North Korean Economy Watch

Daily NK
Yoo Gwan Hee
5/14/2010

A source in North Korea has told The Daily NK that fertilizer shortages near the North Korean border have been alleviated by imports arriving from China.

“Chinese fertilizer has been imported through Hoiryeong. It was not done officially by the authorities, but by trade enterprises. They imported fertilizer in bulk and then sold it to the markets,” the source, who lives in the city, told The Daily NK yesterday.

Therefore, individuals and collective farm managers are still not able to get it through the national distribution system, but can obtain it on the open market.

“In Hoiryeong, a 50kg sack of fertilizer is being sold for 200 Yuan, which is approximately 22,000 North Korean Won,” said the source. Another source from Hyesan reported to The Daily NK the day before that, in the Hyesan jangmadang, the same quantity of fertilizer was being sold for 220 Yuan.

Until late last month, sources were reporting that fertilizer was “nowhere to be seen in the market.” Before that, one source said, “We could see it in the markets, but that was left over from last year.” Then, it was going for between 30,000 and 50,000 North Korean won per 50kg sack. Now enterprises are importing it from China, its price has dropped by around half.

In North Korea, May is the month when farmers are at their busiest, or to cite a proverb, it is the period during which “even the fire-pokers bustle with activity.” Therefore, individuals and farmers are all desperately seeking fertilizer.

Lee Min Bok, a former researcher with the Agriculture Institute of North Korea, explained why. “Growth of plants at the beginning of the planting period is really important because that decides the amount of grain it produces,” he said. “Therefore, applying fertilizer is decisive for the year’s farming. In times of fertilizer shortage, a maximum of 60% productivity can be achieved.”

It has been reported that many residents living near the border and who rely mainly on small farms believe China has relieved their worries.

However, it remains to be seen whether the importation of Chinese fertilizer will have an impact on the farming process in state-owned farms. It is not possible to say at this time whether the imported fertilizer has been or will be provided to those farms.

In North Korean farms, fertilizer ought to be applied three times a year: at the beginning, middle and end of the farming process. But with unfavorable circumstances negatively affecting the supply of fertilizer since the 1990s, use has been circumscribed, and it has only been added at the beginning and end of the

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-05-11-1
5-11-2010

As North Korean leader Kim Jong Il spent four nights and five days in China, meeting with President Hu Jintao, Premier Wen Jaibao, and other top Chinese leaders, it appears that the issue of bilateral economic cooperation was high on the agenda, and was discussed in depth.

‘Strengthening economic and trade cooperation’ was one of the five proposals for bolstering PRC-DPRK relations made by Hu Jintao during the May 5 summit meeting with Kim Jong Il, giving some indication of just how much emphasis he and Kim were putting on economic cooperation during the latest visit.

Hu stated that strengthening cooperation between Beijing and Pyongyang would help both countries build their socialist systems, and would be in their shared interests as it would further development and help to bring peace, stability and prosperity to the region. According to China Daily, the five suggestions made by Hu Jintao are as follows:

1) To maintain high-level contacts. The leaders of the two countries should keep in touch by exchanging visits, as well as sending special envoys and messages.
2) To reinforce strategic coordination. The two sides should exchange views in a timely manner and regularly on major domestic and diplomatic issues, international and regional situation, as well as on governance experience.
3) To deepen economic and trade cooperation. The relevant departments of the two governments should discuss and explore ways of expanding economic and trade cooperation.
4) To increase personnel exchanges. The two sides should expand exchanges in the cultural, sports, and educational fields, and the contacts between the youth in particular to inherit the traditional friendship from generation to generation.
5) To strengthen coordination in international and regional affairs to better serve regional peace and stability.

In response, Kim Jong Il expressed his appreciation for Hu Jintao’s heartfelt invitation and warm greeting, and agreed with Hu’s five suggestions for developing bilateral cooperation. He highlighted the construction of a new bridge over the Yalu River as the latest sign of friendly cooperation between China and North Korea, and added that he “welcomes investment in North Korea by Chinese companies and boosting bilateral working-level cooperation based on the principle of mutual prosperity.”

