North Korean Economy Watch

Back in the autumn of 2008 the North-Korea-watching-world was abuzz with speculation about Kim Jong-il’s health since he had vanished from public view in August (see more here). Fueling the speculation, Kim Jong-il missed the country’s 60th anniversary celebrations in September–which everyone expected him to attend (read more here). KJI marked his return to “public life” on October 4th of that year when he attended a student football match (read more here).  According to KCNA:

Pyongyang, October 4 (KCNA) — General Secretary Kim Jong Il enjoyed a student football match on the occasion of the 62nd anniversary of Kim Il Sung University, the highest institution of Juche-based education and science.

There was the football match between teams of Kim Il Sung University and Pyongyang University of Railways that day, at which the former beat the latter 4-1.

KCNA released several pictures of the match, but I post the most important below along with a satellite image of the location from Google Earth:

In both Google Earth images I have marked off the respective image locations using red arrows.  The top images are the most convincing: The fence, the covering, the field, and hilltop in the background are all spot-on matches .  There is a viewing stand as well (shown in the bottom pictures).  The other official photos, which I did not post, match the satellite imagery as well. You can see them all in the original KCTV broadcast on YouTube.

Just to be safe, I checked out the football fields at Kim Il-sung University and the Pyonyang University of Railroads and neither come close to matching the photographs:

I also checked the hundreds of football fields that I have tagged on my Google Earth file.  None of those match either.

So I think it is fair to say that Kim Jong-il watched the football match from his home in the Kangdong compound (39.200045°, 126.020564°) and this is where he recovered from his surgery, or stroke, or whatever befell him, in the fall of 2008.  Or maybe this is just what they want us to think and he was actually in Wonsan or Hamhung?  It is also worth noting that this compound received a new helipad sometime between March 6, 2004 and December 17, 2006 (39.204600°, 126.014662°).

According to the Korea Times:

North Korea’s former premier Yon Hyong-muk died, presumably of pancreatic cancer in 2005. At the height of his career, he was the most powerful person in the North outside the Kim Jong-il family. He was premier of North Korea from 1989 until 1992.

He is the person who signed the South-North Basic Agreement in 1991. The agreement on reconciliation, nonaggression, exchanges and cooperation is regarded as the bible for inter-Korean relations.

This week, Radio Free Asia (RFA) reported that Kim Jong-il had killed him. Yon’s story is one of many stories making outsiders feel puzzled when they read news on North Korea.

Verifying reports on North Korea is quite elusive and puzzling.

For the past two decades, there have been occasional reports over the imminent collapse of North Korea. Then people wonder why this does not happen.

We are showered with a wide variety of news on North Korea daily. There have also been reports on the execution of North Korean technocrats. Later some of them appear at official functions again. Then people ask themselves whether some people concoct stories to undermine the North or for their political gain.

South Korean media often depend on refugees and their organizations which have their own agenda ― to harm the North Korean system or to work for the democratization of North Korea. These sources are familiar with how the North is ruled and understand the North Korean language. They often claim that they received specific pieces of information from their collaborators living in the North. Those sources of information were never confirmed, however.

Stories often sound interesting, and even believable, but have no proven grounds. The Japanese press is equally imaginative in reporting make-believe stories, but not credible factual stories, on North Korea.

RFA which is often quoted by South Korean news organizations, also depends heavily on North Korean refugees for its reporting.

In other words, many of the news stories reported in the press are unconfirmed stories. It is like saying, “We do not care if people believe it or not, but this is our story.’’.

Verification is not that difficult on such news on economic policy like currency reform, control over markets, daily life and the economy. If people hear more or less from different sources, it is probably true. However, such confirmation is only possible on news about market policies, prices and administrative regulations at lower levels.

Over half of all published reports on domestic power politics and succession, have eventually been shown to be false.

Over the last three to four years, each of the three sons of Kim Jong-il, as well as other members of his family were reported to be confirmed successors.

There is no way to prove the alleged power struggle or succession. Nothing can be done to substantiate such reports until official announcements are made.

Many South Korean news agencies quote North Korean defectors in publishing articles. Are these defectors representing North Korean society? Do they know the inside story of the regime? They may be talking about either end of an elephant. It is difficult to know everything about North Korea without knowing the full picture of an elephant.

A story on a defector is sometimes published as if it were representing North Korean society. News agencies sometimes boast that they have communication channels with many North Koreans inside the North. Is it really possible for North Koreans inside the tightly controlled society to communicate with the outside world?

Even different news agencies interpret the same North Korean story from their ideological angles. The conservative Chosun Ilbo and progressive Hankyroreh often publish the same article from different angles. We need to take them with a grain of salt.

