North Korean Economy Watch

According to the Donga Ilbo:

A casino in the North Korean coastal city of Rason (formerly Rajin and Sonbong) that helps the North earn foreign currency officially resumed operations two months ago, a Chinese source said Monday.

China is known to have allowed its nationals to visit the casino, whose main customers are Chinese.

“Rason Casino is openly doing business and 30 to 40 customers visit every day,” the source based in Hunchun in the Yanbian Korean Autonomous Prefecture of China’s Jilin province said Monday. “You can get a tourist visa for North Korea in a day in Yanji (China), which makes visiting a lot easier.”

In addition to those from Korean autonomous prefectures such as Yanji, casino patrons also hail from Harbin, Shenyang and Changchun in northeastern China. They arrive in Yanji, go through the Hunchun customs office 90 minutes away by car, and enter the North Korean village of Wonjong-ri.

They then travel for another 90 minutes by car to the casino. In Wonjong-ri, taxis wait for Chinese visitors who enter the North on foot.

The reopening of the casino was apparently possible thanks to China’s tolerance or cooperation. Formerly known as “Emperor Casino,” the facility was opened by Hong Kong Emperor Group in 2000 and closed at the end of 2004, when a Chinese official from a Korean autonomous prefecture was found to have gambled away a huge sum of public funds at the casino.

Beijing cracked down on gamblers and stopped its nationals from entering the North, and urged Pyongyang to close the casino. Back then, Chinese media reported that the casino earned at least 1 billion yuan (151 million U.S. dollars) per year.

The casino operator is reportedly based in Hong Kong, and probably Emperor Group.

Operations at the casino conspicuously resumed after August, when North Korean leader Kim Jong Il visited Beijing and Chinese President Hu Jintao agreed on the development of Rason.

Another source said, however, “In fact, the casino secretly resumed operations a year ago. It now openly attracts customers.”

Approximately 15 minutes away from downtown Rajin by car, the casino is also known to house a five-star hotel, room salons (high-class hostess bars), luxury restaurants and saunas. The source said, “Room salons have as hostesses young Russian, Chinese and North Korean women. Prostitution occurs openly.”

A satellite image of the casino can be seen here.

Read the full story here:
NK casino reopens after Kim Jong Il’s Beijing visit
Donga Ilbo
12/29/2010

According to the Daily NK:

Even though the price of rice is over 1,300 won per kilogram in North Korean markets, cadres and the upper class are hoarding rice and grain. This is because a rumor is spreading saying that the international community may suspend food aid to North Korea next year due to the Yeonpyeong attack so the price of rice may not drop next year.

A source from Hoiryeong, North Hamkyung Province, said that, “In the Hoiryeong Jangmadang, rice sells over for 1,300 won per kilogram. Even though it is an unreasonably higher price than in previous years, the wealthy are hoarding the rice they will consume for the next year.”

Immediately after the Yeonpyeong attack, the price of rice soared to over 1,300 won and has stayed at that level. This is because the value of the Yuan has gone up since the currency redenomination last year.

The source explained, “Despite the high price of rice, people purchase it in bulk because they believe that next year the price may not decline considering the current trend.” He added, “A rumor that we won’t receive food aid next year due to being internationally isolated has been circulated by those who get international and domestic information via foreign radio or those who have visited China for private reasons.”

The source reported that, “Based on the experiences of the last decade, people know very well that there will be no food aid from the outside world when the situation is tense like it is this year.”

“Not only those who support themselves through commerce, but also family members of officials of the National Security Agency and People’s Safety Ministry, who primarily live off the national distribution system, are spending all the money they’ve saved to buy up food. They buy reserve provisions in order not to worry about a possible suspension of the distribution system.”

According to the explanation of the source, at the time of the November 30 currency redenomination last year, those who had goods to trade did not get hit hard. Therefore, wealthy people try to obtain more food despite the high price.

Read the full story here:
The Rich Hoarding Rice
Daily NK
Yoo Gwan Hee
12/29/2010

According to Yonhap:

Skinny jeans, blue crabs, pig-intestine rolls and even human manure were some of the hottest items among North Korean consumers this year, according to a South Korean professor who has interviewed recent defectors from the communist country.

Kim Young-soo, a political science professor at Seoul’s Sogang University, said in a conference on Tuesday that adult movies, television dramas and instant noodle “ramen” made in South Korea are also selling “like hot cakes” in North Korea.

Skinny jeans refer to slim-fit pants that have gained popularity around the world, said Kim who interviewed about 2,000 defectors this year as part of a research project for the government.

He said that skinny jeans are so popular in the North’s capital, Pyongyang, that people there sometimes mistakenly believe Chinese wearing the stylish clothes are roaming their capital.

