North Korean Economy Watch

Daily NK
Lee Sung Jin
10/29/2007

South Korean housewives are afraid to open their wallets due to the threefold increase in the price of cabbage and radish compared to last year with the kimchi preparation season ahead. The skyrocketed price of cabbage in North Korea has also caused concerns about disturbance to the kimjang (kimchi preparation) season.

Lee Ok Ran (45), who trades in Hoiryeong, relayed in a phone conversation with DailyNK on the 25th, “Due to the flood damage and the delayed seedtime, the amount of the cabbage harvest has decreased significantly. In the middle of October, we have to enter the kimjang season, but are worried because the price of cabbage has risen exorbitantly. The saying that the price of cabbage is like the price of gold seems fitting now.”

Ms. Lee said, “Large cabbage has not been reaped yet, so cabbage from China has mostly been sold in the jangmadang (markets). Unripe cabbage made in North Korea is being sold at 450~500 won per bundle and Chinese-produced cabbage costs around 1,800~2,000 won.” Last year, North Korean-produced cabbage was sold for 200~250 won per bundle.

He explained, “Chosun (North Korea) cabbage has a lot of insect marks and the leaves are tough, but on the other hand, Chinese-produced cabbages have better quality, so generally reflect over a twofold difference in price. Mostly, the party leaders buy and eat these cabbages rather than average civilians.”

However, with the soaring price of North Korean cabbage, the cost of imported cabbage has increased significantly.

Ms. Lee added, “In the winter, there is only one type of a sidedish—kimchi–so they are called ‘a half-year’s gourmet food.’ At this time, if we cannot prepare kimchi, we will not see kimchi for the entire year next year.”

North Korean civilians have prepared for kimchi by harvesting cabbage or radish seeds, planted starting late July immediately after reaping wheat and corn, from the end of October.

The reality of the cabbage scarcity is due to the loss of the majority of cabbage, which had just started sprouting in early August, in the flood.

The North Korean Central News Agency and the Chosun Shimbo issued by Chongryon (General Association of North Korean Residents in Japan) reported on the 10th, “In some areas of South Pyongan and Kangwon, collective farm laborers plowed the fields submerged in the flood and have started re-sowing.”

The North Korean farmers started sowing cabbage and radish seeds again, but the amount of the harvest is expected to be half of the annual average amount. Due to this, North Korea’s “kimjang combat,” which is supposed to start the middle of October, is supposed to be hit with a huge setback.

In North Korea, using military language such as “combat” for important events is customary. Just as there is the spring rice-planting combat, the summer weeding combat, and the fall harvesting combat, the words, “kimjang combat,” are used during kimjang season.

In northernmost Yangkang, North Hamkyung, kimjang season begins in the middle of October. Come November, all regions of North Korea, such as South Hamkyung, Jagang, North Pyongan, South Pyongan, and Hwanghae are swarming from the combats.

However, the price of cabbage has exorbitantly this year and by kimjang season, the price of hot pepper and seasoning skyrockets, so the concern of North Korean ordinary people for surviving the winter will be raised a notch.

Korea Times
Jung Sung-ki
10/29/2007

North Korea has a keen interest in economic modernization program aimed at luring foreign investment through business cooperation projects with other countries, a member of the European Parliament said Monday.

In a press conference in Seoul, Hubert Pirker, an Austrian member of the European Parliament, said the North clearly understands the fact that without economic modernization, it will not be able to attract foreign investment into the country.

Pirker and two other EU representatives _ Jas Gawronsky of Italy and Glyn Ford of Britain _ visited North Korea from Oct. 20-27 and met the North’s Prime Minister Kim Yong-il. They also held an economic forum with North Korean officials.

During the forum, North Koreans’ attitudes “were not closed or hostile,” said Pirker.

“We visited the railway station, for example, and also parks and restaurants. I could say we could see more modern-style restaurants and more cars than ever before,” the European lawmaker was quoted by Yonhap News Agency as saying.

The European lawmakers discussed ways of modernizing North Korea’s agriculture, light industry, information technology and finance sectors with officials there, Pirker said.

North Korea’s Foreign Minister Pak Ui-chun expressed his wish to visit Europe next year, as Pyongyang seeks to send its young officials and industrial trainees there to learn information technology and other advanced knowledge from European nations, he said.