Many online news outlets on North Korea have cropped up in South Korea. People wonder who sponsor these news outlets. They need money to run the news outlets. Without advertising, how can they stand on their own two feet? What are their purposes for running such news outlets? Are they seeking to topple the North Korean regime? Are they dedicated to reporting news without any bias?

They make daily reports on the North. It may be naive to believe all of them. It is also naive to distrust all of them.

In checking news on North Korea, we need some steps. First is common sense. Repeated news by different agencies and media may be true. All media in Korea copy Yonhap articles. We can also obtain technical data through Google Earth, open-source data, statistics from the U.N. and various sources such as JETRO, KOTRA, IAEA, WFP, NGO reports and International Crisis Group.

Human intelligence is also vital. They include defectors, visitors to North Korea, both former and incumbent diplomats in the North and government officials. Out of these sources, only defectors are willing to talk to the media or open source networks, and others will not speak to the media. Accumulated know-how based on expertise is also necessary. When there are reports, it may be safe to contact North Korea experts for verification or interpretation.

When the truth of news is difficult to confirm, it is difficult for policymakers to make a decision on North Korea. Whether accurate or inaccurate, news on North Korea has an impact on South Koreans and policymakers. Making a judgment on assumptions, not on facts, is quite risky and dangerous. Leaders need to be careful in commenting on North Korea as their impact is quite widespread. Talking about North Korea based on unconfirmed news is all the more dangerous.

Read the full story here:
Accuracy of reports on North Korea
Korea Times
Lee Chang-sup
2011/1/6

According ot Yonhap:

In an apparent bid to facilitate its hereditary power succession, North Korea has rewritten major regulations governing its ruling party, allowing its leader-in-waiting to take full control of the state with greater ease, a government source said Thursday.

The revisions were approved at the landmark convention of the top Workers’ Party delegates in September, during which Kim Jong-un, the youngest son of leader Kim Jong-il, rose as a vice chairman of the Central Military Commission, the source said.

“The revisions paved the way for the Kims to monopolize every part of the North Korean system while making it official that the country is a dynasty,” the source said, asking not to be named because of the intelligence nature of the documents he cited.

North Korea removed a clause that made it mandatory for the party to hold a general convention every five years, the source said. Instead, the party can now elect senior members and revise its regulations just by holding a top delegates’ meeting.

“Another measure that makes it easy for Kim Jong-un to take power is to automatically appoint the party secretary as head of the Central Military Commission,” the source said, adding that the move suggests Kim Jong-un, a four-star general, may be on track to succeeding his father as party secretary.

“This allows Kim Jong-un to control both the party and the military just by rising to the top of the party, the source said.

Kim is believed to be no older than 28. His birthday is this Saturday, Jan. 8.

The Central Military Commission within the party has also been given more power, the source said, as it now “governs all defense and military programs conducted between each party convention.”

The revision signals that the commission may grow more powerful than the National Defense Commission, the highest seat of power headed by Kim Jong-il but not yet joined by Kim Jong-un, he said.

Read the full story here:
N. Korea rewrites party regulations to boost hereditary power succession: source
Yonhap
Sam Kim
1/6/2011

According to the Hankyorey:

A report on major North Korean indicators released by Statistics Korea on Wednesday revealed that South Korean products are becoming increasingly popular in North Korea, and that there are hardly any North Korean urban youth who do not watch South Korean TV dramas or movies.

In the report, Statistics Korea said it is becoming a fad for young people in major North Korean cities like Pyongyang and along the border with China to watch South Korean television dramas and films using MP3 players or laptop computers. Statistics Korea said MP3 players with 1G of memory cost 60,000 North Korean Won (estimated $419), while a used laptop costs about 2 million North Korean Won. A memory chip with two or three movies costs 10,000 North Korean Won if it is an original, and 5,000 North Korean Won if its a copy.

The report also said many South Korean products are in circulation in North Korea, including blenders, portable heaters, gas ranges, butane cans, lunch trays, gas heaters, rice cookers, dishrags and gloves. According to the report, South Korean shampoo and conditioner is popular with the wives of high-ranking North Korean officials in Pyongyang. Some 470g bottles of South Korean shampoo and rinse go for 40-50 yuan (8,000-10,000 South Korean Won) in Pyongyang. The report said the popularity of South Korean products was also reflected in other goods. South Korean necklaces are sold for about $500 and earrings for about $70-80, while South Korean products like perfume, deodorant, car air fresheners, refrigerator deodorizer and bathroom air fresheners are also selling well.

