North Korea’s problematic Covid-19 numbers

May 18th, 2022

By: Benjamin Katzeff Silberstein

North Korea’s admission of a Covid-19 outbreak has understandably drawn global attention. It’s one of two countries – the other one being Eritrea – that have not yet started administering Covid-19 vaccines. North Korea also claimed, until just a few days ago, to have had zero cases of infections.

Naturally, the government’s data is highly interesting in this situation, and you can follow the officially reported numbers here at 38 North‘s tracker. Due to the lack of testing kits, North Korean authorities report cases of “fever” as a proxy for Covid-19.

These numbers perhaps tell us more about how the government perceives the situation, than how many North Koreans have actually been infected with Covid-19. That North Korean authorities are now signalling a greater level of pragmatism in tackling the virus does not mean their claims until a few days ago about zero cases were true. The zero cases claim defies common sense and logic, not least since North Korea borders Chinese provinces where we know there have been significant outbreaks. Outlets such as Daily NK, Rimjingang, Radio Free Asia and others with sources inside North Korea have reported since the start of the pandemic about large numbers of people coming down with Covid-19 symptoms.

Already in March 2020, shortly after the pandemic began, sources in North Korea told Daily NK that over 20 North Koreans had died from the virus. By November last year, Daily NK reported that more than 100,000 people with symptoms were housed in government quarantine facilities. These are only two examples out of a large number of such reports. There is of course no way to confirm any of the information about Covid outbreaks in North Korea. Most  reports, however, have used roughly the same metric as the government uses right now to count cases — fever symptoms.

North Korean state media reports of the number of people in treatment per province also raises a lot of questions. Consider the map below, from the 38 North tracker:

It is possible that Pyongyang and its surroundings, Kaesong, and Rason, all have significantly higher numbers of cases than, say, North Hamgyong province. After all, Pyongyang is a relatively crowded city by North Korean standards, making infections spread more easily. But these are also sensitive areas and it may well be that the government is simply paying more attention by testing (for fever) more and monitoring numbers more closely. All three, in fact, are so-called “administrative special cities” (특별시/t’ŭkpyŏlssi), placing them under more direct central government administration than other cities. Pyongyang, moreover, is politically sensitive as the country’s power center, and Kaesong sits on the tense border with South Korea. Rason holds a special economic zone and is close to North Korea’s borders with Russia and China. Perhaps the government pays greater attention to these cities because of this common denominator.

The question is still why the North Korean government chose to acknowledge the presence of Covid-19 in the country this month. Since the announcement, the state has strengthened quarantine measures, some of which were already in place, and imposed a nationwide lockdown, though there’s been some questions raised about how sternly it is implemented. It is still possible, as I noted in a previous post, that the government is changing to a more pragmatic Covid-19 policy overall, starting with recognizing the virus.

As of now few data points point in this direction, although it is still much too early to tell. It may also be that the government made the announcement to set the stage for accepting vaccines and other assistance from abroad. Even with such assistance, it remains unclear how the rollout would work in practice given North Korea’s lacking equipment for, for example, storing vaccines and keeping them cold while transported around the country.

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North Korea finally admits a case of Covid-19. Is there a trade connection?

May 12th, 2022

By: Benjamin Katzeff Silberstein

Finally, after over two years of denial, North Korean state media has acknowledged a case of Covid-19 in the country:

Next, the Political Bureau discussed the issue of coping with the epidemic prevention crisis state prevailing in the country.

It recognized as follows:

A most serious emergency case of the state occurred: A break was made on our emergency epidemic prevention front where has firmly defended for two years and three months from February, 2020.

The state emergency epidemic prevention command and relevant units made deliberation of the result of strict gene arrangement analysis on the specimen from persons with fever of an organization in the capital city on May 8, and concluded that it coincided with Omicron BA.2 variant which is recently spreading worldwide rapidly.

Informed at the meeting was the spread state in the whole country. Urgent measures were presented and deliberated to take the strategic initiative in the epidemic prevention campaign for the future.