Pirker said the delegates had advised the North Koreans that upgrading the level of communications and finance systems in the North to global standards was essential to securing foreign investments in a stable manner.

Progress at the six-party talks aimed at scrapping Pyongyang’s nuclear weapons program and expanding inter-Korea economic cooperation would help the North achieve its goal of inviting foreign capital, the legislator added.

The European Union has so far sent about 50 million euros worth of aid to North Korea, he said.

The impoverished North has recently shown strong interest in the economic reform programs of other countries.

Reports said North Korean leader Kim Jong-il expressed intentions last week copying Vietanam’s economic reform and openness policy, called “Doi Moi,” during a meeting with Nong Duc Manh, the secretary-general of the Vietnamese Communist Party, in Pyongyang.

The ongoing visit to Hanoi by the North Korean premier appears to have something to do with Kim’s remarks, they said. The reclusive leader is reportedly planning to visit Vietnam in the near future.

North Korean officials expressed firm commitment to denuclearization under the Feb. 13 nuclear deal, according to Pirker.

Under the pact signed by the two Koreas, the United States, China, Japan and Russia, Pyongyang pledged to disable its nuclear facilities and declare all of its nuclear programs by the end of this year in return for economic assistance and political concessions.

North Korea has received 50,000 tons of heavy fuel oil from South Korea and an equal amount from China for closing five of its nuclear facilities in July. The regime is to receive an additional 900,000 tons of oil or equivalent energy aid if it goes through the second stage of denuclearization.

The EU delegates are scheduled to pay a courtesy call on Prime Minister Han Duck-soo and hold meetings with South Korean business leaders including Hyundai-Kia Automotive Group Chairman Chung Mong-koo before leaving South Korea on Nov. 2.

Yonhap
10/28/2007

GS Caltex Co., South Korea’s second-biggest oil refiner, said Sunday it is set to supply 21,000 tons of heavy oil to North Korea as part of a nuclear disarmament agreement.

The oil shipment will be sent later Sunday via the port of Yeosu, a port city about 455 kilometers south of Seoul, to arrive at the North Korean ports of Songlim and Sunbong.

GS Caltex and European oil trading company Vitol have recently won a tender issued by the U.S. Agency for International Development to supply a combined 50,000 tons of heavy oil to the North as part of the disarmament-for-aid deal.

Korea Times
Jung Sung-ki
10/28/2007

North Korean leader Kim Jong-il has expressed intention to model after the Vietnam-style economic reform and openness policy, dubbed “Doi Moi,” a report said Sunday.

Vietnam adopted the reform policy in 1986 to establish a market economy such as liberalization of trade and finance with foreign countries, decentralization of state economic management and reliance on the private sector as an engine of economic growth.

Kim made the remarks during a meeting with Nong Duc Manh, secretary-general of Vietnam’s Communist Party, in Pyongyang last week, Yonhap News reported, citing the Sunday edition of the weekly Yazhou Zhoukan, a Hong Kong-based international Chinese business daily. The newspaper carried an interview with Vietnamese Foreign Minister Pham Gia Khiem who accompanied the secretary general on his Pyongyang visit.

“Chairman Kim highly evaluated the achievements Vietnam’s Doi Moi has made in the past 20 years while meeting with Secretary General Manh,” Khiem was quoted as saying, adding the North Korean leader accepted Manh’s proposal for Kim’s visit to Hanoi.

The ongoing visit to Hanoi by North Korean Prime Minister Kim Yong-il aims to prepare for Kim’s visit to Vietnam, the report said.

The North Korean premier, who arrived in Hanoi Friday, visited several industrial and tourist sites in Vietnam, including Halong Bay, one of the biggest tourist attractions for foreigners, reports said.

Diplomatic sources in Hong Kong, however, were quoted as saying it is remarkable that Kim Jong-il expressed an interest in Doi Moi, but it is not likely for the communist North to closely follow the reform program.

The reason why the North is eyeing Vietnam’s economic program could have something to do with China’s lukewarm attitude to Pyongyang’s efforts to build special economic zones near the North’s border with China, they said.

Hanoi’s reform has often been referred to as a model for North Korea’s underdeveloped economy to emulate.

Chief U.S. nuclear envoy Christopher Hill said during a visit there in May that North Korea should “move on in the way that Vietnam has done so well.”