South Korea’s nominal GNI in 2009 was $837.2 billion, 37.4 times that of North Korea’s $22.4 billion. North Korea’s economic power, all told, is no more than the level of the South Korean city of Gwangju (about 22 trillion Won). South Korea’s per capita income of $18,175 was 17.9 times that of North Korea’s $960. South Korea also conducted $686.6 billion in total trade, 201.9 times that of North Korea, which conducted only $3.4 billion. The only sectors in which North Korea topped South Korea were production of iron ore and coal and length of railroads. North Korea’s iron ore production was 4.955 million tons, ten times that of South Korea (455,000 tons), and its coal production was 25.5 million tons, 10 times that of South Korea (2.519 million tons). North Korea also had 5,242km of railroads, 1.4 times that of South Korea’s 3,378km. North Korea is also believed to have 7 quadrillion Won in underground mineral wealth.

I have been unable to locate the original on the Statistics Korea page.  If any readers can find it, please let me know.

Read the full story here:
In limited N.Korean market, furor for S.Korean products
Hankyoreh
Hwangbo Yon
1/6/2011

According to Yonhap:

Despite persisting political woes, a new South Korean company has begun operating in North Korea’s border industrial complex that combines superior South Korean capital and know-how with the North’s cheap local labor, a government official said Thursday.

The company, known as DSE, completed building its factory in Kaesong in early May and is therefore exempt from the investment ban on North Korea that Seoul imposed later that month over the sinking of a South Korean warship, the Unification Ministry official said.

…

The ministry official, who spoke on customary condition of anonymity, said DSE began operating on Jan. 3 and is employing 160 North Korean workers, part of the 44,000 workforce in the Kaesong complex, to produce lighting apparatuses and other metallic products.

The number of South Korean companies operating in Kaesong now stands at 122, the official added.

…

South Korea has since sharply cut down on the number of its workers allowed to stay in Kaesong. The North, in an apparent act of desperation to revive its economy, has since called for lowering tension and holding cross-border dialogue. South Korean officials are demanding that the North first show “sincerity,” indicating Pyongyang must apologize for the series of provocations blamed on it.

Read the full story here:
New S. Korean company begins operating in N. Korean factory park
Yonhap
Sam Kim
1/6/2011

According to AFP:

A pony-tailed worker taps on a laptop while, not far away, rosy-cheeked children sport baseball caps. Both vistas are part of a rare exhibition of contemporary North Korean art, nowadays on display at a trendy Moscow gallery.

The exhibition, titled “Water Still Flows under Ice,” addresses such themes as World Cup football, new technology and Western fashion. It is running at Winzavod, a brick-walled former factory that usually hosts cutting-edge shows.

In one painting, children wearing T-shirts and baseball caps gaze at monkeys at a zoo.

In another, a female engineer with a helmet over her pony tail taps on a laptop. There’s no sign of any brand name.

None of the works have been shown before outside the isolated Stalinist state, organizers of the show said.

They called the exhibition “unprecedented” and “attempt to break the ideological ice.”

The art is “post-socialist realism,” said Winzavod gallery’s director, Sofiya Trotsenko, referring to the Soviet idea of carrying a political message to the masses through folksy scenes of socialist triumphs.

She stressed the exhibition, which opened this month and runs to the end of January, was not intended as propaganda, despite being endorsed by the North Korean government.

“This exhibition is not propagandizing anything,” Trotsenko told AFP. “We do not make any judgments. We just show [the art] and it’s your business to draw conclusions on what you see.”

Much of the art dates from 2009 and this year. A painting from 2009 shows North Korea’s football team wildly celebrating a win. It was presumably commissioned after the country qualified for the 2010 World Cup.

Titled “Winners,” it shows crowds cheering and footballers waving a giant national flag. In reality, North Korea took one goal against Brazil but then lost 7-0 to Portugal.

All the art comes from the Mansude studio in Pyongyang, the vast workshop of the most favored official artists, who create public art such as patriotic mosaics in the metro.

The organizers said they tried to select works that were not overtly political, however.

“We wanted to show domestic things, Trotsenko said. “We wanted specifically to show daily life.”

She said she got the idea for the exhibition after she visited North Korea as a tourist and went on an excursion to the art studio in Pyongyang.

“There isn’t a single portrait of the Great Leader. Everything here is about private life,” said one of the curators, artist Oleg Kulik.

“We thought it was interesting to do an exhibition that was not ideological,” Kulik added.

Nevertheless, scenes such as those featuring plump babies lying in a hi-tech maternity ward look unlikely in a country where it is feared that malnutrition has stunted generations.

Kulik, an outrageous artist best known for his naked performances as a dog, designed the exhibition’s layout, with pink neon lighting and an installation that shows army helmets hanging over a bowl of rice.

