increasing. The total trade amounted to $475 million last year and is expected to rise to $600 million this year.
The increased trade has aroused the animosity of officials in South Korea, one of Japan's Asian friends, which looks upon any trade with the communist enemy in the north as a betrayal.
South Korea has complained recently about shipments of such items as trucks and short-wave radio sets to Nort Korea, contending they can be used for military purposes.
South Korean military agencies have contended that Japanese radios have been found among the equipment carried by Communist agents who infiltrate the South.
A new complaint by the South Koreans was lodged recently when Japanese Foreign Minister Masayoshi Ito visited Seoul. The Japanese response has been that it will not restrict trade in materials other than items that have a clear military purpose under its arms export law.
"There is nothing we can do," a Japanese official said of the latest South Korean complaint. "Those items which are not cited specifically under the arms-export law will not be restricted because this is a free-enterprise system. This is a longstanding issue. It is a question of principle."
Nevertheless, major Japanese firms to some extent obscure their trade with North Korea by dealing through dummy firms instead of in their own name for fear of alienating South Korea. A Hitachi television set deal did not become public knowledge for several months after it was completed.
Japan's major exports to North Korea are trucks, coke, fertilizers and television sets, according to the North Korea Research Council, the vaguley named association of Japanese business who trade with that country.
North Korea's major exports are cement, iron ore and a numnber of nonferrous metals such as zinc and magnesium. Rising world prices for nonferrus metals have been one of the major reasons for North Korea's improving trade record, according to business sources here.
Banking sources said the North Korean trade with other Asian countries also increased substantially last year. Exports to Asian countries, including Japan, grew more than 30 percent in 1979 over 1978 and are said to have increased a similar amount last year.