Weekly update, March 6th: the coronavirus and the North Korean economy

By: Benjamin Katzeff Silberstein

The coronavirus continues to dominate the news cycle and everyday life developments of people around the world, and North Korea is no exception.

The government is taking very, very serious measures to protect the country. Chinese residing in areas along the North Korean borders have been warned not to get too close, or risk being shot at by North Korean border guards. I cannot recall anything similar to this in the past few decades of Sino-Korean relations and border conditions. Reuters:

Residents of the Chinese cities of Jian and Baishan were warned that people who get too close to the border might be shot, according to three people who received the notice, which was reviewed by Reuters.

“We’re told that we may get killed if we get too close to the border area,” said one restaurant owner in Jian, which is separated from North Korea by the Yalu River, declining to be identified given the sensitivity of the matter.

Residents are prohibited from fishing, grazing livestock or throwing rubbish near the river, according to the notice issued this week.

Strict controls are in force domestically as well. I wrote about price divergences between cities a few days ago, a potential sign that North Korea’s internal controls are severely limiting movement between provinces in the country. While this is likely a good thing from a virus prevention point of view, it’s very problematic for North Korean consumers. It may even be a bigger one than the closure of many of the goods transport routes over the Chinese border.

Aside from goods from different provinces not reaching markets in other localities and limiting supply, there’s a broader question looming. What happens with these goods? In China, as restaurants see demand drop to catastrophic lows, ingredients lay idle and rot. North Korea has limited electricity supply and refrigeration is not common in homes, and likely not with market traders in large parts of the country either. When people stock up on goods, they most likely choose those that will not perish easily, such as rice. And what happens with unsold, fresh goods? Are they sold at below-market value, causing losses for farmers down the supply chain, or perhaps in some cases not sold at all because they can’t be transported to the right markets?

North Korea’s quarantine situation is also interesting. State media has said that 7,000 people are under “medical monitoring”, whatever that means, and 3,920 under quarantine. For the quarantine figure, that’s 0.00015 persons per capita (assuming a population of 25 million). By comparison, Denmark has 0.00004 people per capita under quarantine. This is perhaps not surprising as Denmark is a wealthy country, far away from China with good testing  and monitoring capacities. Still, it underscores the point that 3,920 people under quarantine is certainly not nothing. To some extent, authorities may be over-vigilant, but there’s likely a foundation there somewhere.

More to come next week, surely.

Share