Archive for the ‘China’ Category

North Korea’s convenient but remarkable admission of likely Covid-19 case

Sunday, July 26th, 2020

By: Benjamin Katzeff Silberstein

So, it finally happened: North Korea has officially admitted the suspected existence of a Covid-19 case in the country. State media claims the virus was brought over by a so-called re-defector, who first left for South Korea a few years ago only to return now, reportedly by swimming across the Imjin river. Some South Korean media speculation seems to confirm that a re-defection did happen, reportedly by someone swimming across the Imjin river, though none of this is confirmed. Here is the North Korean statement in full:

Pyongyang, July 26 (KCNA) — Amid the intensified anti-epidemic campaign for thoroughly checking the inroads of the world’s threatening pandemic, an emergency event happened in Kaesong City where a runaway who went to the south three years ago, a person who is suspected to have been infected with the vicious virus returned on July 19 after illegally crossing the demarcation line.

The anti-epidemic organization said that as an uncertain result was made from several medical check-ups of the secretion of that person’s upper respiratory organ and blood, the person was put under strict quarantine as a primary step and all the persons in Kaesong City who contacted that person and those who have been to the city in the last five days are being thoroughly investigated, given medical examination and put under quarantine.

The Political Bureau of the Central Committee of the Workers’ Party of Korea convened an emergency enlarged meeting in the office building of the Central Committee of the WPK on July 25 as regards the dangerous situation in Kaesong City that may lead to a deadly and destructive disaster.

Kim Jong Un, chairman of the WPK, chairman of the State Affairs Commission of the Democratic People’s Republic of Korea and supreme commander of the armed forces of the DPRK, was present at the meeting.

Attending the meeting also were members and alternate members of the Political Bureau of the C.C., WPK.

Present there as observers were members of the Central Emergency Anti-epidemic Headquarters.

Party and administrative leading officials of the Cabinet, ministries and national institutions, members of the executive committees of provincial Party committees and senior officials of the leading institutions at provincial level were present in the video conferencing rooms as observers.

Upon authorization of the Political Bureau of the C.C., WPK, Supreme Leader Kim Jong Un presided over the meeting.

Despite the intense preventive anti-epidemic measures taken in all fields throughout the country and tight closure of all the channels for the last six months, there happened a critical situation in which the vicious virus could be said to have entered the country, the Supreme Leader said, adding that he took the preemptive measure of totally blocking Kaesong City and isolating each district and region from the other within July 24 afternoon just after receiving the report on it.

To tackle the present situation, he declared a state of emergency in the relevant area and clarified the determination of the Party Central Committee to shift from the state emergency anti-epidemic system to the maximum emergency system and issue a top-class alert.

He specified tasks for each sector to be immediately implemented by Party and working people’s organizations, power organs, public security and state security institutions, anti-epidemic and public health institutions.

The meeting unanimously adopted a decision of the Political Bureau of the Central Committee of the WPK on shifting from the state emergency anti-epidemic system to the maximum emergency system.

He instructed all the participants to immediately conduct follow-up organizational work to carry out the decision of the Political Bureau of the Party Central Committee in their fields and units, and party organizations at all levels and every field to ensure and guarantee the most correct implementation of the directions and assignments of the Party Central Committee with a sense of boundless responsibility, loyalty and devotion.

He underscored the need to thoroughly maintain tough organizational discipline and ensure the unity in action and thinking throughout the Party and society, to keep order by which everyone absolutely obeys and moves as one under the baton of the Emergency Anti-epidemic Headquarters and the need for party organizations at all levels to perfectly perform their role and duty.

Saying that everyone needs to face up to the reality of emergency, he appealed to all to overcome the present epidemic crisis by not losing the focus of thinking and action, practicing responsibility and devotion to be faithful and true to the leadership of the Party Central Committee, being rallied closer behind it so as to defend the welfare of the people and security of the country without fail.

The meeting sternly took up the issue of the loose guard performance in the frontline area in the relevant area where the runaway to the south occurred, and decided that the Central Military Commission of the WPK would get a report on the results of an intensive investigation of the military unit responsible for the runway case, administer a severe punishment and take necessary measures. -0-

(Source: “Supreme Leader Kim Jong Un Convenes Emergency Enlarged Meeting of Political Bureau of WPK Central Committee,” Korean Central News Agency, July 26th, 2020.)

This is of course makes for extremely convenient optics for the North Korean regime, and raises lots of questions.