The Political Bureau censured the epidemic prevention sectors for their carelessness, relaxation, irresponsibility and inefficiency as they did not sensitively cope with the public health state which infectors of all kinds of variants are increasing worldwide including surrounding regions of our country.

The Political Bureau recognized that it is necessary to switch over from the state epidemic prevention system to the maximum emergency epidemic prevention system to cope with the present circumstance.

All measures were taken for the Party, administrative and economic organs at all levels, sectors of public and state security and national defence and all organs and sectors of the country to establish the proper work system to make the state work be done smoothly in line with the maximum emergency epidemic prevention system coming into force.

Adopted at the meeting was a resolution of the Political Bureau of the Central Committee of the WPK on switch over from the state emergency epidemic prevention work to the maximum emergency epidemic prevention system to cope with the prevailing epidemic prevention crisis.

Concluding the meeting, Kim Jong Un raised principles to be maintained thoroughly in the emergency epidemic prevention work and tasks to do so.

He outlined and analyzed the current epidemic prevention crisis of the country and noted that the maximum emergency epidemic prevention system is mainly aimed to stably contain and control the spread of COVID-19 that made inroads into the country and to quickly cure the infections in order to eradicate the source of the virus spread at an early date.

Pointing out that more dangerous enemy of us than the malicious virus are unscientific fear, lack of faith and weak will, he affirmed that we will surely overcome the current sudden situation and win victory in the emergency epidemic prevention work as we have strong organizing ability with which the Party, government and people are united as one and there are high political awareness and self-consciousness of all the people that have been fostered and cemented during the prolonged emergency epidemic prevention campaign.

He called on all the cities and counties of the whole country to thoroughly lock down their areas and organize work and production after closing each working unit, production unit and living unit from each other so as to flawlessly and perfectly block the spread vacuum of the malicious virus.

Stressing the necessity of quickly organizing scientific and intensive examination and treatment campaign, he said that the Party and the government decided to take a measure to mobilize reserve medical supplies that have been stored up for the emergency until now.

He underscored the need for the public health sector and the emergency epidemic prevention sectors to strictly conduct intensive examination of all the people, take proactive measures for medical observation and treatment, intensify disinfection of all areas ranging from workplaces to living space and thus block and terminate the source of the malicious epidemics spread.

Though the epidemic prevention situation is harsh at present, it cannot block our advance toward the overall development of socialist construction, and there should be nothing missed in the planned economic work, the General Secretary said, stressing that the Cabinet and other state economic guidance organs and relevant units should conduct fuller organization, guidance and command over the economic work in conformity with switching over from state epidemic prevention system to the maximum emergency epidemic prevention system so as to speed up the immediate farming work and the production at major industrial sectors and industrial establishments to the maximum and flawlessly compete within the appointed date the cherished works of our Party for the people such as the construction of 10 000 flats in the Hwasong area and the Ryonpho Greenhouse Farm.

The Party and power organs should minimize inconveniences and agonies the people would suffer under the strong blockade situation, stabilize their lives and take thoroughgoing measures so that slightest negative phenomena are not be revealed, he noted.

Stressing the need to more firmly cement the outposts of the state defence and guarantee the victory of the great epidemic prevention campaign with arms, he specially emphasized that guard duty should be further strengthened on the fronts, borders, seas and air and the best measures be taken to make security vacuum not be revealed in the national defence.

The people-first politics by our Party and state that have displayed the great vitality, overcoming all troubles of history, and the strength of our people who are united single-mindedly are the most powerful guarantee to win victory in the current great epidemic prevention campaign, he said, adding that all the Party organizations and power organs should prove in practice their loyalty to the Party and revolution, devotion to the people and responsibility for their duty at the present great epidemic prevention campaign to defend the lives and security of the people.

He warmly appealed to all the people and officers and men of the People’s Army to triumphantly conclude the great epidemic prevention campaign with firm confidence and great redoubled efforts and thus defend to the end our precious lives and future with our faith, will and unity.