Economic issues were at the heart of Kim Jong Il’s meeting with Premier Wen Jiabao, as well. Following their meeting, Wen said, “PRC-DPRK economic cooperation has great potential,” and that he actively supports bilateral efforts. He stated that he had high hopes for infrastructure projects and other cooperative efforts in the border region.

He went on to say, “China actively supports North Korea’s economic development and improvements in the lives of its people,” and that he would like to introduce to North Korea “Chinese-style know-how” by sharing China’s experiences with reform and economic construction.

In October of last year, Premier Wen introduced the “Chang-Ji-Tu Development Plan” during his visit to North Korea, pushing hard for the North’s cooperation in developing the border region. That, along with North Korea’s extension of the contract giving Chinese companies access to Rajin Port and the latest talks during Kim’s visit to China give a clearer picture of the future direction of PRC-DPRK cooperative economic efforts.

The Chang-Ji-Tu plan to develop the Jilin and Tumen River regions calls for the establishment of an economic ‘beltway’ by 2020, and the revival of the antiquated industrial areas of China’s three northeastern provinces. To be successful, the plan requires North Korean cooperation on securing access to the East Sea. In 2008, North Korea granted China usage rights to Pier 1 in Rajin Port, and then signed an agreement with China last November on the joint development of the port into an ‘international distribution hub’ providing a link for China to the global market. China’s Jilin Province has already earmarked 3 billion yuan (500 billion won) for Rajin Port’s development.

This, along with the construction of a new border-crossing bridge on the Tumen River and other similar projects, reflects the infrastructure development plans for the border region. Construction on the new 33 meter-long bridge began last October, and China is bearing the burden of a 1.7 billion yuan (290 billion won) price tag. In March, China also began restoration of the bridge over the Tumen River linking Hunchun and North Korea, and is expected to move forward quickly with a road construction project linking the bridge to Rajin Port.

Another cooperative effort is focused on the development of the Hwangeum Industrial Complex, a free trade zone on Hwanggeum Island, in the Tumen River. Ryongaksan General Trading Company, which currently holds the development rights to Hwanggeumpyeong and Uihwa islands, is actively seeking to attract foreign investment. Kim Jong Il’s latest trip to China is seen by some as an opportunity to push for increased Chinese investment and assistance in developing the region.

Workers’ Party of Korea Unification Strategy Department Director Kim Yang Gong, as chairman of the Korea Taepung International Investment Group, traveled with Kim Jong Il in China, and it appears to have been in order to more strongly call for investment in North Korea, and the development of Rajin Port, in particular.

Beijing permitting North Korean sight-seeing tours and joint development in its three northeastern provinces indicates its support for the increasing pace of bilateral economic cooperation with Pyongyang.

…and it is stunningly clear. 

We can finally see the galss starting to go up on the Ryugyong Hotel:

Click image for larger version

I also blogged a few weeks ago about new housing construction near the Potongang Gate (see here).  Well this project is nearing completion (at least from the outside).

Click image for larger version

We can also see the new Pyongyang Folk Village taking shape (39° 3’40.12″N, 125°49’28.42″E).  Here is an overview of the facility:

Here are the replicas of Pyongyang landmarks under construction:

As I mentioned in a previous blog post, there seem to be replicas of different burial mounds, the West Sea Barrage, Monument to Party Founding, Ryugyong Hotel, Mangyongdae Children’s Palace, and much more.  There even appears to be a miniture Korean Penninsula that visitors can walk around.

By Michael Rank

North Korean films are as hard to find as kimchi-flavoured ice cream, so Koryo Tours have done us a big favour by releasing on DVD Centre Forward (film trailer here), a highly watchable and fascinating Pyongyang production from 1978.

It’s the tale of talented novice footballer Cha In-son (Kim Chol), who’s been on the bench for Taesongsan for the last three years, but finally makes the team. Not everything goes well at first, and he’s forced to leave the field injured in his first match. But he sticks at it, and strongly supports the coach’s tough new training regime, unlike his complacent best friend and teammate, Chol-gyu, who thinks it’s unnecessary for such a successful team. Chol-gyu (Choi Chang-su) tries to distract him with drinking sessions, but In-son will have none of this, and eventually everyone’s won over to the coach’s demanding regime and Taesongsan ultimately win the North Korean equivalent of the Premiership.