First, to state the obvious: this would make for an extremely convenient way for the regime to admit the existence of Covid-19 in the country. I have written previously about how unlikely the regime claim of zero cases is. The message is: our anti-epidemic measures, such as closing the northern border, were flawless. But one case still slipped through the cracks. Having a first confirmed case coming in from the south relieves the regime of any awkwardness vis-a-vis China.

Second: this is all still very strange. How can the political and strategic cost be smaller of admitting a glitch in the southern frontline defenses? Look at the text in the statement: “loose guard performance in the frontline area” is not a small thing to admit. It’s far from unprecedented criticism, but still. What does it say about morale and readiness within the army that even at a time of relatively high tensions, “loose guard performance” can happen?

Third and relatedly: this is a lot of fuss for a suspected case. Kim Jong Un not only called an emergency politburo meeting, a major event in its own right. The state has also placed all of Kaesong under lockdown and required anyone that traveled to the city within the past five days to go into quarantine. Just imagine how many people in North Korea must be going around with symptoms that should cause suspicion of Covid-19. The sniffles and a subpar sense of smell and taste should be enough. And yet, this is the first time we’ve seen this sort of alarm.

Fourth: how was this detected, and why was this person specifically taken in for testing? Judging from the statement, he was able to slip back into North Korea undiscovered, only to proceed to move around freely in Kaesong and potentially spread the virus. Was he brought in for testing because he came in from South Korea, or because of specific symptoms? What happens to the undoubtedly more numerous arrivals from China – are they all placed under stringent quarantine? Kaesong is far less connected to the outside world than are other parts of North Korea. The chances of it spreading there but not in the north are…extremely, incredibly slim, at best.

In short, it’s very difficult to buy this as a credible explanation or excuse for a Covid-19 outbreak in North Korea. The virus has most likely been around for some time, perhaps something has now prompted the authorities to need to make an official admission. As always, all we can do is await more information and hope that some questions are answered.

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North Korea promoting Mt Kumgang tourism

Thursday, July 16th, 2020

By: Benjamin Katzeff Silberstein

Clearly, now is not the best time for tourism promotion. One might wonder what target audience is for the North Korean promotion website for tourism to Mt Kumgang. The website itself isn’t new, but as Yonhap/Korea Herald reports here, it’s recently been updated for the first time in a while. The update of a website perhaps isn’t the most riveting piece of news, but at the very least, it means that someone in some office in North Korea took time out of their day to keep this website maintained and updated with new pictures.

Even in non-Covid times, however, the success of Mt Kumgang under fully North Korean management is doubtful. Without cooperation with foreign partners, Mt Kumgang may meet the same fate as Masikryong, not exactly overcrowded with foreign visitors even before Covid hit. As I wrote in this column when North Korea confiscated Mt Kumgang, the success of the resort likely hinges upon South Korean and Japanese visitors coming in addition to tourists from China.

You can find the North Korean website in question here.

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More anti-smuggling measures by the North Korean government

Wednesday, July 1st, 2020

By Benjamin Katzeff Silberstein 

The North Korean government is reportedly clamping down even further on smuggling across the Chinese border. As Daily NK notes, it’s a measure partially directed against corruption, which will most likely just increase bribery amounts. It’s also part of a broader state drive to assert its power over economic activity. Daily NK:

North Korean authorities recently ordered that ships travelling near the Sino-North Korean border must have a security official on board as part of efforts to crack down on smuggling, Daily NK has learned.

“The order concerns ships travelling along the Yalu River and states that they must have a Ministry of State Security [MSS] agent on board,” a source in China told Daily NK on June 25. “The order applies to all ships, regardless of whether they are container ships or fishing boats, and irrespective of their affiliation or purpose.”

Earlier this month, the MSS announced that anyone caught engaging in criminal activity near the border, including smuggling and attempting to defect, will be subject to strong punishments rather than rehabilitative measures, such as time at a forced labor camp.

The announcement of several measures pertaining to illegal activity near the border in the space of a month demonstrates how sensitive North Korean authorities are to smuggling and information leaks in the area.

BREAKING CORRUPTION

The order is also aimed at preventing corruption between local security officials and smugglers, according to the source.

Since it is common for smugglers to bribe local security officials, the MSS will reportedly send agents from the central government rather than local officers to work on the ships.

Smugglers say that the new order will only lead to more expensive bribes.

“You can earn up to RMB 10,000 [around USD 1,412] a day taking goods across the Yalu River,” the source said. “Because there’s so much money to be made, the measures won’t stop the smuggling. Smugglers will just have to pay higher bribes to the security officials.”

