North Korean Economy Watch

UPDATE:  According to Defense News:

Fears that China will establish a naval presence at a port facility at North Korea’s Rajin Port appear unfounded.

An agreement with a Chinese company to lease a pier at Rajin for 10 years was reported by the Chinese state-controlled Global Times on March 10.

The Chuangli Group, based at Dalian in China’s Liaoning province, invested $3.6 million in 2009 to rebuild Pier No. 1 and is constructing a 40,000-square-meter warehouse at the port. The leasing agreement has given way to suggestions China could be attempting to establish its first naval base with access to the Sea of Japan.

The North Korean Navy does use Rajin as a base for smaller vessels, such as mine warfare and patrol vessels, but for the time being, it appears economics are the primary motivation for the Chinese company’s presence there, said Bruce Bechtol, author of the book “Red Rogue: The Persistent Challenge of North Korea.”

“Chinese investment has increased a great deal in North Korea in the past five years,” he said. “It would not be a military port for the Chinese – as the North Koreans would be unlikely to ever allow such a thing.” He noted there are no Chinese military installations in North Korea.

The Rajin facility will give Chinese importers and exporters direct access to the Sea of Japan for the first time. “It is the country’s first access to the maritime space in its northeast since it was blocked over a century ago,” the Global Times reported.

China lost access to the Sea of Japan during the Qing Dynasty in the 19th century after signing treaties under duress from Japan and Russia.

Various media in Japan and South Korea have suggested the lease might give China an opportunity to place a naval base at Rajin, but Bruce Klingner of the Heritage Foundation in Washington, D.C., also downplayed the notion, saying North Korea’s negative attitudes toward China and a fear of excessive Chinese influence would negate any chance Beijing could establish a naval presence there.

Klingner also said he doubts North Korea would make a success out of the agreement. “Pyongyang’s aversion to implementing necessary economic reform and its ham-fisted treatment of investors suggests the new effort to turn Rajin into an investment hub will be as much a failure as the first attempt in the 1990s.”

ORIGINAL POST: According to the Choson Ilbo:

China has gained the use of a pier at North Korea’s Rajin Port for 10 years to help development of the bordering region and establish a logistics network there.

Lee Yong-hee, the governor of the Yanbian Korean Autonomous Prefecture in China’s Jilin province, made the announcement to reporters after the opening of the People’s Congress at the Great Hall of People in Beijing on Sunday.

He was quoted by the semi-official China News on Monday as saying, “In order for Jilin Province to gain access to the East Sea, a private company in China in 2008 obtained the right to use Pier No. 1 at Rajin Port for 10 years. Infrastructure renovation is currently underway there.”

In an interview with Yonhap News on Monday, Lee said, “We’re considering extending the contract by another 10 years afterward.”

Jilin abuts the mouth of the Duman (Tumen) River in the southeast but its access to the East Sea is blocked by Russia and North Korea. “We hope that an international route to the East Sea will be opened via Rajin Port,” he added.

Lee did not specify which Chinese company obtained the right and which North Korean agency awarded the concession. The Chinese Foreign Ministry on Feb. 25 said business investment in the North Korea-China border area is a normal business deal and does not therefore run counter to UN sanctions against the North.

According to Yonhap:

South Korea is keeping a close watch over North Korea’s efforts to draw greater foreign investment to one of its ports, as the move might indicate Pyongyang is opening up to the outside world and signal its return to stalled international nuclear talks, officials said Tuesday.

The North has agreed to give a 50-year lease on its Rajin port to Russia, and the country is also in talks with a Chinese company on extending its 10-year lease by another decade, according to an official from China’s Jilian Province, currently in Beijing for the National People’s Congress.

The North’s opening of the port on its east coast has a significant meaning for China as it will give the latter a direct access to the Pacific, but it also means millions of dollars, at the minimum, in investment for the cash-strapped North.

Officials at Seoul’s foreign ministry said the North’s opening of its port or its economy was a positive sign, but that it was too early to determine whether the move will also have a positive effect on international efforts to bring North Korea back to the nuclear negotiations.

