Institute for Far Eastern Studies (IFES)
China’s Ministry of Commerce reportedly sent about 70 specialists to North Korea to provide “joint consulting” services for Rajin and Hwanggumpyong and Wihwa Islands joint special economic zones (SEZs).
According to Yonhap News, about 70 specialists from the Department of Commerce of Jilin Province were dispatched to North Korea a few months ago to work on the China-DPRK joint venture projects. Their main focus is to discuss the management and legal systems of the SEZs, promotion of foreign investment, and share over 30 years of China’s experience on opening and reform.
The Department of Commerce of Jilin Province is directly under the Commerce Ministry. Chinese officials are going between Rajin, Sinuiju (near Hwanggumpyong and Wihwa Islands), and Pyongyang areas to negotiate on specific management measures concerning the SEZs.
Since Vice Chairman of the National Defense Commission (NDC) Jang Song Thaek visited China in August 2012, the two countries have reached an agreement and established joint management committee in Rason and Hwanggumpyong and Wihwa Islands. Since then, briefing sessions have been hosted in major Chinese cities to promote investment in North Korea.
Many speculated that joint management committees would be established in both zones.
A recent article in North Korea’s economic journal Kyongje Yongu (October 30, 2012), outlined general types of SEZ management: management-led, public enterprise management, cooperative management, joint venture, and contract-based management committees. Government-led management committee was referred to as the most common form.
Currently, the Kaesong Industrial Complex is jointly operated by North and South Korea by a management committee. However, one drawback to this system is that the high government involvement places enormous constraints on the activities of investing companies.
China, on the other hand, is trying to reduce North Korea’s intervention in the management process of the SEZs. China is also shying away from adopting a management committee-led form of management.
Meanwhile, the seventh meeting of the DPRK-China Intergovernmental Cooperation Committee on Economics, Trade, and Science and Technology was held in Pyongyang on January 9, where an agreement on economic and technology cooperation was signed. At a subsequent ceremony, the two sides also signed an agreement for the construction of administrative office buildings in the Rason and Hwanggumpyong SEZs.
The DPRK-China Intergovernmental Cooperation Committee on Economics, Trade, and Science and Technology began in March 2005 and has held one to two meetings each year to promote bilateral economic cooperation.