(Source: Jang Seul Gi, “N. Korea focuses on ending ship-based smuggling on border,” Daily NK, June 29, 2020.)

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North Korea strengthens camera surveillance along the Chinese border

Tuesday, June 30th, 2020

Benjamin Katzeff Silberstein

This is part of a very interesting trend, of surveillance in North Korea going more high-tech. Border security under Kim Jong-un has been a high priority, resulting in a significant drop in the number of defectors reaching South Korea. Recall, as the article does, that this is but one of several purchase rounds of surveillance equipment from China in recent years. It’s also part of a government drive to strengthen control overall – of economic and social trends and activities:

“The equipment was purchased from China in mid-May and cost approximately RMB 20 million [around USD 2,825,497],” a source based in China told Daily NK on Wednesday.

“The camera system will be set up in areas where smuggling activities are common – not across the entire border,” he continued, adding, “The installation of the system will begin in late June.”

Given that the cameras will only cover a limited area on the border, the high price tag suggests two possibilities: 1) the new system will film in higher definition than existing camera systems; or, 2) the system is so advanced that it can detect even the slightest of movements.

There is the possibility that the installation of the new system is part of preparations to resume trade between China and North Korea, namely by further cracking down on smuggling activities by individuals.

“The purchase of the new system shows that North Korea wants to stamp out these smuggling activities to ensure only [official] Sino-North Korean trade is allowed across the border,” the source speculated.

The source noted that North Korean officials believe that smuggling activities conducted by individuals are a key way information and illicit goods enter and exit the country.

(Source: Mun Dong Hui, “N. Korea to install new surveillance cameras on Sino-NK border,” Daily NK, 26 June, 2020.)

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The North Korean economy is doing badly, but keep some perspective

Tuesday, June 23rd, 2020

By: Benjamin Katzeff Silberstein

Sanctions and Covid-19 have fused together to put the North Korean economy in what can only reasonably be described as an awful situation. Trade first plummeted through sanctions, and then even further because of North Korea’s and China’s anti-Covid19 measures. And the fall continues, as these figures in Hankyoreh show:

Figures from the Korea International Trade Association (KITA) and Chinese customs authorities reviewed on June 18 show a major drop in the value of North Korean goods being exported to the Chinese market: US$10.7 million in January and February (-71.7% year on year), US$600,000 in March (-96.2%), and US$2.2 million in April (-90%). The value of North Korean exports to China, which stood at US$2.63 billion in 2016, has fallen since economic sanctions were toughened, decreasing to US$1.65 billion (-37.3%) in 2017 and US$195 million in 2018 (-88.2%). Exports rebounded in 2019, to US$285 million, but that was still less than a tenth of the value of exports in 2016.

But how bad are things?

Bloomberg ran an article yesterday with the angle that the North Korean economy is the “worst” in two decades, and that this is why the country is lashing out against South Korea with renewed vigor. To support the former claim, it cites figures claiming that the country’s economy will contract by a total of 6 percent this year due to the combination of sanctions and Covid-19.

But how reasonable is this take?

There is no doubting that things are bad, but some context is badly needed. One of course cannot equate an economic contraction with the overall situation. (Never mind that any number on this will be qualified guesswork at best.) A contraction is only the economy shrinking, and it means nothing if we don’t know what the starting point is. In 1997, North Korea was perhaps at the height of a devastating famine, after the economy crumbled following the collapse of the Soviet Union, and China vastly scaling back support.

Today, North Korea may be in an economic crisis of sorts. But it entered it on the back of several years of steadily increasing exports to China. These exports, in fact, grew by more than a factor of ten between 1998 and the record year of 2013. So the situation is so different that a comparison is hardly meaningful.

This is also true for the food situation. According to numbers from the World Food Program and the Food and Agriculture Organization, whose data is questionable but highly valuable, food production stood at 3.3 million tonnes in 2008, not an unusually low figure for the time. Contrast this with the projection that this year’s harvest will be 4.6 million tonnes. Not great, lower than it should be, lower than a few years ago, yes. But still not nearly the level of the disaster years.

Also, it is crucial to remember that even in ordinary times, a not insignificant proportion of trade with China occurs off the books. Throw an increasingly lower Chinese sense of caring what the US thinks about its sanctions implementation into the mix and you’ve got, well, likely a lot more trade happening under the radar. This is what news reports from inside North Korea have been saying for quite a while.

Not that things aren’t bad, or that North Korea’s recent actions have to do with sanctions (they almost certainly do). But don’t forget about context or proportions.