“We are trying to confirm the reports, though they appear to be true because they were based on China’s official announcement,” an official said, asking not to be identified due to the sensitivity of the issue.

“We are trying to find out the exact details of the contracts (between North Korea and Russia and China),” the official added.

Additional information 

1. A previous report indcated that there were 250 Chinese companies registered in Rason.  The North Koreans reportedly closed out the insolvent and inoperable businesses. I do not know how many are there now. Read more here.

2. The Russian government recently built a Russian-gauge railway line from Kashan to Rason. Read more here.  It will be interesting to see if China upgrades roads and railways which could connect Rason to China.

3. Rason is sealed off by an electric fence. Read more here.

4. Many other stories about Rason here.

Read the full stories here:
China’s Jilin Wins Use of N.Korean Sea Port
Choson Ilbo
3/9/2010

Seoul closely watching N. Korea’s opening of port to China: officials
Yonhap
Byun Duk-kun
3/9/2010

According to the Choson Ilbo: 

Chinese-made solar reading lamps are selling like hot cakes in North Korea. According to a North Korean source, the reading lamps sell for 10,000 to 20,000 North Korean won, a price several times the average monthly wage.

The customers are chiefly parents with children preparing for college entrance exams. Due to do the poor power supply, North Korea except for some parts of Pyongyang is plunged into pitch darkness every night, making it impossible to study. The solar-powered reading lamps provide a measure of independence from the power grid.

In the North, background determines if youngsters can enter college, and not all parents can afford to concentrate their energy on their children’s education. But relatively well-to-do families provide tutoring for their children by employing students of prestigious universities, such as Kim Il Sung University or Pyongyang University of Foreign Studies, in efforts to prepare their children for college entrance exams.

Read the full article here:
N.Korean Parents ‘Zealous’ About Children’s Education
Choson Ilbo
3/8/2010

According to Yonhap:

South Korea’s planned shipment of its first food aid to North Korea in years has hit a snag due to sourcing difficulties, an official said Saturday.

The South has been preparing to send 10,000 tons of corn to the impoverished neighbor since mid-January, right after Pyongyang accepted its aid offer made months earlier. The shipment would mark Seoul’s first food assistance to the North since President Lee Myung-bak took office in early 2008.

The government has since approved a 4 billion won (US$3.5 million) budget to fund the assistance and notified the North of a shipping route, based on a plan to buy corn in China and ship it directly to the North from there.

“Considering shipping costs, it would make the most sense to send Chinese corn” to the North, a government official said on customary condition of anonymity.

The official said, however, that the plan has faltered because of China’s “grain export quota,” which places restrictions on food exports in order to meet the country’s rising domestic demand.

The delay has raised concern that the planned aid may not be delivered by the time the North needs it the most — usually between March and May when food shortages in the country worsen — because it usually takes at least a month after the purchase is made for such to be delivered.

But the government official said that he believes the problem will be resolved soon, though he did not elaborate.

Read the full article here:
South Korea’s planned food aid for North Korea hits snag
Yonhap
3/6/2010

According to the Washington Post:

The Obama administration, concerned that Burma is expanding its military relationship with North Korea, has launched an aggressive campaign to persuade Burma’s junta to stop buying North Korean military technology, U.S. officials said.

Concerns about the relationship — which encompass the sale of small arms, missile components and technology possibly related to nuclear weapons — in part prompted the Obama administration in October to end the George W. Bush-era policy of isolating the military junta, said a senior State Department official, speaking on the condition of anonymity because of the sensitivity of the subject.

Senior U.S. officials have since had four meetings with their Burmese counterparts, with a fifth expected soon. “Our most decisive interactions have been around North Korea,” the official said. “We’ve been very clear to Burma. We’ll see over time if it’s been heard.”

…

Underlining the administration’s concerns about Burma is a desire to avoid a repeat of events that unfolded in Syria in 2007. North Korea is thought to have helped Syria secretly build a nuclear reactor there capable of producing plutonium. The facility was reportedly only weeks or months away from being functional when Israeli warplanes bombed it in September of that year.

