North Korean economic reforms tightly tied to domestic conditionsCao Shigong

According to Cao Shigong a member of the Korean Peninsula Research Society, Chinese Association of Asia-Pacific Studies, in the PRC’s Global Times:

A series of proactive measures to adjust economic policies and expand exchanges with foreign countries recently adopted by North Korea have drawn widespread attention. The moves aim to help the country escape the long-lasting economic woes, improve the nation’s political and social stability, and promote economic cooperation within the region. Therefore, they deserve welcome and encouragement. However, it is inappropriate to regard these measures as a signal of overall reforms or a starting point of further opening-up.

North Korea is always reluctant to label its measures for economic development as “reform and opening-up.”

To begin with, China’s implement of reform and opening-up is based on absolute disapproval of the mistaken route that deemed class struggle as the guiding principle. Yet North Korea, as a hereditary regime, does not allow any doubt or modification of its former leaders’ ideologies and political lines such as juche (“self-reliance”) and songun (“military-first”).

Besides, China’s reform has broken the traditional planned economy and set up a market-oriented socialist economy with the coexistence of other diverse forms of ownership, especially allowing the development of private business. But North Korea still cleaves to its old beliefs that planned economy and the public ownership of the means of production are the key characteristics of socialism, and that if they are changed, socialism will be lost.

In addition, as a big country, China enjoys strong tolerance and endurance. Even it is wide open to the world, under the pressure over intruding foreign cultures and values, it can still safeguard its political and social stability. North Korea, however, will find it hard to do the same if it opens up like China, against the backdrop of US hostility, the north-south divide, and fierce competition over systems.

Consequently, North Korea took the measures of “our-style (North Korea-style) socialism” and corresponding “reforms,” including the 7.1 Economic Management Improvement Measures, 6.28 Economic Reform Measures and 5.30 Measures. Though similar to the reform and opening-up of China, they have their own distinguished features.

For instance, the country initiated “land contracts,” yet did not end cooperative farms; it encourages its business to be flexible, yet without changing the way their property is held; it established special economic zones and economic development zones, but with focusing on advantageous areas and corridors.

The basic features of North Korean “reform” measures are improving the policy flexibility, introducing new management styles, and bringing the function of the market into full play, without changing its fundamental system. The country also introduces and utilizes foreign capital under the control of the government. Apparently, these practices stem from the nation’s domestic conditions.

It is generally acknowledged that North Korea’s reform measures have achieved initial success. North Korean economy has recorded positive growth for three consecutive years, with its domestic markets and consumption becoming more active and the strain on food and living supplies eased.

On the other hand, confrontation between North and South Korea is rumbling on, and the arrangements around the only industrial complex between the two sides, the Kaesong Industrial Region, is constantly encountering conflict, which has made business people skeptical about economic collaboration with North Korea. Especially as North Korea keeps conducting nuclear tests, it remains hard for it to break the sanctions and isolation from the international community.

All these factors prove the uncertainty of North Korea’s economic reforms. Hence, media and scholars should be reminded to deliver accurate and comprehensive information over North Korea to the world, in order to prevent giving misleading impression or weakening the risk awareness of investors, causing irreparable losses as a result.

Read the full story here:
North Korean economic reforms tightly tied to domestic conditions
Global Times
Cao Shigong
2015-5-27

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