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Update on North Korea and Covid19: June 7th, 2020

Sunday, June 7th, 2020

By: Benjamin Katzeff Silberstein

A little over a week ago, I wrote an essay for Foreign Policy Research Institute about Covid-19 in North Korea. The long-term challenge of Covid-19, combined with sanctions, of course poses a major economic challenge for North Korea. However, as I attempt to lay out, there’s another issue. Much of Kim Jong-un’s legitimacy and policy focus has been tied up with economic construction and raising the people’s living standard. That looks like an increasingly distant prospect. With “just” sanctions, trade could have resumed and even expanded depending on the political moods in Beijing, and to a lesser extent, Moscow. Now with Covid-19, considerations are totally different:

Over the past few months, however, the tone of state rhetoric has changed. While before it breathed optimism, North Korean state propaganda now speaks much more—and more realistically—about problems and obstacles to economic development and about the old themes of autarky and economic self-reliance. For the time being, any plans to lift North Korea to a higher plane of economic development have largely been put on hold.

What does this mean politically for Kim Jong-un, who staked much of his credibility on delivering economic progress? The truth is that no one really knows. On the one hand, North Korea is perhaps the harshest dictatorship in the world, and the regime crushes even the slightest hint of dissent with an uncompromising iron fist. Over 100,000 people are estimated to be imprisoned in labor camps, many for crimes of political nature (or “speaking mistakes” as the Korean term goes), some for life. Kim Jong-un was in fact absent not just for one period of several weeks—the initial one that drew so much international attention—but for two different periods, and only appeared in North Korean media four times in all of April and May. Kim may be recovering from a medical procedure, but his absence may also be caused by caution against COVID-19. He may simply not want to conduct public visits or meeting sessions due to the risk of infection. In a system where so much power is centered around one single leader, his health is a top priority for national security in the eyes of the state, and will always be strongly guarded.

On the other hand, no dictatorship can truly function sustainably without any sense of at least tacit support from part of the population, such as the privileged, political core class. Kim has catered to this class in North Korea by overseeing their access to an essentially Western upper-middle class lifestyle in many respects, such as luxury department stores and a water park. The provinces have seen little of this development, and the massive and growing cleavage between the capital city and everywhere else is another long-term problem for the regime. Even so, life in the countryside has improved overall, albeit more marginally, thanks to the growth of the market system.

What happens when, over the course of a longer period of time, things not only cease to improve, but become markedly more difficult? The general public may heed the state’s call to get ready for some difficult times ahead for a while, but in the longer run, it may lead to widespread discontent. What that will mean for the North Korean regime, which has already survived challenges that seemed impossible, only time will tell.

(Full article here.)

In North Korea, it seems the regime is letting up on some of the strongest restrictions. For example, it will – and this says a great deal about the country’s complex economic system, where boundaries between illegal and legal trade are often unclear – “permit” smuggling to a greater extent:

North Korean authorities have decided to permit smuggling activities across some portions of the Sino-North Korean border from mid-June on the condition that smugglers pay foreign currency to purchase trade permits, Daily NK has learned.

According to a Daily NK source in North Korea on May 29, North Korea decided to allow traders in Sinuiju, Ryongchon, Uiju and Nampo Special City to conduct their activities from June 15. Traders who fall within the purview of the new measure include those working for trade companies affiliated with the military, Cabinet and other government agencies along with individual smugglers registered with companies.

WAKU BACK TO YOU

Traders must fulfill two conditions to restart their activities: 1) pay for their trade license (waku) in foreign currency; and, 2) in addition to their own imports, import items designated by the state and donate half of these imports to the government.

Even companies or individuals that already possess a waku must buy new permits with foreign currency because the permitted import lists on their trade permits must be changed to accommodate the import needs of the state.

North Korean authorities have reportedly ordered smugglers to include rice, flour, oil (cooking oil), sugar, MSG and other foods on their list of imports. Even traders who previously specialized in electric appliances or clothes must now include food items in their imports to be allowed to begin trading again.

The inclusion of these food items is likely the result of a measure handed down by the country’s Central Committee and Cabinet on Apr. 17 that restricted all “unnecessary” imports until the end of the year.

Following the announcement of the import restrictions, the prices of MSG, soybean oil and flour skyrocketed; there now appears to be great discontent among North Koreans about the scarcity of certain food products and the generally higher prices of food items. Daily NK’s source said that the addition of these food items to import lists is a direct result of this discontent.

