Jin Hualin, dean of the College of Economics and Management at Yanbian University, talks about Chinese investment in Rason in China’s Global Times. Here is an excerpt:
GT: If China does continue to rent Rajin harbor for another 10 years, what will the effects be?
Jin: China has reached an agreement to rent a pier at Rajin Port for another decade. A Dalian-based Chinese company has invested 26 million yuan ($3.8 million) in the reconstruction of Rajin Port No.1 Pier. Park also said that China may enjoy more favorable conditions there, such as more berths.
I think Chinese companies’ participation is good for promoting the North Korean economy and building logistical infrastructure in the area, which is beneficial to China, North Korea and the Northeast Asian countries.
When the Sino-Mongolia route is finished, raw materials and natural resources from Mongolia can be shipped to Japan and South Korea via Rajin harbor, and then China’s northeastern regions and North Korea can both benefit.
GT: What should China do to promote Northeast Asian cooperation and devel-opment?
Jin: I suggest Chinese governments at all levels consider the following issues. They should accelerate trade and tourism and build cooperation on logistics, and support Chinese companies going global and investing in North Korea.
Actually, China now has many companies capable of investing abroad. The point is foreign countries’ investment environment.
We should strengthen cooperation on education with North Korean universities and colleges, sending students to study there and exploring research in new areas together.
We can also strengthen regional cooperation. We can designate China’s Hunchun city and North Korea’s Rason city as pilot cities and permit China’s commercial banks to open yuan-based accounts in Rason’s commercial banks.
Relations between Northeast Asian countries are subtle and complicated because of geopolitical contradictions, different political systems, the influence of the Cold War, historical issues, territorial disputes and sentiments caused by historical and territorial issues.
Mutual distrust fundamentally hinders cooperation. China needs to take the responsibility to promote regional cooperation and make it institutionalized and legally guaranteed as soon as possible.
GT: How do you evaluate the political and economic risks for Chinese companies going into North Korea? What advantages do Chinese companies have?
Jin: There are always political and economic risks involved in trade between different countries. The first major solution is to establish a mutual investment guarantee agreement, so that the two countries’ economic cooperation will be protected legally.
We hope that North Korea can keep the stability and consistency of its policies and issue development policies that is in line with international conventions. As long as North Korea adopts consistent policies, Chinese companies won’t encounter great political and economic risks there.
China and North Korea are believed to enjoy good mutual trust. China has experience from its reform and opening-up and plenty of investment capability. North Korea has a good educational foundation, low labor costs, and rich natural resources.
Chinese companies are active participants in investing in North Korea and I believe they’ll do well there.
Read the full interview here. Hat tip to Adam.
I believe one of the reason the chinese government is not vastly promoting this great investment oppotunity is due to the intensive political relationship north korea is involved in with the united states. Although china is relatively being independent from the economic tie with america, politically the chinese central government is still suspicious in the future north korean political fate. The chinese companies that have been conducting business along the boarder area are all government backed enterprises. So far as a common sense no enterprise would take risks in north korea to do capital intensive business. I am a hunchun native by the way.