North Korea, Vietnam agree to boost bilateral ties
Yonhap
10/27/2007

North Korea and Vietnam said Saturday they have agreed to forge closer cooperation in the sectors of agriculture, culture and tourism, in their first high-level meeting in five years.

The agreement was reached after a meeting of visiting North Korean Premier Kim Yong-il and Vietnamese Prime Minister Nguyen Tan Dung.

Kim, who is in charge of economic policy, arrived in Hanoi on Friday for a five-day stay, as part of the first leg of a tour to Southeast Asian nations that include Malaysia, Cambodia and Laos.

Vietnam has shifted to a market economy since the mid-1980s and Hanoi’s reform is seen by many as a model for North Korea’s underdeveloped economy to emulate.

Times of London
10/24/2007
Lucy Bannerman

She is one of the few Westerners to be invited behind the borders of the world’s most secretive state, and is surely the only soprano from Middlesbrough to perform for Kim Jong Il.

Having become an unlikely celebrity in North Korea over the past six years, the opera singer Suzannah Clarke has pulled off perhaps her greatest coup by getting permission to take the state’s national orchestra to Britain. The Times has learnt that plans are under way for 120 musicians to perform at a number of big venues across the UK early next year.

The Foreign Office has already given its support to the project and the search is now on for sponsors.

For the performers, it will be their first experience of the outside world; for Clarke, 38, it will be the culmination of years of work, using her position as the darling of Pyongyang to build close relations with North Korea’s leaders. She said: “This is not an easy project. Two years ago I wouldn’t have had any hope of succeeding. But when I went out there last April, I could feel a change in the air, a warmer atmosphere. This is the first time the North Koreans have ever let their orchestra abroad.

Clarke, who opened the Euro 96 football championships at Wembley, claims that ending isolation is the best way for the West to build relations with the hardline state, which has a dismal record on human rights and is thought still to be holding up to 200,000 political prisoners, and has presided over millions of deaths from famine and economic mismanagement. However, she argued that isolation was not the answer. The idea of a British tour came to her as she watched the orchestra perform during the annual Friendship Festival this year.

As befits the tough standards set by the dictatorship, the musicians displayed the same discipline and technical prowess demonstrated by the thousands of dancers who take part every year in the synchronised gymnastic games marking Kim Jong Il’s birthday. “They played a cheeky medley of tunes – Shostakovich, Mozart, as well as some of their own repertoire. It was powerful, passionate, but funny as well, and I thought, ‘Gosh, British audiences would love this’,” she said.

She is seeking sponsors and dealing with the considerable logistical challenge of arranging transport and accommodation for 120 North Koreans and their chaperones during their visit. “I wake up from mini-nightmares of losing a North Korean on the Tube,” she said.

Supporters include Lord Alton of Liverpool, chairman of the British-North Korean All Party Parliamentary Group and official patron of the project, and David Heather, a British financier who curated Britain’s first exhibition of North Korean art in Pall Mall, this year.

Joong Ang Daily
10/23/2007

Regulatory filing requirements to invest in North Korea will be eased, and the Export-Import Bank of Korea will manage information on investment activities in the North, according to a Ministry of Finance and Economy release yesterday.

For an amount below $300,000, an investor will no longer need to hand in an annual financial report to the bank handling the company’s foreign exchange deals for investments in the North.

For an amount below $1 million, an investor will only need to report briefly.

The bank dealing with foreign exchange transactions will need to report the investor’s financial information to the Export-Import Bank of Korea instead of the Ministry of Unification and the Finance Ministry.

D.P.R. Korea Export and Import 2007
Price JPY39,900.-(tax included)
Date of issue October  2007
Size B5/Page 514
Publisher WTS
ISBN Code ISBN978-4-9903339-2-8-C3033

This book summarizes foreign trade statistics in fiscal year 2006 of the Democratic People’s Republic of Korea (DPRK).  Since DPRK does not publish the trade statistics, it is not even certain whether or not statistical data on trade are systematically collected.  Therefore, WTS drew up this book by investigating foreign trade with DPRK, based on customhouse statistics of 190 or so countries (and regions) which are trade partners of DPRK.

The statistical format applied in this book was created, based on the HS code (the commodity classification list based on “International Convention on the Harmonized Commodity Description and Coding System”) which is the international standard.
Amounts in various currency units were all converted into the U.S. dollar on the basis of the annual total.

We would be delighted if this book could serve as reference for concerned parties.

