The economy in Kim Jong-un’s New Year’s address: what’s there and what isn’t

By Benjamin Katzeff Silberstein

The supposed hydrogen bomb test has come to dominate the news on North Korea over the past few days, for obvious reasons. Kim Jong-un’s New Year’s Address has naturally ended up in the shadow of the nuclear test, but it is worth going back for a closer look. Overall, it is a speech that appears to contain few major announcements or indications. Perhaps more surprising than what themes are there, are the themes that are absent.

Stephan Haggard pretty much sums up how economic matters are treated in the speech, as they often are in North Korean rhetoric on economics: “As usual, the economic components of the speech rely more on exhortation than any clear policy message, confusing results with the means of achieving them.”

That is, in much of the speech, Kim simply talks about what will be achieved but leaves out how to get there. Take the following paragraph, for example (my emphasis added):

The Cabinet and other state and economic organs should decisively improve their economic planning and guidance. Leading economic officials should fully equip themselves with Party policy, work out plans of the economic work in an innovative way and give a strong push to it on the principle of developing all the sectors at an exponential speed by relying on the inexhaustible creative strength of the working people and by dint of modern science and technology. They should accurately identify the main link in the whole chain of economic development and concentrate efforts on it while revitalizing the overall economy, especially when the conditions are not favourable and many difficulties arise. They should be proactive in organizing and launching the work of establishing on a full scale our style of economic management method which embodies the Juche idea, thus giving full play to its advantages and vitality.

And:

All the sectors of the national economy should set ambitious goals and maintain regular production by tapping every possible internal reserve and potentiality.

Those who are more savvy at reading between the lines and interpreting rhetorical symbolisms can perhaps draw out meaningful signals from quotes such as these. But at face-value, they seem to give little indication of policy changes. Or of any policy at all, for that matter.

What are the areas that Kim hold up as economic priorities, then? Stephan Haggard points out heavy industry as one such theme. It is also the one mentioned first in the speech. Infrastructure and power supply also features fairly prominently (and is mentioned early on), with specific references to several power station construction projects. Kim also mentions IT and the “knowledge-driven economy” (emphasis added):

Our working class, scientists and technicians, true to the instructions of the great leaders, made a big stride in making the metallurgical industry Juche-based, built model, standard factories of the era of the knowledge-driven economy in various parts of the country and put production lines on a modern and IT footing, thus opening a new road of advance for developing the overall economy and improving the people’s standard of living.

Presumably, this is what North Korean media mean when they talk about the H-bomb test as an economic boost: that such capabilities show North Korea’s strength as a knowledge-based economy.

Domestic production capabilities are highlighted all the way through. This theme isn’t new. Kim Jong-un has often emphasized the importance of goods diversity and local production. This lies well in line with the basic economic tenets of the Juche doctrine. Here is one example of how domestic production capacity is highlighted in the speech (emphasis added):

The flames of the campaign to implement the Party’s ideas and defend its policies have unfolded a proud reality of our indigenous plane flying in the sky and our indigenous subway train running under the ground, and rich fish and fruit harvests were gathered, their socialist flavour bringing pleasure to the people.

One theme that features relatively prominently is construction. In one paragraph, Kim even states that “Construction is a yardstick and visual evidence for the strength of a country and the quality of its civilization”, and continues to urge the country to build more:

The construction sector should launch a general offensive to implement the Party’s construction policy and grand plan. By doing so, it should build important production facilities, educational and cultural institutions and dwelling houses on the highest possible level and at the fastest possible speed, so that they serve as standards and models of the times. In this way it can make sure that the great heyday of construction continues without letup.

Perhaps this is an indication that the building boom in Pyongyang of the past few years will continue. Priorities such as this one primarily benefit those political classes that live in Pyongyang. With few exceptions, as far as I’m aware, most other cities have seen little of the construction boom that the capital city has experienced.

There is also a reference to the coal mining industry. On the one hand, it may be interesting because North Korea’s main export destination for coal is China, and these trade flows have been volatile over the years, and there have been signs that North Korea isn’t getting a good deal in this trade. But on the other hand, this may be reading too much into one small reference in the speech (emphasis added):

In order to achieve breakthroughs for a turning point in building an economic giant the electric-power, coal-mining and metallurgical industries and the rail transport sector should advance dynamically in the vanguard of the general offensive.

Later, coal mining appears only in reference to the domestic power supply (emphasis added):

All sectors and all units should wage a vigorous campaign to economize on electricity and make effective use of it. The sector of coal-mining industry should raise the fierce flames of an upsurge in production to ensure enough supply of coal for the thermal power stations and several sectors of the national economy.

There are two themes that are surprisingly absent. One is agriculture. Agricultural policy is barely present, and when it is, management methods aren’t mentioned. For example:

The agricultural sector should actively adopt superior strains and scientific farming methods, speed up the comprehensive mechanization of the rural economy and take strict measures for each farming process, so as to carry out the cereals production plan without fail.

This is a little surprising, because regime sources have claimed that agricultural production has been boosted during the year, and management reforms with greater incentives for farmers have been touted as the reason. (A close look at the numbers indicates that agricultural production has declined slightly during 2015, moving it towards the average of the 2000s.) If agricultural reforms have indeed been a central tenet of Kim Jong-un’s economic policies, one could at least have expected a reference to these reforms in the speech.

The second theme that is strangely absent is forestry policy. It is only mentioned in one sentence:

The whole Party, the entire army and all the people should buckle down to the campaign to restore the forests of the country.

During the past year, Kim Jong-un has highlighted forestry policy as a key area. He has talked openly and frankly about the role of tree felling in causing floods and subsequent food shortages, and promoted reforestation, albeit not in a way that is likely to work very well. North Korean media has singled out tree nurseries for not doing their job properly. In sum, forestry has been relatively high on the agenda, but the topic still barely made it into the speech.

All in all, from an economic policy standpoint, this year’s New Year’s Address did not contain any major bombshells. The fact that economic issues appear right after the section on the upcoming party congress may be a hint that such issues will be high on the agenda, but then again, it might not mean much at all. Moreover, it is unclear how much can really read into the New Year’s Address for hints about regime policies and priorities. After all, the speech contained virtually no allusions to the H-bomb test that was to come only days later.

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An affiliate of 38 North