He called it “a metaphor for the condition of North Korea.”

Read the sull story here:
Official art from North Korea comes to Moscow
AFP
1/5/2011

According to StrategyPage.com:

North Korea has expanded its special operations troops to 200,000 troops over the last five years, an increase of 67 percent. This is apparently an effort to maintain a reliable force of troops as the armed forces, as a whole, declines because of lack of maintenance, new equipment and anything resembling morale. These 200,000 troops have turned into a North Korean “Republican Guard,” an army within the army that is more reliable and loyal than the rest of the armed forces.

North Korea has long maintained elite commando forces, troops who were carefully selected, then paid, housed and fed better, and given access to better equipment. This alone insured a higher degree of loyalty. About 16 percent of the 1.2 million military personnel are now in these elite units. Most of them are similar to U.S. rangers, marines, paratroopers or special reconnaissance troops (U.S. Marine Force Recon and army LURPS). There are also some 30,000 snipers, organized into ten Sniper Brigades. This is a rather unique use of snipers, and given shortages of ammunition in the north, it’s uncertain how well these troops, no matter how well selected, are at sniping. If you want to maintain your shooting skills, you have to fire thousands of rounds a year. The same applies for all elite troops, although a lot of the training just consists of physical conditioning and combat drills. For snipers, this consists practicing staying hidden. This can be accomplished, if you can keep the troops well fed and housed. This is no longer the case with many of the Special Forces, and morale is suffering.

At the apex of North Korean Special Forces there are over five thousand commando and U.S. Special Forces type troops. These are meant to get into South Korea and go after key targets and people. Again, the North Koreans have trained for half a century to do this, but have not been able to actually put these troops to the test much. There have been thousands of small operations in the south over the last half century. In the 1960s there was a low level war going on, as the North Koreans sent dozens of small teams south each year. Over a hundred American troops were killed or wounded, and many more South Korean soldiers and police. Yet, the North Koreans had little success.

While the top special operations units are still well cared for, more and more reports come out of the north about many less skilled special operations troops complaining about lower quality food and other benefits (like access to electricity year round, and heat during the Winter.) More of these troops are deserting and heading for China, where they can be more easily interviewed. Some have made it all the way to South Korea, where the extent of their numbers and preparations has pushed South Korean commanders to increase their security preparations, and train more troops to deal with all these commandos in war time.

While the North Korean special operations troops are grumbling, and not getting all the training resources (ammo and fuel) they need, they remain a highly motivated, and generally loyal, force. The government uses these troops to insure the loyalty of the other 84 percent of the military, and more and more elite troops are being used to assist the secret police in going after dissidents and corrupt officials. This is probably hurting the North Korean special operations forces more than anything else. The troops are getting a close look at the corruption and contradictions in North Korea. The troops generally lived in closed bases and don’t get out much. But now that they do, they see a North Korea that is unpleasant, and not as swell as their commanders told them it was. It turns out those letters they were getting from home were not exaggerating how bad things were. And the trend has been down for so long, it’s hard to assure the troops that there’s any way up.

Read the full story here:
The North Korean Republican Guard
Strategy Page
1/5/2011

According to Arirang News:

The income disparity between South and North Korea has widened by close to 40 times.

According to figures released by Statistics Korea on Wednesday South Korea’s Gross National Income reached 837 billion US dollars in 2009 about 37 times more than North Korea’s 22 billion dollars.

South Korea’s GNI per person posted 17,175 US dollars roughly 18 times more than North Korea’s 960 dollars while in annual trade the South saw 686 billion dollars in 2009 which is 202 times larger than the North’s 3 billion dollars.

As for economic growth that year the South saw a [0.2%] expansion in the wake of the global financial crisis whereas the North posted a contraction of 0.9.

Economists say such figures show that it is almost impossible for North Korea to catch up with South Korea anytime soon.

An official with the finance ministry in Seoul says South Korea’s overall economic strength is about 40 times that of the communist regime adding that such power provides the foundation for South Korea to stay ahead of North Korea in every field including defense.

And according to the Choson Ilbo:

South Korea’s economy is 37.4 times larger than North Korea’s, according to the latest data. Statistics Korea said Wednesday that as of 2009 South Korea’s nominal gross national income stood at US$837.2 billion as against North Korea’s GNI of $22.4 billion. The figure is slightly lower than the 37.7-fold gap seen in 2008 but marked a significant increase from the 34.7-fold difference seen in 2006.

Per-capita GNI was $17,175 in the South, 17.9 times larger than North Korea’s $960, and South Korea’s total trade volume of $686.6 billion was 201.9 times greater than North Korea’s $3.4 billion.