Contents of “D.P.R.Korea Export and Import 2007”
1. Overview
2. Statistics by country
3. Statistics by product group
4. Statistics by country and product group (20 high rank countries = China, South Korea, India, Thailand, Yemen, Russia, Brazil, Qatar, Japan, South Africa, Singapore, Mexico, Greece, Germany, Hong Kong, Netherland, Chile, Taiwan, Peru, Paraguay)
5. Topics:
1) Oil import
2) Export of gold and silver
3) Export of rare metals
4) Export of other subterranean resources
5) Import of luxury items
6) Export of apparels
7) Export of fishery products
8) Data on imports to DPRK after the nuclear test
9) Partial confusion of the statistics of DPRK with those of South Korea
6. Statistics by product group and country (HS6ST)- EXPORT 3,161 all articles
7. Statistics by product group and country (HS6ST)- IMPORT 4,294 all articles

Information provided by:
Miyagawa Jun
Korea Specialty Bookstore, Rainbow Trading Co.
TomodaSanwaBldg. 2F, 1-37,
KandaJinbocho1-37, Chiyoda-ku,
Tokyo101-0051 Japan
tel/ fax +81-3-5283-6100,
miyagawa@rainbow-trading.co.jp

Korea Times
Andrei Lankov
10/21/2007

When I was preparing for a trip to Yanbian, people told me that I would not have any difficulties in communicating with the locals: “They all speak Korean there.” It seems like an exaggeration, but it was not.

Every time my poor and broken Chinese was not up to the task, I asked if somebody around could speak Korean and such a person was found in seconds. Indeed, Yanbian is officially known as the Korean Autonomous Prefecture.

From the 1880s the Koreans began to move to the area in large numbers, and by 1949 when the Communists took power in China, they formed a majority in the borderland areas. In 1945 about 1.7 million Koreans lived in China. About 500,000 of those chose to move back to Korea in the late 1940s, but a million or so decided to stay.

Nowadays, the Korean population has reached two million, so some Korean nationalists even describe this part of China as “Third Korea,” together with the North and South Communist China emulated the Soviet approach to ethnic minorities. Ideally, each minority had to be given some kind of autonomous quasi-statehood.

Within such statehood, the ethnic minority would be provided with the education in their native language, the media in this language and some token representation of the minority in the government agencies. This scheme was applied to Yanbian as well, and in spite of all problems this policy has worked so far. On the one hand, Koreans of the area, unlike Koreans in the former USSR, Japan or U.S., have managed to keep their language.

On the other hand, their loyalties seem to remain firmly with Beijing. The Korean language is widely used in the area. Lively talks in Korean can be overheard during walks through the city of Yanji, the capital of the Prefecture. It is remarkable that the language is used not only by elderly people, but often by youngsters as well.

As stipulated by the law, all shops and government agencies have to display signs in two languages, and it is explicitly stated that the Korean text should not be smaller than its Chinese equivalent. The local newsstands sell a number of Korean language publications, ranging from pulp fiction periodicals with semi-nude beauties on the cover to a solid quarterly which publishes the work of local Korean-language writers (such a quarterly seems to be run on a government subsidy).

The ethnic flavor has even become a tourist attraction. The dog meat restaurants are everywhere, and unlike South Korea, they are not hidden but openly advertise themselves. The images of the hanbok-clad ladies are another feature of local advertisements. The promotion of ethnic features seemingly targets both South Koreans and visitors from other parts of China. It is remarkable that until recently the local Koreans overwhelmingly sent their kids to Korean language schools.

The curriculum at those schools was identical to the schools attended by the Han Chinese, but Korean was the major language of tuition. After graduating from high school, young Koreans can proceed to the local university where they are officially granted preferential treatment at the entrance exams, sort of “affirmative action,” Chinese style. Of course, the life of Koreans was not always easy.

There were periods of restrictions and even open persecution, especially in the crazy decade of Mao’s Cultural Revolution in the late 1960s. At those days, the relations between Beijing and Pyongyang went sour, and this influenced the local Korean community to some extent. A middle-aged ethnic-Korean businessman told me, “Back in the late 1960s, I seldom saw my parents. Because they were members of an ethnic minority, they had to go to ideologicalstruggle sessions every day and had to stay until very late.

