Archive for January, 2021

Kim Jong-un’s congress speech: strengthening state control over the economy

Tuesday, January 12th, 2021

By: Benjamin Katzeff Silberstein

Unfortunately, North Korean state media has not been as forthcoming with coverage of the congress contents as they were on the first day. They did, however, release a summary of Kim Jong-un’s nine-hour long report to the congress. Presumably, Kim’s report contained much greater levels of detail than the (still very long) report summary put out by KCNA on January 9th.

In this post, I try to summarize the most significant parts of the speech where Kim deals with the economy. Such content is plentiful, but as so often in these speeches, many words are used to say very little.

The bottom-line message is clear, however: state control over the economy is increasing and will continue to tighten. What exactly this means in practice is unclear, but we have seen some very troubling examples as of late, such as the reported executions of foreign currency traders, clear signs of strengthened control over foreign currency market rates, attempts by the state to take control over semi-private corporate operations, among many other examples. And let’s not forget all the anti-corruption campaigns. While fighting corruption is undoubtedly a good thing, in the current North Korean context, it often likely means finding cash earned through semi-legal or illegal private economic activity and hidden from the state.

Indeeed, Kim’s report is abundantly clear in stating that he (or, the collective consensus of the North Korean policymakers with the most clout at present, of which Kim is obviously the most powerful) wants the state to be the main planner and decision-maker not just over the general direction of the economy, but on a much more detailed level than that. As others have pointed out, the anti-covid-19-measures may at least in part be the results of anti-market policymakers in the state apparatus using the current situation to push their agenda. Sentences such as the following are particularly concerning: “It is imperative to improve planning and make proper use of the economic leverages including financial, monetary and price administration so as to ensure rational management of the economy.” Price administration requires a level of economic governance by the state which suggests that the policy direction is hardly about merely setting interest rates and making some public investments.

None of this is happening in a vacuum. Overall, since Kim came to power, there’s been a general push to assert state control not just over the economy, but society overall. Border control has strengthened, as evidenced by the dwindling number of defections. Campaigns against consumption of foreign media have seen a significant uptick although, of course, they were always more or less in force in the country. The speech seems to hint at this too, with passages about enhancing the quality of domestic media, which may be an attempt to compete more strongly with the smuggled foreign culture that the regime considers ideologically poisonous. In any case, taking control over the economy is a natural, and perhaps the most central, part of social and political control overall.

For those hoping that North Korea will go in a direction of looser social and economic control by the state, the congress report does not make for joyful reading. The clippings below are only a small fragment of the gargantuan text, I’ve done my best to curate what I consider to be the most interesting and important parts and annotated some of them. My own emphasis in bold:

Although economic construction failed to hit the expected strategic goals, a precious foundation for making sustained economic development by our own efforts was provided, the report said, adding: The greatest of such successes is that the backbone of the self-supporting national economy, the socialist economy, which is the material basis of the existence and lifeline of our own style of socialism, was maintained and its arteries were preserved.

Kim has made similar admissions of failure in the past, so in my opinion, media headlines framing this as unique have been off the mark. In any case, the full message seems to be: things have been bad, little progress made, but at least we didn’t budge on core principles and reform our system.

The Party Central Committee built up new potentials for readjusting and developing the overall economy by taking revolutionary measures for strengthening the unified guidance and strategic management of the state over economic work and making sure that the socialist principles were thoroughly observed in the economic field.

So, some measures taken for enhanced state control, but many remain.

By prioritizing the long-standing and special DPRK-China relations, our Party developed the friendly relations with China as required by the new century and opened a new chapter in the DPRK-China relations of friendship with socialism as its core, the report stressed.

The Party Central Committee strengthened strategic communication, promoted mutual understanding and deepened comradely trust between the two Parties through five rounds of the DPRK-China summit talks and thus provided a firm guarantee for fresh development of the DPRK-China relations as demanded by the times that required continuity in the fraternal ties and unity between the Parties and peoples of the two countries which are inseparably bound up with each other in the struggle for their common cause.

Attaching importance to the fresh development of the traditional DPRK-Russia relations, the Party Central Committee also conducted external activities for the development of friendly and cooperative relations between the two countries, in the course of which it laid a cornerstone for the expansion of friendly relations with Russia.