“These are signs that North Korea is easing its isolation,” Kim said in a telephone interview, noting that such lifestyle changes are conspicuous in Pyongyang and areas near the border with China.

The professor said many of the defectors he has interviewed had stayed in China no longer than a month before they came to South Korea, allowing him to have a relatively up-to-date glimpse of the latest culture in the communist country.

Kim said defectors told him pine mushrooms were also a “hit” among North Koreans this year because exports to South Korea had been diverted into the domestic market since cross-border tensions soared over the deadly March sinking of a South Korean warship.

After a multinational investigation in May found North Korea responsible for the sinking that killed 46 sailors, Seoul banned cross-border trade as part of its punitive measures.

Kim said blue crabs have met the same fate as pine mushrooms, allowing North Koreans to enjoy what was once a rarity for them. The professor even told of a shop in which human manure could be traded to be used as an alternative to chemical fertilizer, an item on which the North had heavily depended from the South for years.

“Soondae,” or sausage rolls stuffed with ingredients such as noodles and vegetables and wrapped in pig intestine films, has also made inroads into the market as a staple after the military stopped collecting pork and other food items from civilians, Kim said.

“These changes may not necessarily lead to greater ones in society, but they do bear a meaning,” he said.

Read the full sotry here:
Skinny jeans, pig-intestine rolls among “hit items” in North Korea this year: survey
Yonhap
Sam Kim
12/28/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-12-22
12/22/2010

On December 1, the North Korean Supreme People’s Assembly Standing Committee announced an order to elevate the position of the National Resource Development Office, which is overseen by the Cabinet’s Ministry of Extractive Industry, to the Ministry of National Resource Development. According to the Korea Central News Agency, this measure is aimed at increasing development and export of underground resources as international sanctions against the North further limit Pyongyang’s access to foreign capital.

The regime’s focus on increasing earnings can be seen in Kim Jong Il’s on-site guidance trips, as well. The KCNA reported on December 3 that Kim had recently visited Danchon, South Hamgyong Province, touring the Danchon Magnesia Factory, the Danchon Mining Equipment Factory, and the Danchon Port facilities. During his visit to the magnesia factory, Kim Jong Il emphasized the need for increasing the production of quality asphalt. In addition, after receiving a report on the status of implementation of CNC in the Danchon Mining Equipment Factory, he stated, “The factory needs to normalize at a high level of mass production to turn out the necessary numbers of mining and processing equipment.” Upon reviewing the Danchon Port facilities, Kim Jong Il urged staff to work towards ensuring a loud chorus of boat whistles in the port for the upcoming 100th anniversary of the birth of Kim Il Sung in 2012.

U.S. financial sanctions levied against the North have made it difficult for Pyongyang to collect export earnings from its mining efforts, one of its key earners of foreign capital. In May of last year, when sanctions were strengthened in response to North Korea’s second nuclear test, European and even Chinese banks froze money transfers to North Korea. The [North] Korea Magnesia Clinker Manufacturing Group could not collect 4.6 million USD in earnings from the export of zinc to Europe. It appears that the North has tried to compensate for these losses by increasing the export of iron ore from Musan. Exports to China passing through the Musan customs office have more than doubled, rising from 1200 to 2500 tons per day.

The mines of Musan, holding more than seven billion tons of iron ore, are the North’s primary vehicle for earning foreign capital. In 2004, China’s Tonghua Steel and Iron Group signed a contract with North Korean authorities granting the group 50-year development rights at some key North Korean mines, and is planning to invest seven billion Yuan in developing the sites. Beijing plans to use the access to North Korean mines to meet some of the expected 80 million ton shortfall of iron ore in 2010. However, there are rumors that North Korea has canceled the contract with no explanation, causing much speculation about the direction of Pyongyang’s export strategy.

According to the Daily NK:

In advance of the new year, 2011, the North Korean authorities have released lecture materials to emphasize “Kim Jong Eun’s leadership.” It implies that they are going to make 2011 the year of Kim Jong Eun, though without the label of “successor.”

A source from Yangkang Province reported on Monday on “a lecture entitled, ‘In the New Year under comrade Kim Jong Eun’s leadership the whole people should be united impregnably around the Party and open the gate of 2012 as a strong and prosperous state.’ It has been spread to each organ and enterprise.”

The source added, “The secretary of the party cell reported that this material was handed down and said the party is going to hold a lecture around the 30th. He stressed that we definitely must attend the lecture.”

Since the North’s authorities announced publicly the Kim Jong Eun succession through the Delegates’ Conference of the Chosun Workers’ Party and on the founding day of the Party, they have been speeding up the process of the succession through releasing Kim Jong Eun’s public activities such as military or security related on-site inspections with his father through the state publications and orders handed down from Kim Jong Eun.