The Political Bureau of the C.C., WPK examined and approved the written emergency instructions of the Central Military Commission of the Party and the Cabinet and made sure that they are issued.

(Source: “8th Political Bureau Meeting of 8th Central Committee of WPK Held,” Korean Central News Agency, May 12th, 2022.)

A few thoughts:

First, it’s very unlikely that this is actually North Korea’s first case. It defies common sense and logic, especially given the country’s proximity to China. There is a solid stream of anecdotal reports to strongly suggest that North Korea has already seen outbreaks in several parts of the country.

Second, recall that Chinese authorities, upon North Korea’s request, recently ceased railway traffic between the two countries again after it had been open for only four months. The following part of the KCNA statement, depending on how you read it, seems to suggest that the recently re-imposed “blockade” may last for quite a while, and won’t necessarily go away when case numbers in Chinese border provinces drop:

The Party and power organs should minimize inconveniences and agonies the people would suffer under the strong blockade situation, stabilize their lives and take thoroughgoing measures so that slightest negative phenomena are not be revealed, he noted.

It seems to me that Kim Jong-un’s message could be: buckle down, again, for the long-haul. The four months of somewhat restored railway links were the exception.

Third, however, it is also possible that the country’s admission of a case is part of a normalization of government policies related to the virus. Dropping the zero-cases claim would allow the government to manage the virus as a strategy, rather than seek to contain it entirely. In other words, if the government would recognize the virus as part of a new reality, it could move away from tight border lockdowns toward testing measures and, eventually, a mass vaccination campaign. Recognizing the spread of the virus and opting to manage it would expand policy options beyond closing the border every time infection numbers go up across the border in China.

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A blast from the past: Yoon’s outdated North Korea thinking

May 10th, 2022

By: Benjamin Katzeff Silberstein

South Korea’s new president Yoon Suk-yeol took the oath of office in Seoul earlier today. North Korea was hardly the main focus of his speech, but no South Korean president could avoid the topic, especially three days after a North Korean short-range ballistic missile launch. His idea for inducing denuclearization in North Korea appears very similar to former US president Donald Trump’s, namely to give North Korea lots of shiny, expensive things:

“북한이 핵 개발을 중단하고 실질적인 비핵화로 전환한다면 국제사회와 협력하여 북한 경제와 북한 주민의 삶을 획기적으로 개선할 수 있는 담대한 계획을 준비하겠습니다.”

(Source: Ji Song-rim, “취임 일성으로 ‘북한 비핵화’ 강조…경제적 보상 제안,” Yonhap News, May 10th, 2022.)

“While North Korea’s nuclear weapon programs are a threat not only to our security and that of Northeast Asia, the door to dialogue will remain open so that we can peacefully resolve this threat…If North Korea genuinely embarks on a process to complete denuclearization, we are prepared to work with the international community to present an audacious plan that will vastly strengthen North Korea’s economy and improve the quality of life for its people.”

(Source: Lee Haye-ah, “Yoon champions freedom, offers to revive N.K. economy with ‘audacious plan,'” Yonhap News, May 10th, 2022.)

Of course, it’s still unclear exactly what this “audacious plan (담대한 계획)” is. But in context, an “audacious plan that will vastly strengthen North Korea’s economy” most likely entails South Korea and possibly others offering North Korea a shiny, brand new infrastructure for basically the entire country, investments, vast sums of aid, et cetera, in exchange for North Korea giving up  its nuclear weapons. Essentially what Trump suggested in 2019. I’m obviously simplifying here, but those may well be the broad strokes.

This line of thinking — assuming it’s genuine and not just a way to avoid the topic —  relies on inaccurate and, at best, outdated, ideas about North Korean economic policy. If handing over piles of cash was the solution, there wouldn’t still be a North Korean nuclear issue. Lee Myung-bak, for example, made similar suggestions through his “Denuclearization Development 3000 (비핵 개방 3000)” But North Korea has continuously reneged on deals in this spirit, or simply rejected, often in plain language, that they would ever trade the nuclear weapons for economic incentives.