These passages are interesting not so much because of their substance, but because an explicit goal of the last five-year plan, according to leaks, was to diversify its trade away from near-total reliance on China, and expand trade with Russia in particular. There is no hint of that goal in the report summary.

The report said that due to such obstacles, state investment and supplies intended to bolster the major economic sectors in the five-year strategy for the national economic development could not be carried out properly.

It made an analysis and appraisal of the Party Central Committee on the cause of non-fulfillment of the five-year strategy for the national economic development during the period under review, seriously pointing out that it could not but draw a conclusion that if one ascribes its failure to objective conditions, he can do nothing and the action and role of the driving force will be unnecessary, and it is impossible to accelerate the revolutionary struggle and construction work unless the unfavourable external factors are removed.

The Party Central Committee analysed the current situation, in which the 5-year strategy for national economic development had not been properly set on the basis of scientific calculation and grounds, science and technology failed to actually play the role of propelling the economic work of the country and the work of readjusting and reinforcing the irrational economic work system and discipline was not properly done.

The report referred to the conclusive lesson that the economy of the country can never be boosted without breaking with the wrong ideological viewpoint, irresponsible working attitude, incompetence and obsolete working manner that have been prevalent so far.

In other words: state officials and managers shouldn’t be content with blaming the external environment, the poor performance of the economy is still their fault, because they were not ideologically convinced enough. It is a convenient conclusion to draw for policymakers who want to avoid serious reform at all costs.

The new five-year plan mainly presupposes that the Cabinet, as the economic headquarters of the country, properly enforces the Cabinet-responsibility system, Cabinet-centred system, for economic work, vigorously accelerates the work of strengthening the essential lifeline and integrity of the country’s economy, definitely improves its economic management, actively promotes the normalization of production, renovation and local provision of raw and other materials by dint of science and technology and orientates the external economic activities toward reinforcing the foundations and potentiality of the self-supporting economy.

And the new plan reflects the demands for perfecting the self-supporting structure of the national economy, lowering the proportion of dependence on imports and stabilizing the people’s living by taking the actual possibilities into consideration.

The main seed and theme of the plan are, as always, self-reliance and self-sufficiency.

[…]

It was noted that in order to attain the goal of iron and steel production mentioned in the new five-year plan, scientific and technological problems must be solved to expand production capacity by renovating the existing production lines with advanced technology and building new energy-saving iron blast furnaces in major iron works and steel plants, to invigorate the production of iron ore and to use brown coal in the northern areas for the production of pig iron.

The report also referred to the direction of the development of the core industry of the country, the chemical industry, which can be likened to the lifeline for the construction of the self-supporting economy and the improvement of people’s standard of living.

It is unclear precisely how the state intends to use such increased production. With regards to the chemical industry, it likely has to do with manufacturing fertilizers and liquified coal, to replace expensive oil imports. 

It put an emphasis on important issues for developing the coal industry, an outpost for the development of the self-supporting economy.

Referred to were the issues of boldly unfolding and powerfully propelling the work of intensively supplying equipment, materials, labour and funds to the coal industry, securing more coalfaces by giving precedence to prospecting and tunnelling in the coal industry, putting efforts into the development of the soft coal industry, pushing forward the work of improving the working and living conditions of coal miners as a priority task for increased coal production and taking measures for the effective use of coal.

The report defined the machine industry as an important sector leading and hauling the overall economic sectors, and set forth the immediate orientation of its development after examining the present situation facing the machine industry of the country and its causes.

The basic task facing the machine industry during the new five-year plan period is to make it an industry with solid foundations and switch to a development- and creation-oriented industry.

The machine industry should positively develop and produce modern and high-performance machine products including machine tools, vehicles, building machines, electric machines, mining machines and hydraulic machines.

The report stressed the need to attach importance to the mining industry and shore it up for the sake of the normal development of the national economy.

Many of the goods mentioned here are North Korea’s most central export commodities. They are hardly useless for domestic purposes, but will of course generate much less revenue than if exported.

The basic tasks facing the construction field during the new five-year plan period is to massively carry out the capital construction including housing construction so as to provide the people with a higher civilized living conditions and radically change the appearances of the country.