The film, co-directed by Pak Chang-song and Kim Kil-in, is well paced (and only 70 minutes long) and the black and white camerawork is fluent and confident.

There’s a strong political message, inevitably. “Oh, we are the sports soldiers of the leader/ Let us glorify the honour of the motherland…,” goes the splendidly rousing theme song, and to underline the point, the coach reminds In-son, “The Fatherly Leader taught us that we should train harder to win every single game and we should turn our country into a great sporting nation. But we’re still not sweating enough, that’s why our football isn’t getting any better and we’re failing to achieve the teachings of the Fatherly Leader who taught us to make the country a kingdom of sport.”

On a less overtly political level the role of the women in the film is fascinating. In-son doesn’t seem to have a girlfriend, and the love interest, as it were, is provided by his pretty sister,  Myong-suk. She is the star member of a dance troupe and her hard work and dedication is an inspiration for her brother, while she is just as devoted to him, going off to talk to the coach about his prospects when he is feeling despondent. And she takes time off from her dancing duties to iron her brother’s clothes, while his mother washes them for him as he rests, exhausted.

There’s some wry comedy in the relationship between In-son’s mother and best friend Chol-gyu’s grandmother. After her grandson’s string of successes on the pitch, she feels right at home in the world of football and knows all the jargon, and she’s apt to be a bit condescending to In-son’s mum to whom she has to explain terms like “left back” and “having an off day”.

There’s a bit of melodrama when In-son is concussed during a match – don’t worry, he makes a miraculous recovery – and his mother who is watching the game on television wants to rush to the stadium to be with her son. But then she realises she can’t face seeing In-son apparently seriously injured, and Chol-gyu’s granny tells her, “You’re not ready to be a footballer’s mother yet.”

Interestingly, neither In-son or his friend seem to have fathers, and this emphasis on mother figures seems to underline what Brian Myers says in his excellent book The Cleanest Race (Order here) about the roles of mothers and motherliness in North Korean politics and society.

This is the perfect film to see ahead of the World Cup in South Africa next month, in which North Korea have qualified for only the second time ever. Not for nothing has Centre Forward been hailed as “the best North Korean-themed football movie of all time” and there’s no doubt that the Choson Art Film Studio is a truly worthy winner of the Kim Il-sung medal and the National medal, first class.

Daily NK
Min Cho Hee
5/11/2010

In a move sure to add weight to suspicions that North Korean industry is in the midst of a very serious funding crisis, a source has reported to The Daily NK that the Chinese partner has taken unprecedented power in a new mining joint venture in North Hamkyung Province.

The inside source reported on Sunday that when Saebyul Coal Mining Complex, a North Korean mining management organization, sealed a contract between Gogunwon Coal Mine, Ryongbuk Youth Coal Mine and a Chinese enterprise, it agreed to hand over an unheard of degree of discretion in affairs of personnel management, materials and working methods to the Chinese enterprise.

The source explained, “Now, the Chinese enterprise has authority over staffing, food distribution, wages and materials. Accordingly, it has reduced the administrative staff and drastically improved productivity.

According to the source, the Chinese are guaranteed operational independence free from the control and instruction of the Saebyul Party committee, and take 60% of net profits. If true, this is a new model of collaboration and cooperation in business between China and North Korea.

The source added, though, “The number of people in the Party committee has also been reduced, though it is unlikely to be got rid of completely due to the nature of the North Korean system.”

He said, “Since last year, North Korea has been trying to attract Chinese investment and three or four Chinese companies have been in negotiations over mine development in this way.”

The Chinese enterprise plans to convey the lignite produced in the mines to China, process it there and sell it domestically.

The source noted, “North Korean workers are delighted with this method of collaboration. They get guaranteed wages and food, and the working environment has also improved thanks to new, stronger mining timbers, so productivity has increase.”

In the cafeterias at the mines, they serve 900g of rice to everyone, and pork and eggs, which workers like. According to the source, “Workers want to take meals served in the cafeteria home for their family members. In this worker-friendly mood, Party cadres are unable to complain.”