North Korea has, moreover, declared the old model of special economic zones built and run by South Korea dead and gone. Kim Jong-un wants foreign investment, but he doesn’t want companies from the “southern puppet regime” dictating any of the conditions or managing special economic zones on his territory.

It seems likely to me that Yoon is aware of all of this – he presumably gets high-quality briefings on North Korean policies – but that this was the least bad thing to say, since he had to say something about his vision for North Korea policy. Subin Kim, who analyzes South Korean politics at his excellent website Koreakontext, pointed out in an email that most of Yoon’s national security team consist of the same people who advised Lee Myung-bak on North Korea policy. Perhaps this is simply a way of avoiding the topic by repeating tired and tried phrases. In any case, such suggestions are a dead end with North Korea, and Yoon likely knows it.

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Four months after re-opening, China-North Korea rail traffic shuts again

May 3rd, 2022

By Benjamin Katzeff Silberstein

Only four short months after traffic started up again following a two-year shutdown, Chinese authorities announced late last week that railway traffic between Dandong and Sinuiju was to be halted again from May 1st, this past Sunday. According to Chinese authorities, this was done at the request of the North Korean government. The reason is the recent rise in Covid-19 cases in Dandong which has prompted a strict quarantine regime in the city, as in many Chinese localities. This move comes a few weeks after border guards in North Korea were apparently ordered to wear gas masks following the rise of cases in China.

As long as North Korea continues to hold zero Covid cases rather than mass vaccinations as the main policy goal, and China’s strict quarantine policies continue, this is like how trade between the two countries will continue for some time, with intermittent stops every now and then when cases rise in China. It still remains to be seen how long the pause in trade will last.

It is, of course, troubling for the North Korean economy. Goods such as fertilizer, pesticides and other farming inputs are badly needed imports. Radio Free Asia reports that traders have been purchasing these goods, in addition to food, as “national emergency goods”, most likely a priority category created by the North Korean government:

Days before the closure, traders made preparations for the last shipments, the source said.

“The freight station is now filled with fertilizer, pesticide and food purchased by North Korean trading companies as national emergency goods. The last trains will be shipped to a quarantine facility in Uiju either tomorrow or the day after,” he said.

RFA reported last year that North Korea had completed a new rail line between Sinuiju and a quarantine facility in Uiju, in anticipation of trade reopening prior to the end of the pandemic. The new facility allows entire trainloads of cargo to be sterilized prior to distribution to Pyongyang and the rest of the country.

A second source familiar with Sino-North Korean trade in Dandong confirmed that rail freight would stop at the beginning of May.

“North Korea urgently needs farming materials and fertilizer, so the two sides have both agreed to bring the supplies to Sinuiju by the end of this month,” he said. “People expect that the freight train between Dandong and Sinuiju will resume only after COVID-19 disappears and the city lockdown is lifted throughout China.”

(Source: Hyemin Son, “Zero-COVID policy in Chinese border city stops freight to North Korea,” Radio Free Asia, May 2nd, 2022.)

The resumption of train traffic earlier this year was not the end of the border quarantine but, rather, the beginning of a new phase with intermittent shutdowns for the time being. As of now, this may help clear some of the backlog of imports in quarantine in North Korea. But as long as these dynamics continue, they will disrupt trade between the two countries and inflict serious damage on the North Korean economy.

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Another data point on North Korea and the world economy

April 25th, 2022

By Benjamin Katzeff Silberstein

At 38 North, I recently looked at how world market price swings impact the North Korean economy. Given the lack of consistent price data for coal in North Korea, I was unable to look at the potential impact of global coal price changes on domestic prices (and export prices) in North Korea. But with global coal prices shooting up following bans on imports of Russian coal and other energy products, North Korean producers will likely benefit significantly, at least in the short- to medium-term. So although global food price hikes following Russia’s attempted invasion of Ukraine may hurt the North Korean economy in some ways, rising coal prices will benefit it in others.