The construction field should powerfully push forward the two fronts simultaneously−industrial construction for strengthening the economic foundations of the country and construction for meeting the material and cultural needs of the people.

By concentrating efforts on the construction of 50 000 flats in Pyongyang, it should set the annual plans for building 10 000 flats every year, starting from this year, scrupulously organize the construction operation and guidance for implementing the plans and thus basically settle the issue of dwelling houses for the Pyongyang citizens.

25 000 houses should be built in the Komdok area, a leading nonferrous mineral producer where a large contingent of workers live, and thus build it into a mining city with no comparison in the world.

[…]

The field should step up technical updating of its infrastructure and turn mobile communications into a next-generation one as early as possible by developing the relevant technology.

It is needed to readjust the wire broadcasting and cable TV networks, put the relevant technology on a higher level and provide full conditions for the people in all parts of the country, ranging from cities to remote mountain villages, to enjoy a better cultural and emotional life.

This is a very interesting part of the speech which has received little or no attention. The message seems clear: the state has to improve TV programming to compete with the ideologically contaminated competition coming in from abroad, mainly in the form of South Korean TV dramas.

The report raised it as a very urgent issue at present to develop the state-run commerce and preserve the socialist nature of public catering and welfare service, and set forth the tasks for restoring our commerce, true to its name, to public service activities for supporting the people’s life and promoting their material well-being.

The important tasks to be carried out by our commerce without fail at present is to restore the state’s leading role and control in the overall commerce service activities and preserve the nature of socialist commerce of serving the people.

Commercial service units should put their service activities on a people-oriented, cultural, modern and diversified basis with a correct management strategy, and thus create a new socialist service culture of our own style.

[…]

The report underscored the need to tighten discipline in ensuring unified guidance of the state in the economic work, strengthen the national system of unified statistics, launch a proper project for boosting the mainstay of the national economy, and improve the conditions of industrial establishments to carry on their management activities.

Productive forces should be redistributed in a reasonable way so that economic efficiency may increase in the whole realm of the national economy, weak links in the chain of each economic sector identified, and the sectors that are essential for balanced development of the economy reinforced.

It is imperative to improve planning and make proper use of the economic leverages including financial, monetary and price administration so as to ensure rational management of the economy.

The scientific analysis and clear policies the report put forth with regard to the prevailing situation of the major economic sectors and their readjustment and development serve as a powerful weapon of practical importance in consolidating the material and technical foundations of the self-supporting economy and propelling economic construction in a planned and stable way irrespective of the change in the external environment.

Again, as mentioned in the intro to this post, this is all very traditional rhetoric and worryingly so. A very, very far cry from the early days of Kim Jong-un’s rule, when policy experimentation and limited liberalization moves of that time.

The long-term objective for rural construction is to eliminate disparities between the working class and the peasantry, the gaps between industry and agriculture and differences between the urban and rural areas by pushing ahead with the three revolutions in the rural areas and thoroughly implementing the thesis on the socialist rural question; and the immediate task is to give precedence to the work of transforming agricultural workers on a revolutionary and working class pattern, boost state support to the rural areas and build up the rural communities in a balanced way so that they have regional characteristics of their own.

This is pretty standard rhetoric, but it is incoherent given the consistent prioritizing of Pyongyang for prestige projects and the like. The same text even continues to push this priority with promises of new housing construction in Pyongyang.

Mentioned in the report was a task for city and county Party committees and people’s committees to become a powerful engine propelling the development of their regions, master of the local economy and administrator responsible for the livelihood of the people in their regions.

In other words, stronger local government control over economic affairs.

The report also made serious analysis of the work in the field of art and literature, and set forth tasks for ushering a new era of efflorescence of Juche-oriented art and literature by effecting a radical turn on all fronts of art and literature.

Creation guidance officials, creators and artistes in the field of art and literature should display an enterprising working spirit with high discernment to produce good works embodying the Juche character, national identity and modernity, stage characteristic performances, and purposefully carry out the training of reserves on a long-term basis by establishing a proper system and setting development strategy and clear goals.