Gogunwon Coal Mine and Ryongbuk Youth Coal Mine are both located in the “Gogunwon Workers” district of Saebyul, North Hamkyung Province. They both contain good quality coal seams, and are among the best coal mines in North Korea.

Another source from North Korea suggested on Monday that North Korea is losing a lot of control of the economy in its northern provinces, saying, “The purse strings in the border regions of our country have basically been handed over to China, and ‘our socialist pride’ is in the hands of China. Any factory where they produce even a small amount of goods has been invested in by the Chinese”

UPDATE 2:  (5/19/2010) According to Offshore-mag.com:

LONDON — Aminex says a delegation from North Korea is in London negotiating a new production-sharing agreement (PSA) covering activity in the East Korea Bay basin.

Chosun Energy has become a 50% shareholder in Korex, Aminex’s subsidiary for the region, and will become increasingly involved in management of this project.

Assuming agreement for the PSA can be reached with the government of North Korea, work will start as soon as possible on the next phase of exploration in the area.

UPDATE 1:  A reader passes along a very helpful comment (Thanks!):

I think that some lazy journalism on behalf of the Irish paper has mistakenly linked Colin McAskill of the UK to this.

If you do a background check on Chosun Energy via Singapore Companies House, you will see that it is controlled by a.o. James Passin (an American) of Firebird. McAskill is not on the board and, as far as I can see, there is no connection to McAskill’s Chosun fund.

Interesting to see the Americans preparing to invest in NK!

DYOR of course, I may be entirely wrong of course:)

ORIGINAL POST: According to the Independent (Ireland):

Brian Hall’s AIM-listed resources firm Aminex has agreed to sell a 50 per cent stake in its North Korean interests to a fund fronted by one of the few westerners to have dealt with its erratic leader Kim Jong II.

Aminex received close to €600,000 for a 50 per cent stake in its Korex vehicle, which is currently trying to develop oil assets in the sea around North Korea.

Its new partner, Chosun Energy, is controlled by a fund backed by British businessman Colin McAskill.

Mr McAskill is one of the few westerners with access to the dictator, having advised the country on debt and banking issues.e a prisoner in some re-education camp”.

Read the full story here:
Aminex sells half Korean interests
Independent
Nick Webb
5/9/2010

According to Asia News:

According to the Catholic geography, North Korea is divided into three dioceses – Pyongyang Hamhung and Chunchon – and a territorial abbey that of Tomwok directly subject to the Holy See. After the end of the civil war in Korea (which was de facto in 1953, but never expressly recognized by the two governments) and the resulting division of the peninsula in two, the Vatican gave over Apostolic administration of the diocese to bishops of the South.

Under the Pontifical Yearbook – the mighty Volume printed in the Vatican, which represents a sort of map of Catholic presence in the world – the bishops are still the same. Under “Pyongyang”, we read Mgr. Francis Hong Yong-ho, born in 1906 and now “missing” for Hamhung we find an empty space, Chunchon, however, has a territory that “borders” in the North. Here, then, the entitled bishop is Mgr. John Chang-yik (but the post “is vacant” according to local Catholics).

The situation of the bishops is a true reflection of the situation of the Church of North Korea. In the middle of last century 30% of the inhabitants of the capital Pyongyang were Catholics, compared to 1% of the rest of the country. During the Korean War (1950-1953) Communist troops penetrated the South and hunted missionaries, foreign religious, and Korean Christians. The North Korean regime intended to destroy every Christian presence. In the north all the monasteries and churches were destroyed, monks and priests were arrested and sentenced to death.

During the war, the apostolic delegate to Korea, Patrick James Byrne. Bishop and U.S. citizen was arrested, was sentenced to death but the sentence was not executed. He was deported to a concentration camp and died there, after years of hardship and deprivation. There has been no news of what happened to the Christians in the following years: we still do not know the fate of the 166 priests and religious who remained in the North after the war. When questioned about them, North Korean officials respond: “They are perfect strangers.”