North Korean officials have also announced that smugglers who hand over 70% of the food products – more than just the minimum of 50% – they import to the state will be given so-called “patriotic donation certificates.”

All in the all, the latest measure to open up smuggling across the border is aimed at both acquiring foreign currency (through the sale of trade permits) and stabilizing market prices by importing food items in demand.

UNEQUAL FOOTING

The decision to open up smuggling in certain areas is likely due to difficulties in controlling smuggling activities in places like Ryanggang Province and North Hamgyong Province.

Smugglers in those regions are reportedly faced with the significant burden of having to move their operations to North Pyongan Province or Nampo.

Moreover, they have to submit a “letter of intent” to a North Korean agency saying they will be importing items from a particular Chinese trader and the existence of these traders in China must be confirmed by the North Korean embassy in China. These traders also have to compete with traders already based in North Pyongan Province and develop trading routes from scratch.

Ryanggang Province-based traders have mixed opinions on the move to open up smuggling across the border. Some believe that they need to take the opportunity to start trade again, while others think they should wait until the authorities officially permit smuggling across the border in the province.

(Source: Jang Seul Gi, “N. Korea to permit smuggling over parts of Sino-NK border,” Daily NK, 1/6/2020.)

Meanwhile, schools are now open, with video clips to show it:

Schools in North Korea were supposed to start new semesters in early April, but the vacation period was extended repeatedly due to the coronavirus pandemic, though some colleges and high schools were allowed to open in mid-April.

In the footage, students were seen wearing masks, as were parents and teachers. Masks stayed on inside classrooms.

The resumption of schools might suggest concerns over the coronavirus have recently eased in North Korea or it could be aimed at projecting Pyongyang’s the country’s ability to contain the virus.

(Source: “N. Korean schools reopen during pandemic,” Yonhap, 3/6/2020.)

Meanwhile, news continue to come out of the country about deaths from symptoms similar to Covid-19, though of course, everything remains unconfirmed:

Dozens of people in two South Pyongan Province hospitals recently died after suffering symptoms similar to those caused by COVID-19 infections, Daily NK has learned.“The dozens of people who died recently were all patients at a facility caring for tuberculosis patients and the hepatitis care center at the Pyongsong City Hospital,” a source in South Pyongan Province told Daily NK on June 4.

The Pyongsong City Tuberculosis Care Center and the Hepatitis Care Center at the Pyongsong City Hospital are both focused on treating patients with infectious diseases. Patients in these facilities are typically discharged only after receiving permission from their doctors.

The patients who died were all being hospitalized for preexisting conditions, but expired while receiving intensive care after they began showing signs of COVID-19 infections.

Both hospitals quickly blamed tuberculosis or hepatitis for the deaths and hospital workers were ordered to stay silent about the dead patients, the source said.

The sudden spike in deaths led some patients in the hospitals to run away from the facilities out of fear of COVID-19.

“Groups of patients left the hospitals out of fear that they could die if they stayed there any longer,” the source told Daily NK, adding, “Local authorities along with hospital managers were alarmed by this.”

Local and hospital authorities were reportedly concerned that the runaway patients might infect broader society with their diseases.

Local rumors about the runaway patients reportedly focused on the reaction of the authorities, which suggested that officials are still concerned about COVID-19.

Late last month, public health authorities in South Pyongan Province reportedly conducted a province-wide survey of people who showed symptoms similar to those caused by COVID-19 infections.

According to the source, the survey found that there are around 1,500 people quarantined either at home or at medical facilities in the province after complaining of high fevers, coughing, difficulty breathing, and other symptoms. Most of them are self-quarantining at home, while only a few with severe symptoms are in medical facilities.

(Source: Jang Seul Gi, “Source: Dozens recently died at two Pyongsong hospitals,” Daily NK, 5/6/2020.)

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“New” bridge between China and North Korea getting a little closer to completion. But what does it really mean?

Tuesday, May 12th, 2020

By: Benjamin Katzeff Silberstein

Another day, some more progress on the so-called “bridge to nowhere”. It’s now been around six years since construction started on the new bridge between North Korea and China, crossing the Yalu river. The currently operational one between Dandong and Sinuiju already (in normal times) operates over capacity, and frequently needs repairs. Last year, in June, Xi Jinping supposedly promised Kim Jong-un funding to finally complete the bridge and to connect it to North Korea’s road networks to make it operational. Recently, work has finally taken off again on the North Korean side to do just that. Dong-a Ilbo:

North Korea resumed the construction of a road on last Sunday, according to multiple sources and photos posted on a Chinese social media platform.