Tasks were set forth for the mass media to raise the fierce flames of a new revolution in newspapers, news services, radio and TV broadcasting and publishing as required by the new period of drastic change and upsurge in socialist construction so as to wage a vigorous media campaign aimed at deeply instilling into all the people the core of the ideas, lines and policies of the Party Congress and inspiring them to the implementation of the decisions of the Party Congress, and for the field of physical culture and sports to redouble efforts for making our country join the ranks of advanced sports nations in line with the prestige and position of our dignified state.

The innovative orientations for building socialist culture are a reflection of the grandiose plan for creating a new, Korean style of civilization by bringing about a great revolution in all sectors of socialist culture with the successes, experiences, mistakes and lessons gained in the period under review as a springboard for advance and leap forward.

The report put an emphasis on effecting a revolutionary change in the mental and moral life of the people by pushing ahead with the eradication of non-socialist, anti-socialist practices and thorough establishment of the socialist lifestyle throughout the country as an undertaking involving the whole Party, state and society.

All the people should create and develop a noble and civilized new life of our own style and conduct a powerful mass campaign against the practices running counter to the socialist lifestyle, deeply bearing in mind the faith in socialism and love for and trust in things of their own.

Again, a similar theme to above, namely, improving cultural production — implicitly to compete with the inflows of foreign culture and its problematic ideological influence.

The report underscored the need to strengthen the people-oriented nature of the state befitting the intrinsic character of our style of socialist system, realize its unified, scientific and strategic control and thoroughly establish a revolutionary spirit of law observance throughout society as required by the building of a socialist rule-of-law state, and called on judicial, procuratorial, public and state security organs to fulfill their sacred mission and duty they have assumed for defending the system, policy and people as reliable defenders of the socialist system.

[…]

The Supreme Leader in his report put forward the important tasks for strengthening the working people’s organizations, the links between the Party and the masses and its fringe organizations, into powerful political ones, powerful forces for building socialism.

The report stressed the need for the working people’s organizations to hold fast to their internal work in line with their duty as organizations in charge of ideological education to firmly arm all their members with the Party’s revolutionary ideas and, in particular, the need to prepare the youth league as a reliable successor to and reserve of the Party.

[…]

It clarified it as the first task to attach primary importance to establishing the monolithic leadership system and further develop it.

As mentioned in the report the Party organizations and officials should ensure the absolute authority of the Party Central Committee always and everywhere and staunchly safeguard it. And they should never tolerate or connive at even the slightest tendency to undermine the authority of the Party Central Committee, but wage uncompromising struggle against it.

They should consistently push forward with the efforts to defend and glorify the Party’s leadership feats, particularly give a facelift to the units associated with the leadership exploits and the ones inspected by the great leaders, and ensure that they become the model units in carrying out the Party policies.

Party organizations should scrupulously organize the work to carry out the Party policies, learn in detail about how it is done, and review it, so as to thoroughly implement the policies.

To cement the single-minded unity of the Party and the revolutionary ranks in every way by doing the Party’s internal work effectively was raised as an important task in the report.

[…]

The report stressed once again that abuse of power, bureaucracy, irregularities and corruption are what the Party must most strictly guard against and its primary struggle target at present, and that Party organizations should carry on an uncompromising struggle against even any iota of them.

Calling for thoroughly establishing the revolutionary discipline of intensifying criticism, ideological struggle and study and of working according to functions, the report stressed that it is a way of improving the Party work to decisively improve the level and ability of the Party officials.

These last few paragraphs are perhaps not directly related to the economy, but they do emphasize the push under Kim for tightened discipline and ideological-political control.

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8th Korean Worker’s Party Congress and the economy: Day 1

Wednesday, January 6th, 2021

By: Benjamin Katzeff Silberstein

The Party congress in Pyongyang opened yesterday, Tuesday January 5th, and we already have some rather brief reports from KCNA. First, some relevant snippets from Kim Jong-un’s review of the Central Committee’s work:

He said that he is going to suggest through the report the key line of struggle and strategic and tactical policies for the epochal advance of the socialist construction and other important issues arising in accomplishing the cause of national reunification, promoting external relations and strengthening the work of the Party after strictly reviewing the work of the 7th Central Committee in the aspects of success and mistake.

The Supreme Leader reviewed the shining successes achieved by our Party and people in the period under review.