Daily NK notes this in an interesting recent report. According to their sources, prices paid by Chinese importers for North Korean coal have risen by 40 percent in a short time:

According to multiple Daily NK sources in North Korea on Wednesday, Chinese traders are paying an average of USD 70 per ton for smuggled North Korean coal.

That is not even one fourth of international price coals, including Australia’s benchmark Newcastle index, which have been climbing at a frightening rate due to the EU’s ban on Russian coal imports.

The price of smuggled North Korean coal is about half that of the local price in China, where there is a price cap. However, it is also more than double the price of exported North Korean coal prior to the COVID-19 pandemic.

Moreover, even compared to early October, when smuggled coal sold for about USD 50 a ton, the current price represents a more than 40% climb from six months earlier.

At the time, Chinese coal prices were skyrocketing due to local shortages following Beijing’s suspension of Australian coal imports due to trade disputes with Canberra.

In the end, the price of North Korean coal is essentially hitching on to continuously rising global coal prices.

Moreover, the sources said North Korea is selling high-quality coal of more than 7,000 calories to China. Accordingly, more Chinese traders are reportedly demanding North Korean coal.

They further said that while coal exports are not as brisk as they were prior to the pandemic, North Korea has been continuously exporting coal through the port of Nampo as of late.

(Source: Seulkee Jang, “N. Korea sees coal prices rise as international energy prices skyrocket,” Daily NK, April 21st, 2022.)

It is always striking and interesting to note just how much of a buyer’s monopoly North Korea is subject to when it comes to China’s coal imports. Because China is the only country of true significance for North Korean coal exports, it is to a large extent free to set the prices. As the article notes, the prices Chinese importers pay for North Korean coal are not even one-fourth of global prices. It’s worth keeping in mind when China is referred to as North Korea’s economic “lifeline”. It may be somewhat true, but it’s far from that simple.

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New data: NK-China trade after the Covid border closure

March 24th, 2022

By Benjamin Katzeff Silberstein

Numbers for China-North Korea trade are out from Chinese customs for the first two months after railroad traffic resumed in January. Overall, the data looks like what one would expect. Trade has skyrocketed by a factor of almost 41, from $3.27 million in January and February last year, to $136.5 million in the same period this year. The real figure is probably somewhat larger. The majority, $116.3 million, is constituted by North Korean imports from China, which goes a long way in explaining the exchange rate hike on North Korean markets that I wrote about yesterday here.

Despite the drastic increase, the numbers are about half of what they were pre-covid. That shouldn’t itself be surprising, since many trade connections have likely faltered during the long closure. Moreover, North Korean authorities seem determined to reconstitute the way they regulate trading rights and access.

Numbers source: Joongang Daily, here.

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Oil and fuel supply shortages on North Korean markets?

March 23rd, 2022

By Benjamin Katzeff Silberstein

It’s been a couple of months since railroad traffic opened again between China and North Korea. Although it isn’t very much time to fully evaluate such a drastic change, we can see some interesting price movements on the country’s markets. (Click to see the full graph.)

Average of market prices for rice, gas, diesel, USD and RMB in three North Korean cities. Graph by NK Econ Watch. Data source: Daily NK. 

First, and unsurprisingly, foreign exchange rates have gone up drastically. This makes perfect sense, since news of trade resuming would make more North Koreans want to hold foreign currency, to import and purchase goods from abroad.

Second, both diesel and regular fuel prices have gone up, and quite drastically. As Daily NK notes, the fuel price increase in North Korea is much higher than that of global oil prices. This is also logical, since businesses have likely increased their purchases of fuel in anticipation of increased demand as border trade increases. I’m not sure, however, that the entire magnitude of the increase can be explained this way, since in some localities, prices have more than doubled. Diesel prices have also skyrocketed, which is somewhat unusual since gas and diesel prices tend not to fluctuate this much together. (Gas prices are some of the most volatile on North Korean markets and often fluctuate with the geopolitical situation.)

