North Korean Market Research
Daily NK
Yoon Il Geun
11/23/2007
Unlike its external gesture towards openness as observed in the case of a recent agreement to expand South-North economic cooperation, the North Korean authorities regulate market activities at home.
On October 3rd, the Workers Party delivered a public message that urges the North Korean people to have a proper understanding about the market and to eradicate anti-socialist activities which threaten people’s interest. According to the message, the state bans females who are less than 40 years old from doing business and orders them to get back to factory complexes.
In regard to the recent regulation imposed on the market, many experts on North Korean affairs explain that the North Korean authorities are trying to hold in check a nouveau riche class who have made a fortune in the market and stop the infiltration of foreign culture and news into the society.
Experts believe that the North has decided to regulate the market, the very source of living of its people because it posed a treat to the Kim regime.
◆ The growth of the market since the mid 1990s
In 1990s, the country’s economy collapsed and the state failed to distribute food to its people. Many starved to death, and those survived turned to the market
In those days, despite the state’s tight regulation, the North Korean people had to make their living by either selling in the market or smuggling to China anything they could find in the sea, mountain or river such as fish, pine mushrooms, hemp, alluvial gold, etc. Some even stole metal such as copper and white gold from refineries or dismantled equipments from plants or factory complexes, and smuggled them to China.
Many North Koreans were able to secure the minimum amount of purchasing power by selling national resources overseas. Moreover, many defectors started to send money to their remaining family members in the North, and helped secure the purchasing power of their family. It was around this time when Chinese goods started to flow into North Korea and a new type of market began to grow. The new type of market differed from the state-approved farmer’s markets in the past. For the first time, it became possible for North Koreans to earn bread for a day in the market.
◆ The growth of a new type of market
On July 1, 2002, the nearly bankrupted country adopted an economic improvement measure designed to improve the competitiveness of factory complexes. As many individuals illegally sold national resources overseas and factories were shut down, the state ran short of revenue and became unable to give wages to workers, officials and college professors. In order to solve the shortage, the state began to issue paper money to fill national treasury.
Unfortunately, that increased workers’ wage 10 to 15 times on average. Moreover, the exchange rate which was about 220 won per dollar on June 30, 2002 increased to 1,800 won per dollar nine months after the adoption of the July 1st Economic Management Reform Measure.
Foreign Policy, an American magazine of global politics listed North Korea once again this year as one of the world’s worst currencies and pointed out the problem of the country’s skyrocketing inflation. The magazine also pointed out that the price for rice has increased by 550 percent since the adoption of the July 1st Economic Management Reform Measure. It should be noted that rice is one of those items whose prices have increased the least.
◆ The more the market grows, the more it threatens the regime
As inflation continued, more people turned to the market to make a living and started to manage their economic life independently. Having noticed that, the authorities began to worry what kinds of changes the market would bring about.
The authorities’ foremost concern lies in the rapid spread of foreign information through the market. As North Koreans’ preference for products from South Korea and Japan increases, so does their interest in these two countries. Many defectors say that a countless number of foreign VCDs have been circulated among people through the market.
In addition, the state has lost authority as more people relied on the market and became self-sufficient and individualistic. Prevalent corruption has also undermined its authority.
Lastly, illegal activities have increased so much that they are threatening public security. In fact, the North Korean people nowadays would do anything to make money.
For instance, many party cadres, hospital workers and Red-Cross personnel are stealing aid supplies sent by the United Nations and advanced countries, and army personnel are selling military provisions including rice in the market. Furthermore, many violent crime incidents and lootings are taking place in the areas not under the government control.
“The army and gangsters are savagely looting the market” says a woman in her 50s says recalling her visit to Hwanghae Province prior to coming to Dangdong, China.
◆ The impact of adopting market regulatory measures
The growth of the market will likely deepen the crisis of the Kim regime. Any measure designed to restrict the market would backfire among people.
Since the second half of the year, the North Korean authorities have been promoting market regulatory measures in the hope of protecting the regime. Some have raised a possibility that the North might try to restore its public distribution system using international aid. However, unless the North continues to open its door, the country would never secure an amount of food enough to run the distribution system again.
“Kim Jong Il is aware of the importance of the market for people’s survival, so he tacitly approves its existence. However, when he feels that capitalism is spreading too quickly, he would try to control it.” says Gao Jingzhu, professor of Korean studies at Yanbian University.