He also analyzed the mistakes manifested in the efforts for implementing the 5-year strategy for national economic development and their subjective and objective factors.

Underlining the need to start the work for further developing the overall economy of the country under a new five-year plan, the Supreme Leader analyzed the present states of the key industrial sectors including metal, chemical, electricity, coal, machine and mining industries and set forth the tasks for future development.

(Source: “Supreme Leader Kim Jong Un Starts Report on Work of 7th Central Committee of WPK,” Korean Central News Agency, January 6, 2020.)

As I’ve argued elsewhere, there is relatively little that the state  can do under current conditions to advance any “key industrial sectors”, aside from changes in management structures and extolling people to work harder and better — measures that will only have a marginal impact, if any.

Kim Jong-un also opened the congress with a speech, a few snippets related to the economy below:

However, though the period of implementing the Five-Year Strategy for the National Economic Development ended last year, almost all sectors fell a long way short of the set objectives.

Still existing are the various external and internal challenges that hamper and hinder our efforts and advance for fresh and continuous victories in socialist construction.

The key to breaking through the existing manifold difficulties with utmost certainty and speed lies in consolidating our own strength, our internal force, in all respects.

Proceeding from the principle of finding the cause of mistakes not in the objective conditions, but in the subjective conditions, and resolving all problems by enhancing the role of our motive force, the current congress is going to make a comprehensive and profound analysis and judgement of the experiences, lessons and mistakes we have made during the period under review and, on this basis, define the scientific goals and tasks of struggle, which we can and must accomplish without fail.

The successes we have already achieved are priceless for us, and so are the bitter lessons that have been accumulated.

All these are things that cannot be bartered even for gold, and constitute valuable assets for achieving fresh victories in the future.

We should further promote and expand the victories and successes we have gained at the cost of sweat and blood, and prevent the painful lessons from being repeated.

In particular, we should be bold enough to recognize the mistakes which, if left unaddressed, will grow into bigger obstacles and stumbling blocks, and take resolute measures against their repetition.

This congress has been convened on the basis of this pluck and commitment.

If the Eighth Party Congress, a congress for struggle, carries out its work in a substantial manner and puts forth a correct line and strategic and tactical policies, the Korean revolution will greet an era of a new leap forward and upswing.

[…]

First, it conducted the work of making a comprehensive, three-dimensional and detailed analysis and review of how the decisions of the Seventh Party Congress were implemented and drawing experiences and lessons for future progress and development.

To this end, the Party Central Committee formed a non-permanent central inspection committee and sent it to lower units on a mission to learn about the actual situations there and carefully listen to the opinions of workers, farmers and intellectuals who are Party members and work in the field.

The non-permanent central inspection committee conducted the work in the way of dispatching its teams to provinces and, after grasping the actual situations there, dispatching them to ministries and central institutions by direction and sector to make brisk, comprehensive and detailed inspections.

The teams thoroughly examined all aspects of the actual situation including what was wrong, what was neglected among what could be carried out and what was implemented in a profitable way or formalistic way in executing the decisions of the Seventh Party Congress, and if there were shortcomings, what were their causes and what were the defects in Party guidance.

During the days when the Party congress was prepared, departments of the Party Central Committee and other Party organizations across the country submitted to the Political Bureau of the Party Central Committee and the preparatory committee of the congress reports of their work over the last five years and innovative and detailed opinions on the goals and plans of struggle in the future.

(Source: “Supreme Leader Kim Jong Un Makes Opening Speech at 8th WPK Congress,” Korean Central News Agency, January 6, 2020.)

The speech contained relatively few specific and details, and we can probably expect more to come tomorrow. It seems to me that much of this, too, is a repetition of the theme we’ve seen throughout the past year: blaming officials through the chain of command for economic failures. The measure of sending out inspection teams is also consistent with the trend of striving to strengthen government oversight of the economy and, not least, uncover previously hidden financial assets.

Another angle to consider on what it means when Kim says the last plan “failed”: One of its key tenets, according to claims of leaked documents published by Japanese media, was to decrease the country’s trade reliance on China. If anything, given sanctions and the general international environment North Korea has faced over the past five years, that problem has gotten even worse.

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