With the help of China’s investment, the six-lane bridge was completed in 2014 as a replacement of the Sino–North Korean Friendship Bridge, an old and narrow bridge built in 1943. The New Yalu River Bridge was expected to boost trade between the two nations.

(Source: Wan-Jun Yun, “New Yalu River Bridge gears up to open six years after its construction,” Dong-a Ilbo, May 4th, 2020.)

The Dong-a headline appears somewhat premature, however, since customs buildings and other essential infrastructure still isn’t built. As Daily NK reports:

The opening of the bridge has long been delayed because North Korea had demanded that China pay for the construction of the North Korean road to the bridge.

While Daily NK has been unable to confirm whether any agreement on the payment issue has been reached, the efforts to complete the road suggest that the two countries have reached some sort of agreement.

There may, however, be obstacles in the way of the bridge opening any time soon.

“Customs-related buildings need to be built even if the road is finished,” the source said.

“The closure of the Sino-North Korean border due to COVID-19 and international sanctions on North Korea make it difficult to know when the bridge will open,” he added.

North Korean authorities are also highly sensitive to the threat of the COVID-19 pandemic despite their moves to restart the road construction.

“Sinuiju residents were practically confined to their homes when COVID-19 posed a clear threat to the city, but the authorities have restarted construction – perhaps because the threat has gone away,” the source said.

“That doesn’t mean, however, that Chinese engineers and materials are entering the country [in quantities] like before,” he added.

A Chinese company had been managing the construction of the North Korean road to the bridge before work was halted. Now the North Koreans have completely taken over the construction process – none of the Chinese workers and their equipment are present at the construction site anymore, the source explained.

The lack of Chinese labor and equipment may be due to the North Korean government’s fears over COVID-19, but the country’s efforts to finish the road suggest that North Korean leaders are keen to use the bridge when Sino-North Korean trade begins again.

(Source: Mun Dong Hui, “N. Korean road connected to New Yalu River Bridge nears completion,” Daily NK, May 11th, 2020.)

There are two quite different ways of looking at these developments. I’d argue the bridge is, despite how things may seem, not a very good metric for the prospects of trade between China and North Korea. Surely, China would not likely invest in a new bridge unless it envisioned growing economic activity along the border. There are good reasons to believe that this is indeed the case, and that these border regions in particular regard North Korea as a driver for local growth and advantage. At the same time, planned economies such as China often make investment decisions for reasons unrelated to actual economic prospects. Perhaps infrastructure like this is also intended to boost the region itself, or at least, make it look like that is what the central government is doing. Moreover, it is also possible that China and North Korea merely envision replacing the current bridge over time. Last but not least, it may well be a political gesture of good faith and friendship to North Korea. Or, most likely, a mix of all of the above.

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What to make of the panic buying in Pyongyang and beyond

Sunday, May 10th, 2020

By: Benjamin Katzeff Silberstein

There’s been a few reports over the past few weeks about panic buying in Pyongyang, particularly of imported goods. The foremost reason appears to be the government’s restrictions of imports, aside from essential goods (whatever these are). A quick thought:

On the one hand, on a closer reading beyond the term “panic buying”, it’s apparent that we aren’t really talking about fundamental, daily necessities for the most part, but about imported items such as batteries and certain vegetables. When we monitor economic developments for social stability, such analyses tend to focus on items like rice and, at least in countries other than North Korea, fuel, and not least the stability of the currency. So it may not matter all that much if people in a northern province cannot buy lighters imported from China, or if Pyongyangites can’t buy imported pepper and other non-staple goods. (As you will see in one of the articles below, Daily NK has not heard reports of panic buying in Hyesan at all.)

At the same time, however, these imported goods are quite essential in the everyday lives of many people. We don’t know how much of imported goods the average person consumes, and I suspect it’d differ greatly between provinces. Since at least a significant proportion of the population consumes imported goods on a regular basis, these difficulties in acquiring items imported from China would in many cases cause great annoyance and, in others, disrupt production processes of firms and industries, although some exceptions are granted for “essential” items. Who determines what’s essential is likely hinges on political and economic clout, and it certainly won’t be the mom-and-pop-shops of the backstreet markets.

I’ve gathered a few related articles here. AP wrote about the topic on May 7th, 2020, with intelligence sources in Seoul confirming the news:

The NIS said it cannot rule out a virus outbreak in North Korea because traffic along the China-North Korea border was active before the North closed crossings in January to try to stop the spread of the virus, according to the lawmaker.