“The lesson here is the Syrian one,” said David Albright, president of the nongovernmental Institute for Science and International Security and an expert on nuclear proliferation. “That was such a massive intelligence failure. You can’t be sure that North Korea isn’t doing it someplace else. The U.S. government can’t afford to be blindsided again.”

Burma is thought to have started a military relationship with North Korea in 2007. But with the passage of a U.N. Security Council resolution last June banning all weapons exports from North Korea, Burma has emerged “as a much bigger player than it was,” the senior U.S. official said.

In a report Albright co-wrote in January, titled “Burma: A Nuclear Wannabe,” he outlined the case for concern about Burma’s relations with North Korea. First, Burma has signed a deal with Russia for the supply of a 10-megawatt thermal research reactor, although construction of the facility had not started as of September.

Second, although many claims from dissident groups about covert nuclear sites in Burma are still unverified, the report said that “there remain legitimate reasons to suspect the existence of undeclared nuclear activities in Burma, particularly in the context of North Korean cooperation.”

Previous posts about the Myanmar-DPRK relationship can be found here. 

Read the full story here:
U.S. increasingly wary as Burma deepens military relationship with North Korea
Washington Post
John Pomfret
3/4/2010

According to TVNZ:

North Korean experts were in Vietnam this week to advise the government on – no, not uranium enrichment – choreography for an extravaganza celebrating Hanoi’s 1,000th anniversary, state media said.

The delegation was led by Song Pyong Won, deputy director of the Arirang performance department in North Korea’s Ministry of Culture, and included experts in mass performance, stage design, sound and lighting, reported the website of the newspaper Saigon Tiep Thi (sgtt.com.vn).

“This is the advance team that will make preparations for the various art performances, including card flipping to make images and words, as well as stage design, sound and lighting for the opening ceremony,” the newspaper said.

Hanoi will mark its 1,000th anniversary on October 10 this year.

Song hoped “through this visit the delegation would gain a precise grasp of the basic material conditions in Vietnam, like human resources, so that the staged programme can be the most unique and best possible,” the article said.

The group met representatives of Vietnam’s Ministry of Culture, Sports and Tourism and planned to visit various anniversary event venues, including the 40,000-seat My Dinh Stadium. It would also visit other sites, such as Ho Chi Minh’s mausoleum, it said.

Read the full story here:
N Korea teaches Vietnam how to party
TVNZ
3/5/2010

According to Bernama (Malyasia):

Farmers in Pahang will soon be able to use North Korean technology to commercially grow paddy, after an alliance was formed between North Korea and Syarikat Sungai Duri Plantations Sdn Bhd.

Sungai Duri Plantations managing director Datuk Normala A. Kahar said the technology acquired from North Korea was used countries like China, Uganda, Angola and the Philippines successfully.

Normala said five experts from North Korea who would be involved in a project that covers an area of 263 hectares in Sungai Pelak, Pekan, would conduct a study and research to help soil enrichment and identify pest that can be a problem to the growth of paddy.

She added that an area of 60 hectares in Mambang, Pekan had already been planted with the MR219 type of seeds produced by Mardi and would be ready for harvest in May.

“The results have been very encouraging and we are optimistic that the project will be a success,” she told reporters after sealing an agreement with the North Korean government here on Thursday.

Normala said through the technology, farmers can reap up to seven tonnes of paddy per hectare a season.

Malaysia has an interesting relationship with the DPRK.  I have been told that Malaysia does not require entry visas for North Koreans.  If this is not true, please let me know.  There are also a couple of North Korean restaurants in Kuala Lumpur.  Finally, the Mansudae Overseas Projets Group built the Rice Museum (“Muzium Padi” located here) in northern Malaysia.

Pahang is here.

According to the Associated Press (via the Washington Post):

North Koreans are getting better medical treatment as the result of a joint program between the two Koreas that has trained thousands of doctors, provided modern equipment and renovated hospitals, the World Health Organization said Thursday.

Maternal mortality has declined by over 20 percent since 2005, and diarrhea cases and deaths in operations have also dropped, said Dr. Eric Laroche.

The World Health Organization has helped in the wide-ranging program, which started in 2006 and is funded by South Korea. It has cost a total of $30.2 million so far.