But North Korea has ample mineral resources. As of 2008, North Korea had W6,983.6 trillion (US$1=W1,126) worth of mineral resources, 24.1 times more than South Korea’s W289.1 trillion. The North has an estimated W2,679.7 trillion worth of magnesite (6 billion tons), W2,662.9 trillion worth of coal (20.5 billion tons), and W61.33 trillion worth of gold (2,000 tons). South Korea had no magnesite while its coal deposits amount to just W15.7 billion or 1.36 billion tons, 5.9 percent of North Korea’s.

Statistics Korea also cited media reports to describe the rising interest among North Koreans in South Korean pop culture. South Korean-made mixers, heaters, gas ranges, gas containers, lunch boxes, pressurized rice cookers, towels and gloves are sold in North Korea with the brand labels intact.

South Korean-made shampoo and conditioners are popular among high-ranking North Korean officials, with a 470 g product costing between 8,000 to 10,000 North Korean won and US$1.50 for a bar of soap. Some young North Koreans watch South Korean movies and TV dramas such as “Friend,” “My Wife is a Gangster,” and “Winter Sonata” on their Chinese laptops and listen to South Korean pop songs on their MP3 or CD players.

Read the full story here:
Income Gap Between South and North Korea Records 37 Times Differences in 2009
Arirang News
Kim Na-ri
1/5/2011

Economic Gap Between 2 Korea Remains Huge
Choson Ilbo
1/6/2011

According to Yonhap:

North Korean leader Kim Jong-il conducted the largest number of public activities last year since he inherited the communist country from his father in 1994, according to figures aggregated by the South Korean government.

The 68-year-old appeared in North Korea’s official media a total of 161 times, the Unification Ministry said Tuesday in a release that suggested Kim was trying to tamp down outside speculation over his health. About one fifth of his activities last year were joined by his third son and heir-apparent Kim Jong-un, the ministry said.

Kim Jong-il reportedly suffered a stroke in 2008, a year during which he showed up only 97 times. Kim appeared in official media 159 times in 2009, increasing his visits to factories and other economy-related facilities. Last year, he made 63 visits to economic sites and 38 to military ones, the ministry said.

“He seems to be trying to unite the regime by showing both internally and externally that he remains healthy and that he is focused on enhancing the living standards of people,” a ministry official said, asking not to be named.

North Korea is trying to revive its economy ahead of 2012, which marks the centennial of the birth of Kim Il-sung, who founded the country and later passed his power to Kim Jong-il upon his death.

Outside analysts say the heavy focus on the economy is aimed at creating a setting favorable for another hereditary power succession, this time, to Kim Jong-un, believed to be about 28.

North Korea’s media have yet to report on Kim Jong-il’s first public activity this year.

Read the full story here:
N. Korean leader most active last year despite health woes
Yonhap
Sam Kim
1/4/2011

Click image to see the Chinese, Russian, and North Korean piers

According to the Choson Ilbo:

In official confirmation that closer China-North Korea business ties have come to fruition, the state-run Xinhua news agency and local media in Jilin on Monday said China has transported 20,000 tons of coal from a mine in Jilin to Shanghai and Ningbo through North Korea’s Rajin-Sonbong Port since Dec. 7.

The coal produced in Hunchun was carried by some 570 35-ton trucks across the Duman (or Tumen) River and transported to the port along a 60 km unpaved road between Hunchun and Rajin-Sonbong.

A source in Hunchun said, “Since a month ago, dozens of trucks a day have been going to the North” through Quanhe Customs Office.

The abundant coal deposits in the northeastern China are mainly used for heating homes in southern China in winter, but with no access to the East Sea, China had to transport it overland to Yingkou Port in the Bohai Bay, some 800 km to the west, incurring logistical costs.

China has long tried to get the right to use Rajin-Sonbong and Chongjin ports in North Hamgyong Province in North Korea in a bid to secure an East Sea route.

In 2009, Chuangli Group, an environmental facilities manufacturer in Dalian, obtained the right to use a pier in the Rajin-Songbong port for 10 years in collaboration with a North Korean trading company. Another Chinese firm in Tumen is also reportedly seeking the right to use Chongjin Port.

Prof. Yoon Seung-hyun of Yanbian University said Chongjin Port, has better facilities than Rajin-Sonbong. “The North is more open and aggressive” because it is groaning under international sanctions and aid from South Korea has dried up, he added.

Recent posts on Rajin (Rason) can be found here.

Read the full story here:
Chinese Shipping Through N.Korean Port in Full Swing
Choson Ilbo
1/4/2011