The NIS declined to confirm Kim’s comments in line with its practice of not commenting on information it provides to lawmakers. Kim did not discuss how the NIS obtained its information.

Last Friday, Kim Jong Un ended his 20-day public absence when he appeared at a ceremony marking the completion of a fertilizer factory near Pyongyang. His time away triggered rumors about his health and worries about the future of his country.

The NIS repeated a South Korean government assessment that Kim remained in charge of state affairs even during his absence. His visit to the factory was aimed at showing his resolve to address public livelihood problems and inject people with confidence, Kim Byung Kee cited the NIS as saying.

The NIS said the virus pandemic is hurting North Korea’s economy, mainly because of the border closure with China, its biggest trading partner and aid provider. China accounts for about 90% of North Korea’s external trade flow.

The trade volume between North Korea and China in the first quarter of this year was $230 million, a 55% decline from the same period last year. In March, the bilateral trade volume suffered a 91% drop, the NIS was quoted as saying.

This led to the prices of imported foodstuffs such as sugar and seasonings skyrocketing, Kim Byung Kee quoted the spy agency as saying. He said the NIS also told lawmakers that residents in Pyongyang, the capital, recently rushed to department stores and other shops to stock up on daily necessities and waited in long lines.

The NIS said prices in North Korea “are being stabilized a little bit” after authorities clamped down on people cornering the market, Kim said in a televised briefing.

(Source: “Seoul reports panic buying in N. Korea amid economic woes,” AP/Mainichi, May 7, 2020.)

NK News was one of the first outlets to cover the topic, in an article on April 22nd:

“Panic buying” sprees have been spotted taking place in some of Pyongyang’s stores and groceries since Monday, multiple informed sources told NK News, resulting in increasingly empty shelves and a growing shortage of key staples.

It’s unclear what’s led to the sudden surge in demand, with one source describing empty shelves and a sudden absence of staples like vegetables, flour, and sugar.

Locals have been buying “whatever is there,” one expat said, saying that “you can hardly get in” to some stores.

Both the expat and another person in Pyongyang said the surge was particularly notable on Wednesday.

Another source said large groups of locals were seen buying big amounts of mostly-imported products in some grocery stores, resulting in abrupt shortages.

(Source: Chad O’Carroll, “North Koreans “panic buying” at Pyongyang shops, sources say,” NK News, April 22nd, 2020.)

Daily NK, of course, has reported extensively on the topic, from both Pyongyang and the provinces. Imported goods are not only consumed in Pyongyang:

“The prices of Chinese goods have risen sharply in markets across the province, including the Yonbong and Wuiyon markets in Hyesan,” a Ryanggang Province-based source told Daily NK on Apr. 28.

According to the source, the price surge has mainly affected Chinese products, including daily necessities such as sugar, flour, and other cooking products.

For example, the price of Chinese seasoning has increased fourfold to a KPW 40,000 (around USD 6). Flour, rice and other grain prices have also increased. Two weeks ago, imported Chinese rice was being sold at KPW 4,400 per kilogram but is now being sold at KPW 5,500.

The price hikes have not just affected food. Chinese cigarettes have also increased in price: a box of Chinese-made Chang Baishan cigarette packs, for example, which used to cost KPW 12,000, is now KPW 17,000.

“Even Chinese lighters, which usually cost around KPW 700, have seen a price hike of nearly threefold and now cost KPW 2,000,” the Hyesan-based source added.

The main reason for these price surges is the halt in Sino-North Korean trade following the closure of the North Korean-Chinese border in late January. The effects of the steep fall in Sino-North Korean trade were made clear in recent data published by China’s General Administration of Customs. According to this data, Chinese-North Korean trade in March dropped by 91.3% compared to the same period last year to just USD 18.64 million.

“Just two weeks ago merchants were feeling more optimistic given the improved situation in China. Now, they’ve lowered their expectations quite a bit,” the Hyesan-based source told Daily NK, adding, “Prices are rising because business people are intentionally sitting on their stocks with the hope that prices will increase even more.”

[…]

Meanwhile, Daily NK is unaware of any reports of panic buying in Hyesan [emphasis added].

(Source: Kang Mi Jin, “Ryanggang Province witnesses price spikes,” Daily NK, April 30th, 2020.)

And, more recently, a report from Pyongyang:

“There are a lot of ordinary stores that have closed or are unable to sell anything because they have no stock left,” a Pyongyang-based source told Daily NK on Apr. 30. “Right now 100 grams of imported pepper costs KPW 40,000, 450 to 500 grams of MSG costs KPW 48,000 and sugar can’t be found at all.”