The program has trained more than 6,000 doctors and nurses in emergency obstetric care, newborn care and child illnesses, said Laroche, who assessed its progress in a four-day visit to North Korea.

The specialization marks a change in health strategy in North Korea, which has about 90,000 family doctors who care for about 130 families each, according to Laroche.

“They know each family one by one,” he said. But, he added, “they’re extremely keen to be trained.”

…

Laroche said hospital staff have been trained in hygiene and clinics have received better material for operations, blood transplants and other medical interventions.

Numerous hospitals have been renovated, and material has also been distributed to 1,200 rural clinics.

Between 2007 and 2009, the number of patients dying in operations fell 73.4 percent, said Laroche, citing a study by the University of Melbourne.

He declined to give an overall view of the health system in the isolated communist nation. But he said services were well-spread among cities and communities.

Read the full article here:
WHO: Korean cooperation boosting health in north
Associated Press (via Washington Post)
Elaine Engler
3/4/2010

According to the Financial Times:

“The WFP can continue to support around 1.4m children and pregnant women with fortified foods until the end of June. However, new contributions are required now or the operation will come to a standstill in July. We are hopeful that donors will come forward with contributions, given the situation,” he told the Financial Times.

In 2008 the WFP hoped 6.2m people would receive such aid but found it increasingly hard to get donations. Annual aid to North Korea is equivalent to $4.50 (€3.30, £3) per person across the population. The average across other low-income countries is $37 per person.

The WFP has survived such funding crunches in the past, but UN officials fear donors have now become exasperated with North Korea, which expelled US non-governmental organisations last March. Pyongyang has severely restricted aid workers’ access, has demanded they give longer notice periods before rural visits and has barred teams from using their own Korean speakers.

Rocky relations with the US and South Korea after Pyongyang launched a long-range missile last April and tested an atomic warhead in May have further discouraged donations.

The US, once the leading food donor, has said it will not supply cereals until North Korea resumes proper monitoring, allowing aid agencies to track the final recipients.

North Korea’s harvests cannot feed all its people and in recent years the annual food deficit was about 1m tonnes. People are chronically malnourished and as many as 1m are believed to have died during famine in the 1990s.

It is hard to determine the scale of malnutrition but Kim Jong-il, the country’s dictator, made a very rare apology this year for failing to deliver “rice and meat stew” to the people. Food markets were thrown into disarray late last year by a currency redenomination but Mr Due, based in Pyongyang, said these seemed to be returning to normal.

Read the full article below:
Donor fatigue threatens aid for North Korea
Financial Times
Christian Oliver and Anna Fifield
3/3/2010

Voice of America
3/4/2009

Decades after most countries signed on to global bans of highly toxic chemical agents, North Korea continues to make widespread use of them — putting its people and those of other countries at risk. The North’s self-imposed isolation has kept people there ignorant for decades of the dangers they face.  The United Nations is trying to remedy the problem.

United Nations officials say decades of isolating itself has left North Korea ignorant about some of the world’s most dangerous chemicals — and that it is taking a heavy toll.

Craig Boljkovac manages the chemical and waste program for  the United Nations Institute for Training and Research.

“The environment-related problems that exist in North Korea, I just have to say right now, I think they’re much more serious than in many other countries in the world,” Boljkevac said.

A team of U.N. envoys managed by Boljkovac is in Pyongyang this week, teaching officials about decades-old global chemical bans Pyongyang ignored completely until just a few years ago.  The world body is especially concerned by North Korea’s use of two chemicals, known as DDT and PCBs.

DDT was once a widely used insecticide.  American soldiers even sprinkled it in their helmets to kill head lice during World War Two.  Adverse health effects caused it to be banned in most countries — but not North Korea.

“So today in the world, DDT is only allowed one use, and that’s to kill the mosquito that carries malaria… But turn the clock back 50 years, and you have North Korea,” Boljkevac said. “They use DDT for everything.”

PCBs are a cooling agent, once critical in power grids to help keep electrical circuits from overheating.  Other countries now use much safer chemical alternatives, but Boljkevac says his team has made some unsettling discoveries in the North.