Price hikes in China, on both diesel and gasoline, are likely a strongly contributing factor. Another significant factor, reported by Daily NK in the article above, is likely moves by the North Korean government to restrict private fuel sales, perhaps leading hoarding by sellers. The rapidly rising exchange rate also makes fuel more expensive, but fuel prices have risen faster than the exchange rate.

Increased supply from China may come to stabilize fuel prices, but given global oil price increases, such deliveries to North Korea are increasingly costly for China as well.

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Chinese Foreign Ministry on rail link trade resumption

January 18th, 2022

By: Benjamin Katzeff Silberstein

This Bloomberg story on the resumption of railroad traffic carries an interesting quote by the Chinese Foreign Ministry spokesperson:

China says trade via a railroad link with North Korea has restarted, giving a much-needed boost to Kim Jong Un’s battered economy as the neighbors restored a service Pyongyang cut about a year and a half ago due to pandemic fears.

“After friendly consultations between the two sides, freight in goods in Dandong has resumed,” Foreign Ministry spokesman Zhao Lijian said Monday at a regular press briefing, referring to a Chinese border city.

“This work will be conducted while ensuring pandemic prevention and safety, and to help normal trade exchanges between the two countries,” he added.

Kim’s decision to close borders at the start of the pandemic slammed the brakes on the little legal trade it had with China, his state’s biggest benefactor. It also helped push the sanctions-hit economy into its biggest contraction in more than two decades, with Kim making rare admissions of the country’s difficulties in recent months.

(Source: “China Says Rail-Borne Trade With North Korea Has Restarted,”  Bloomberg News, January 17th, 2022.)

This statement certainly does suggest that the resumption is intended to be permanent, and that the two countries will work to restore trade the way it was before the Covid-19 border lockdown.

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Has China-North Korea trade via rail resumed, and what could it mean?

January 16th, 2022

By: Benjamin Katzeff Silberstein

Today (January 16th), a freight train from North Korea crossed into China for the first time since the pandemic border shutdown began. Reuters reports, based on statements by several Chinese businesspeople involved in border trade, that this marks a more permanent, long-term resumption of trade between the countries.

It is too early to say if this is a long-term change or a unique event, and the coming weeks and months will confirm whether or not this marks a permanent change. It will also, hopefully, give us some sort of clue about how quarantine procedures are supposed to work on the North Korean side.

It goes without saying that this would be a welcome change for the North Korean economy. The pause in North Korean exports to China has created significant difficulties, but as Bill Brown has often pointed out, the blockade against North Korean imports from China also creates severe problems for several industries. As an example, see this Radio Free Asia report about the bottlenecks in the economy that tire shortages are causing:

The source said that two of the four cars owned by his company cannot be used due to the tire shortage.

“Drivers will use the same tires until the treads are worn out and shiny, so it has become the norm to re-use punctured or torn tires by putting a small piece of an old tire tube over them. Sometimes they have to be put in at an angle because the tires they are using are either larger or smaller than the vehicle’s specifications,” the source said.

“I have never seen new tires produced locally. Since international trade is stopped due to the border closure, it has become difficult to import used tires,” said the source.

The ban has become problematic for many North Korean drivers who use their vehicles for supplemental jobs in the country’s nascent market economy, the source said.

“They can no longer drive their cars to earn a little extra income because they don’t have tires.”

(Source: Chang Gyu Ahn, “North Korean tire shortage grounds vehicles, disrupts commerce,” Radio Free Asia, January 13th, 2022.)

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Pyongyang Times on financial management app

December 29th, 2021

By Benjamin Katzeff Silberstein

The North Korean English-language newspaper Pyongyang Times recently carried an interesting article about the electronic financial management app “Mulpangul” (water drop), which I am pasting below (with thanks to a friend of the blog for sending it over).

The theme of the article is in itself not new or revolutionary, but the plain and explicit terms in which it talks about “earnings and incomes”, “cash incomes” et cetera is interesting. If nothing else, it’s one out many data points in the recent past that show how normal descriptions of phenomena like personal savings, in the language of market economics, have become.

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