The source reported the mood there, saying that, “Even though the authorities have been clamoring for decades to ‘Protect the Suryeong (Absolute Leader) to the Death,’ there are still many citizens who don’t attend lectures. When they do go to the lectures, they think it is a time napping.”

He went on, “Nowadays as food prices and other prices are soaring, people say that it’s hard to live or they aren’t sure about the propaganda.”

The source construed the attempt to hold lectures about Kim Jong Eun’s leadership likely to be a countermeasure to eliminate people’s discontent with Kim Jong Eun.

Read the full story here:
Lecture Scheduled on Kim Jong Eun’s Leadership
Daily NK
Kang Mi Jin
12/27/2010

According to Yonhap:

South Korea has spent only 5.6 percent of its funds earmarked for promoting humanitarian and economic ties with North Korea this year, the unification ministry said Sunday, as inter-Korean relations tumbled to their worst in decades.

As of the end of November, the ministry said it had endorsed spending worth some 62.6 billion won (US$54.4 million) from its South-North Cooperation Fund, or 5.6 percent of the total allocated for this year.

Just over half the sum, or about 32.8 billion won, went toward financing loans for inter-Korean trade and economic cooperation, while another 27.8 billion won was spent on improving exchanges among families separated across the border and other humanitarian projects.

The low spending rate apparently reflects the ban on cross-border exchanges following the deadly March sinking of a South Korean warship, blamed on a North Korean torpedo attack, and escalated tensions on the peninsula since the North’s artillery attack on a southern island last month.

The fund’s implementation rate ranged from 37 to 92.5 percent between 2000 and 2007, but nosedived after President Lee Myung-bak took power in 2008 with a hard-line policy on the North. That year, the rate stood at 18.1 percent before dropping further to 8.6 percent in 2009.

Read the full story here:
S. Korea spends 5.6 pct of inter-Korean cooperation fund
Yonhap
12/26/2010

According to the Daily NK:

North Korea’s National Security Agency (NSA) is trying to use smugglers to crack down on defectors, an inside source has revealed to The Daily NK.

The source from Yangkang Province told a Daily NK reporter on Tuesday, “The Yangkang provincial NSA office has ordered smugglers investigated recently to report those who cross the river for the purpose of going to South Korea.”

In many border regions, smugglers play the role of brokers in river-crossing defections. As of late November this year, the commission earned by a smuggler for facilitating a river crossing was about 4000 to 6000 Yuan per person. For 500 to 1000 Yuan, the smugglers were willing to convey goods back across the Yalu River, too.

The source said, “About two hundred people convicted of smuggling were called in by the NSA,” explaining that they were told, “If they report river crossers to the NSA, the NSA promised to guarantee their smuggling activities.”

The reason for the new policy, the source also explained, is that “while the government keeps strengthening border controls and orders punishment for river crossers, the number of defections is not decreasing, so they have formulated a new plan. It has met with modest early success; on December 16th, three people who were crossing the Yalu River from Huchang to Changbai (China) were arrested by the NSA.”

However, the source pointed out, “Since some smugglers are cooperating with the NSA now, the number of river crossers might decrease for a while, but it will come back to normal. Those smugglers who report to the NSA will lose customers, and those who don’t will have more.”

Read the full story here:
Smugglers Told to Shop Defectors
Daily NK
Kang Mi Jin
12/24/2010

According to the Choson Ilbo:

The European Union has decided to renew and extend its list of people and entities in North Korea who are subject to restrictive measures.

One individual and six entities were added to the list due to their involvement with the North’s nuclear arms program or other weapons-related activities.

The measures include both a visa ban and an asset freeze. The list, which currently contains 18 individuals and 12 entities, was published in the EU Official Journal on Thursday.

The EU says “the decision also limits financing activities and trade” with Pyongyang, particularly of arms and related materials that could be used in the development of weapons of mass destruction.

The official EU publication, featuring all of the specifics, can be found here (PDF).

Read the full story here:
EU Extends Visa Bans and Asset Freezes on N.Korea
Choson Ilbo
12/24/2010

According to Yonhap:

A pre-dawn fire completely destroyed a South Korean factory in a joint industrial complex in North Korea Friday, an official here said, citing an electricity leakage as the possible cause.

No injuries were reported from the fire that began at 2:30 a.m. at a container building and spread to a nearby factory owned by a kitchenware manufacturer, the Unification Ministry official said, asking not to be named or have the firm identified in the media.

Read the full story here:
Fire destroys S. Korean factory in N. Korea: official
Yonhap
Sam Kim
12/24/2010

No it does not have Tom Cruise, but it has lots of the KPA Air Force in action. The first reader to figure out at which AFB this movie was filmed wins.  Click image to watch the movie.

Thanks to ctigmata for sending the link.

Also, if you are interested in ordering any North Korean films, Koryo Tours has a wide selection.

Happy Holidays!