Today the Church in the North is without clergy and without worship. According to official government figures, there are about 4,000 Catholic North Koreans, in addition to some 11,000 Protestants. But AsiaNews sources in the country claim that the “real” Catholics number no more than two hundred, mostly very elderly. Throughout the North there are only three places of worship approved for the Christian faith: two Protestant Churches and one Catholic Churc. This is the church of Changchung (pictured) in the capital Pyongyang, which for many analysts is only for “show” and controlled by the regime.

The Christian community is subjected to harsh repression by the authorities. A Christian is doubly unpopular: accused of disloyalty to the regime and suspected of ties with the West. The majority of the faithful have been forced to express their faith in secret. In a communist country, being “discovered” while attending a mass in an unauthorized location may result in imprisonment and, at worst, torture and even capital punishment. Even the mere fact of possessing a Bible is a crime that can carry the death penalty. On 16 June 2009, a 33 year old Christian, Ri Hyon-ok, was sentenced to death and executed “for putting Bibles into circulation.”

The figure of Mgr. Hong Yong-ho is emblematic of this situation. Ordained May 25, 1933, he was appointed vicar apostolic of Pyongyang and titular bishop of Auzia March 24, 1944 by Pope Pius XII. The following June 29, he was consecrated by Archbishop Bonifatius Sauer, co-consecrating Bishop Hayasaka Irenæus, Archbishop Paul Marie Kinama-ro.

On March 10, 1962 Pope John XXIII decided to elevate the vicariate of Pyongyang to diocese, also in protest against the policies of the North Korean regime, and appointed as its first bishop, Mgr. Hong, who has becomes a symbol of persecution against Catholics in North Korea and in general in the communist regimes. Although he is now well over one hundred, in the Vatican they say it “can not be excluded that he may still be a prisoner in some re-education camp”.

According to KCNA:

Pyongyang Spring Int’l Trade Fair to Open

Pyongyang, May 7 (KCNA) — The 13th Pyongyang Spring International Trade Fair will take place at the Three-Revolution Exhibition from May 17 to 20.

It will bring together more than 270 companies of the DPRK, China, Russia, Germany, Mongolia, Brazil, Switzerland, Singapore, Australia, Austria, Italy, Indonesia, Thailand, Cuba, Poland and Taipei of China.

Exhibits will include more than 85,000 products of over 5,000 kinds such as CNC machine tools, electrical machinery and equipment, electronic and light industrial goods, foodstuffs, daily necessities, medicines and vehicles.

Koryo Tours is offering a unique travel experience:

At long last we are proud to bring you news of our brand new tour, on a route that no other company offers and that Koryo Tours has spent great effort pioneering. From June 30th to July 10th this year we are offering a 3 country, 3 cultures, 3 time zone tour in an area you may well have never heard of before – we’re calling it the “Tuman Triangle” and if you’re interested in learning more then please hit the following links to download our brochure and itinerary for this remarkable journey:

Information Brochure – click here

Full Itinerary – click here

In brief, this tour travels from Beijing up to the North East Chinese city of Yanji from where we enter North Korea’s Rajin-Sonbong free trade zone, we then journey into DPRK-proper and the industrial city of Chongjin and the stunning and remote Chilbo mountains before heading back up the coast and crossing into Russia by train, visiting some remote areas and then heading by boat to Vladivostok from where we fly back to Beijing having seen a vast variety of sites, experienced several distinct cultures and seen places and things that almost no western tourists have ever been anywhere near.

Simon Cockerell will accompany this tour and we have a mere 20 spaces open for this first time trip, if you’d like to know more then please get in contact with us and we hope you can come along with us, this is the first time such a tour has ever been offered by anyone. Be a part of regional tourism history!

Best regards from Beijing,

Koryo Tours

Andrei Lankov writes in the Korea Times:

So after months of rumors and a couple of false reports, Kim Jong-il finally departed for China. This time his visit produced a palpable irritation in Seoul. Suspicions about Pyongyang’s involvement in the Cheonan disaster are mounting, so some South Korean politicians saw China’s willingness to invite the North Korean leader as a sign of tacit support for Pyongyang’s policy. This led to an outpour of critical statements, which are certain to have no impact on China’s actions, of course.