PRICE SPIKES

The prices of imported food items nearly doubled after Apr. 17, when the North Korean government announced restrictions on imported goods deemed “unnecessary” for the North Korean economy. Prices began to rise rapidly once more before the publishing of this article in Korean on May 1.

According to Daily NK’s Pyongyang source, the price of imported pepper was just KPW 8,000 per 100 grams before the announcement, but doubled to KPW 16,000 after the decision was released. Now, the price has reportedly risen to KPW 40,000.

“The price of watch batteries and other small batteries for common household appliances like remote controllers for TVs have tripled or quadrupled,” the source further reported. “The price of batteries had remained stable even after the announcement, but several days ago it started to rise suddenly. The spike is probably because so many people began hoarding them.”

Although the price of batteries has risen to an unprecedented degree, Pyongyang residents reportedly continue to buy them in bulk, in boxes of 50, and as much as 10 boxes at a time. The hoarding is likely due to concerns that the price will only continue to rise and that soon there may not be any batteries left to buy.

“Many of the electronics stores throughout the city have closed down,” the source said, adding, “Stores that still have stock have closed perhaps because of rumors that Chinese products will no longer enter the country.”

In short, the source’s report suggests that state-run electronics stores, which command 20% of the market, have no stock left, while privately-run stores that take up the remaining 80% of the market have closed up despite still having stock on hand.

Based on the source’s report, owners of privately-run stores may have closed down their shops with the intent to sell their goods at prices even higher than they are now. The owners are likely under the belief that the recent import restrictions announcement means that various electronics accessories will no longer enter the country from China for some time.

(Source: Ha Yoon Ah, “Pyongyangites continue to hoard as prices keep rising,” Daily NK, May 4th, 2020.)

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April 1st, 2020: Latest market prices in North Korea

Wednesday, April 1st, 2020

By: Benjamin Katzeff Silberstein

In the past few days, Daily NK updated their market price index. The latest price data was sourced on March 20th, but posted at least a couple of weeks later. A few quick observations:

In general, rice prices continue to decline, although not by very much. The average rice price went down by 1.4 percent from the previous price observation, on March 7th. This is hardly enough to be truly significant. As I wrote on 38North recently, the price drop may not be caused by an increase in supply only, but also by increasing enforcement of price controls by the government.

Foreign exchange rates have appreciate significantly since before the coronavirus border closure, and continue to climb still. The RMB has, interestingly, appreciate much more than the US dollar. The dollar climbed by 1.4 percent in the last price observation compared with late December last year, while the RMB went up by almost ten percent during the same time period. Between March 7th and March 20th, the USD appreciate by 0.55 percent, and the RMB by 1.2 percent. North Korea thereby goes counter to the international trend, where the dollar has appreciated significantly over the RMB. This makes sense, however, since the border closure has cut the supply of Chinese goods drastically, thereby raising their price. A significant share of trade in these goods occurs in RMB, and it is only logical that the price would go up.

More on this during the weeks to come…

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North Korean ships not stopping in Chinese ports

Sunday, March 29th, 2020

Benjamin Katzeff Silberstein

The New York Times reports that North Korean ships that would usually transport goods to Chinese ports are now idle in Nampo:

The Royal United Services Institute satellite analysis shows that on March 3, 139 ships were idled in the Nampo area, which includes the anchorage and several ports, up from 50 ships a month earlier.

The fleet includes vessels previously implicated in sanctions evasion operations, which are often tracked through satellite imagery and aerial or ground surveillance by other states, independent research groups and the United Nations.

The institute’s analysis said the idled ships included some of the “most active and scrutinized oil tankers” used for the illicit import of refined petroleum products such as fuel. For example, the oil tanker New Regent, which had been spotted making unreported deliveries as recently as January 2020, and twice in 2019, according to the United Nations, was seen in Nampo in multiple satellite images. Other ships, too, have been floating unused for weeks, according to satellite imagery provided by Planet Labs, an earth-imaging company in San Francisco, and Maxar Technologies Inc., a space technology company in Westminster, Colo.

(Source: Christopher Koettl, “Coronavirus Is Idling North Korea’s Ships, Achieving What Sanctions Did Not,” New York Times, March 26, 2020.)

As the article points out, coronavirus really is doing what sanctions never fully could. It seems that the only fully confirmed mode of goods transportation between North Korea and China right now are trains (judging by the Rodong pictures of Corona prevention activities), and we don’t know how often they run.

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