”However, that period was an exception. The same person, who is buy no means a fan of the current Chinese system, still admitted when I asked him about discrimination: “Discrimination? Well, almost none, to be frank. They appoint some Han Chinese officials to supervise the administration, but basically I don’t think Korean people here have problems with promotions or business because of their ethnicity.

Sometimes being a minority even helps a bit — it’s easier to get to a university if you come from a minority group.” However, in recent years the situation in the area began top change fast. The Koreans began to switch from their native language to the Chinese (or, to be more precise, Chinese is increasingly seen as a native language by the children born in Korean-speaking families). Schooling in Korea faces a major crisis.

According to statistics, widely known and discussed, the number of children enrolled in Korean schools in 2000 was merely45.2 percent of the 1996 level. In the 1990-2000 period, 4,200 Korean teachers, or some 53 percent of the total, left their jobs because of school closures. It is remarkable that younger people with whom I could talk often have obvious problems with communicating in Korea, and whenever possible prefer to switch to Chinese. In families they still talk Korean to the elders, but Chinese is a natural choice between themselves.

In short, the assimilation began, and it might be unstoppable. Koreans leave their villages and go to the cities where they work and cooperate with Chinese. They often intermarry, and Chinese becomes the sole language of their kids. Like it or not, but the days of the “Third Korea” seems to be over.

Yonhap
10/20/2007

The number of South and North Koreans who made cross-border visits during the first nine months of this year surged over 30 percent as economic, social, cultural and humanitarian exchanges between the Koreas expanded, a government report showed Saturday.

According to the report released by the Unification Ministry, a total of 102,809 people from the two countries made cross-border visits during the January-to-September period, up 33.6 percent from the same period of the previous year.

Of the total that excluded South Koreans who visited the North’s Mount Geumgang, 102,079 were South Koreans going to the North, and only 730 North Koreans visited the South, it added.

Exchanges in the economic sector were most brisk with a total of 69,729 people crossing the border, followed by 9,924 for social and cultural exchanges, and 7,260 for humanitarian purposes, the report showed.

Meanwhile, inter-Korean trade during the nine months amounted to US$1.22 billion, up 12.7 percent from a year earlier, the report noted.

The countries remain technically at war as the 1950-53 Korean War ended with an armistice, not a peace treaty.

Financial Times
Anna Fifield
Richard McGregor
10/18/2007

China suspended key rail freight services into North Korea last week after 1,800 wagons carrying food aid and tradeable goods crossed into Kim Jong-il’s hermit state but were never returned.

Absconding with Chinese wagons would be a strange move for North Korea because Beijing is Pyongyang’s closest political ally and biggest provider of food, goods and oil. Analysts monitoring North Korea said Chinese officials had privately complained to them that the North Koreans were dismantling Chinese wagons and selling them back as scrap metal.

The Chinese railway ministry suspended a number of rail freight services into North Korea on October 11, humanitarian agencies operating in North Korea told the Financial Times. The ministry told international aid agencies that it would not send any more wagons into North Korea until Pyongyang returned the 1,800 Chinese wagons.

Tony Banbury, Asia director for the UN World Food Programme, said that the curtailed service had held up the delivery of 8,000 tonnes of maize and wheat already stockpiled in Dandong, a Chinese border town. “We now have significant amounts of food but we can’t deliver it,” Mr Banbury said.

Reliefweb, a United Nations website for aid agencies, reported that the delivery of food stocks into North Korea had been “critically affected by the cessation of movement of railway wagons from China”.

An official with China’s railway ministry said yesterday that it was not aware of any suspension of freight services into North Korea.

But Fu Xue, of the Dandong Tianda International Freight and Forwarding Company, said there had been delays in the return of wagons but that North Korea had asked for permission from China.

North Korea has frequently failed to pay for goods or to pay back debt. It has also long been accused of relying on currency counterfeiting and drug smuggling to stay afloat.

But purloining Chinese wagons would be a brazen move. China is already thought to be disillusioned by Pyongyang’s refusal to embrace economic reform. It was also angered by North Korea’s decision last year to conduct a nuclear test despite Beijing’s objections.

North Korea has a history of not returning vehicles. In 1998, the late Chung Ju-yung, founder of South Korea’s Hyundai Group, donated 1,001 cows to North Korea to make amends for stealing a cow as he escaped from the north as a boy.

Pyongyang said the cows should be transported on Hyundai trucks. The trucks were never seen again.