“It looks like there is something on the order of 40,000 metric tons of PCBs in North Korea presently,” Boljkevac said. “And, all you need are a few molecules in your body to cause irreversible harm to your health, or that of your children.”

Boljkevac and his team were not allowed to make a visit to North Korea until 2005.  He was struck by the lack of otherwise common chemical knowledge there.

“The look and the feelings of surprise from the officials that we deal with in North Korea, when they realized how harmful these chemicals were — I witnessed them personally, myself,” Boljkevac said. “They were quite stunned.”

Boljkevac says women are especially vulnerable to the effects of toxic chemicals, because they can be stored in fatty tissue and mother’s milk.   He also says it is also impossible to confine the dangers of toxic chemical use to North Korean territory.

“North Korea’s problem with these chemicals is the world’s problem,” Boljkevac said. “Once they’re used and released into the environment, they travel all over the world.  North Koreans cannot travel outside their country very easily or frequently — these chemicals can, and do, on a daily basis.”

Boljkevac says North Korea is providing his teams with full access and cooperation.   He says his job is made easier by the fact that none of the chemicals he is seeking to eliminate have anything to do with weapons production.

UPDATE: Some additional informtaion from Paul Costello:

Stanford researcher Sharon Perry PhD, an infectious disease specialist, has been working in North Korea with a team of American health specialists to develop the country’s first diagnostic laboratory to test drug-resistant tuberculosis. The Democratic People’s Republic of Korea, as the hermit country is formally known, witnessed a resurgence of TB in the 1990s after famines plagued the country.

The TB Diagnostics Project is being led by the Bay Area TB Consortium, which Perry directs, and the Nuclear Threat Initiative, a Washington nonprofit group working to strengthen global security. The program came about after a team of North Korean health officials visited California and met with Stanford and Bay Area tuberculosis experts in 2008.

It’s unusual for any outsiders to visit North Korea, but extremely rare for Americans. Safe to say that it’s an unprecedented partnership between U.S. researchers and health officials in North Korea. So far, Perry has ventured there three times and is soon to return for a fourth visit.

I spoke with Perry for a 1:2:1 podcast about her work in North Korea. It’s a candid, revealing interview that pulls back the curtain a bit from this most mysterious nation. I found it fascinating to hear Perry describe the work there and talk about collaborating with officials from the Ministry of Health on this significant health crisis for the nation. The porous nature of geographical borders and the ability of disease to spread easily from one country to another clearly illustrates that we’re one planet and all in this together.

ORIGINAL POST: According to the New York Times:

With help from scientists from Stanford University’s medical school, North Korea has developed its first laboratory capable of detecting drug-resistant tuberculosis, scientists involved in the project said last week.

Tuberculosis surged in the Democratic People’s Republic of Korea during the famines of the 1990s. (Starvation suppresses the immune system, allowing latent infections to grow.) But the country cannot tell which cases are susceptible to which antibiotics, meaning more dangerous strains could push out strains that are easier to kill, as has happened in Russia and Peru.

The project began after John W. Lewis, an expert on Chinese politics at Stanford participating in informal diplomatic talks over North Korea’s nuclear threat, realized how serious a TB problem the country had. In 2008, doctors from North Korea’s health ministry visited experts in the San Francisco Bay area. Last month, a Stanford team began installing the new diagnostics lab at a hospital in the capital, Pyongyang.

The project “represents an unprecedented level of cooperation” between North Korean and American doctors, Professor Lewis said. It is supported by the Nuclear Threat Initiative, a nonprofit global security group led by former Senator Sam Nunn, Democrat of Georgia, and by Christian Friends of Korea, a humanitarian group.

Although it will soon be able to grow and test TB strains, North Korea right now has none of the more expensive antibiotics that attack drug-resistant TB, said Sharon Perry, the epidemiologist leading the Stanford team. Without outside help it will also run out of routine first-line antibiotics by July, she said.

Read the full article here:
Tuberculosis: North Korea Develops TB Laboratory With Help From American Doctors
New York Times
Donald McNeil, Jr.
3/1/2010