To start with, China ― in spite of all rhetoric of “eternal friendship” ― is no admirer of Kim Jong-il’s regime and is frequently annoyed by the North Korean antics. China does not want Pyongyang to go nuclear, since nuclear proliferation threatens China’s own privileged position of a “legitimate” nuclear power. China also worries that North Korea’s nuclear program might trigger a nuclear arms race in East Asia, producing a nuclear Japan and perhaps, a nuclear Taiwan. Moreover, China rightly sees the North Korean economic system as irrational and wasteful.

Nonetheless, China supports North Korea. Throughout the past few years when South Korean and U.S. aid dried up, famine in North Korea was prevented, above all, by free or subsidized shipments of grain from China. China is the largest investor in and trading partner of North Korea. Why do Chinese continue to invest money into supporting the regime which they do not particularly like and do not see as their reliable ally?

From time to time some people in Washington and Seoul express their hope that China can be somehow persuaded to stop its support of the North or to use its supposed leverage to influence Pyongyang policy (like, say, pressing North Korea into denuclearization). After the second North Korean nuclear test in 2009, China chose to support the U.N. sanctions and there were statements that China finally was “in the same boat as the United States.” Alas, this is wishful thinking. China is not in the same boat, and will never be. There are good reasons why China supports the North, and these reasons are likely to remain valid for the foreseeable future.

Yes, China does not want a country in its neighborhood to acquire nuclear weapons. Neither it is happy about military provocations of any kind. However, there are two other concerns which are far more important for China to keep the region stable and to keep Korea divided.

Stability is a keyword for the Chinese policy. China concentrates on economic growth and needs a peaceful and predictable environment in order not to be distracted from this goal. Hence, any crisis in the vicinity of China is an anathema for the Chinese strategists and should be avoided at all cost.

Another, arguably less important, goal is to keep Korea divided. Taken into consideration the current balance of power, unification is likely to lead to absorption of the impoverished North by the rich South. For China it might mean the emergence of a stronger U.S. ally ― or, at least, another “unruly democracy” ― right on its border. China can survive such a turn of events, to be sure, but it would prefer to maintain North Korea as a strategic buffer zone.

Alas, in order to really influence North Korea’s behavior, one has to play hardball. Subtle measures will not work, since the North Korean government does not care that much about economy or even about survival of its own population. In order to have an impact, China would have to virtually close the border completely and stop all trade with the North. A senior South Korean diplomat described this problem in a private conversation by a good allegory: “China does not have leverage when it comes to dealing with the North. What China has is a hammer.”

But China must have a mighty good reason to wield this hammer since such extreme pressure can easily lead to a system collapse. This collapse will make the situation very volatile. Crowds of refugees, the nuclear weapons and material getting to the black market, numerous diplomatic complications ― those are not the problems China is eager to deal with. Finally, collapse is likely to produce a unified Korea which is not China’s most preferable outcome.

Therefore, China prefers to spend some resources keeping the North Korean regime afloat in order to maintain the status quo and prevent or, at least, postpone a major crisis. It also wants to minimize the risk of North Korea being involved in excessively dangerous actions, but this goal is of secondary importance.

At all probability, this time we will see another repetition of the old game. Chinese will insist that North Korea should come back to the six-party talks (Beijing’s pet project), and also should restrain itself. Kim Jong-il will claim his sovereign rights to run his state as he pleases while inquiring how much aid he is going to get for some minor concessions. The Cheonan affair is unlikely to be discussed at all ― even if Chinese bring up the question, the North will deny responsibility, claiming that all accusations are results of the “smear campaign waged by the South Korean warmongers.”

And what will be the net result? Perhaps, we can see the contours of a likely deal: North Korea will promise to go back to the six-party talks while China will reward Pyongyang for this by aid and subsidized trade. So, China will be satisfied with maintaining both its international prestige and stability in its neighborhood while the long-delayed six-party talks will finally restart, to continue for a while, until the next crisis. Will the talks ever produce their intended result ― the “complete and verifiable elimination of North Korea’s nuclear weapons programs?” Of course, not. But has that not been clear for years?

Read the full story here:
Why does China continue to support North Korea?
Korea Times
5/6/2010