North Korean Economy Watch

According to Yonhap:

The North spent over US$146,000 to buy medical supplies from Bangladesh in the fiscal year 2014, the Washington-based Radio Free Asia (RFA) reported, citing trade statistics from the Bangladeshi Export Promotion Bureau.

The figure is more than double the $68,000 tallied in the fiscal year 2013. The country closes its books in June.

The North likely chose Bangladesh as its trading partner because the latter can copy patented drugs and sell them abroad for now as per an international agreement brokered by the World Trade Organization, the Dhaka office of the Korea Trade-Investment Promotion Agency said.

North Korea also bought $163,000 worth of instruments used in radiology from the U.S. in May, trade documents by the U.S. Commerce Development showed earlier this month.

Though it is too early to tell, the RFA speculated that the North’s sudden interest in medical import may be closely related to leader Kim Jong-un’s recent campaign to boast his “love for the people,” a move possibly aimed at assuaging public outrage over a deadly collapse of an apartment building in Pyongyang in May.

The North’s healthcare spending has been among the least in the world, with the World Health Organization estimating that it had put in less than $1 per person in 2006.

Separately, the Swiss government has said it will continue its humanitarian assistance to North Korea for the next two years, the U.S.-based Voice of America reported Friday.

The Swiss Agency for Development and Cooperation (SDC) will extend its 2012-2014 Medium-Term Programme, an aid plan aimed at helping North Korea exploit sloping lands for farming purposes and gain better access to clean drinking water, by another couple of years, the report said.

Read the full story here:
N. Korea ramps up import of medical equipment, drugs in past year: RFA
Yonhap
2014-7-11

According to the Daily NK:

The British government donated $660,000 USD in Official Development Assistance (ODA) to North Korea last year, according to a Voice of America (VOA) report released on July 9th.

The report, citing a British government fiscal report, stated that more than half of the total sum, $342,000 USD, was spent by the British Council on English language education programs in Pyongyang. The program has been in place since the beginning of the century, when the two states established formal relations, and was recently extended to 2017.

Outside this sum, $167,000 USD was given to assist the rescue work of the Chosun Red Cross Society, while the British government also facilitated the participation of a North Korean athlete in the International Paralympics, and provided training for North Korean officials.

The British government has, throughout the life of bilateral relations, cleaved to a policy of critical engagement with the Kim regime, which, according to the official London stance, allows for harsh criticism of human rights and other abuses whilst also providing for progress in other areas.

Additional information:

1. Martyn Williams catalogs UK activities in the DPRK over the last few years here.

2. British Council forges new UK/North Korea cultural ties (Press Release on 2014-7-15)

3. Previous posts on the UK here.

Read the full story here:
British Government Gives $660,000 to North Korea
Daily NK
Moon Eun Joo
2014-7-10

According to Yonhap:

China donated US$1 million to the World Food Programme (WFP), the United Nations’ food assistance body, to help feed malnourished North Korean children and pregnant women, a U.S. report said Tuesday.

The donation will be used to provide food to around 1.8 million North Korean babies, children and expecting mothers, according to the report by the Washington-based Voice of America.

China has previously donated the same amount of money for WFP’s North Korean assistance program last December.

Since the beginning of 2014, WFP has collected $49 million in donations for North Korean food assistance from countries such as Switzerland, Australia and Canada.

The amount accounts for only 35 percent of what WFP needs to accomplish their food aid programs for North Korea in the first half of this year.

Read the full story here:
China donates US$1 mln to help feed N. Korean children
Yonhap
2014-7-8

According to Yonhap:

Cross-border trade between North Korea and Russia jumped 37 percent to US$104 million in 2013 from the $76 million recorded in the previous year, according to a report by Lee Yong-hwa, a researcher at the private think tank Hyundai Research Institute.

“The North is believed to have forged deeper relations with Russia in an effort to revitalize its economy and prevent it from becoming excessively dependent on China,” Lee said in the report.

The researcher said the two countries’ economic cooperation is forecast to grow further going forward as the North’s attempts to revitalize its moribund economy coincide with Russia’s bid to develop its Far Eastern regions.

According to the report, the portion of trade between North Korea and Far Eastern Russia out of the two nations’ total trade volume surged to 23.1 percent in 2013 from the 10 percent tallied in 2009, indicating that Russia’s Far East development policies have added to the overall bilateral trade expansion.

The socialist country has also tightened relations with Russia in other business areas including transportation and logistics as well as in the energy industry, the report added.

China was the biggest trading partner for North Korea last year with their bilateral trade volume reaching $6.54 billion, according to data from the Korea International Trade Association (KITA).

But trade between the two Koreas fell to its lowest level in eight years in 2013 due to their strained relations. Inter-Korean trade reached $1.15 billion last year, down a whopping 41.9 percent from the previous year’s $1.98 billion, the data showed.

Read the full story here:
Russia-N. Korea economic ties expanding: report
Yonhap
2014-7-3

 Pictured Above (Google Earth) the Hunchun-Rason Bridge: (L) 2009-5-28 (R)  2016-3-19

UPDATE 6 (2016-3-19): New satellite imagery shows progress being made on the bridge, but it seems to be moving slowly.

UPDATE 5 (2014-6-28): According to Xinhua, the bridge is to be replaced:

China and the Democratic People’s Republic of Korea (DPRK)agreed on Friday to jointly build, manage, and maintain a new border bridge between thetwo neighbors.

An agreement was signed by Chinese Ambassador to the DPRK Liu Hongcai and DPRKVice Foreign Minister Pak Myong Guk, the official KCNA news agency reported.

The Quanhe-Wonjong bridge over the Tumen River, which was built in the 1930s, hasbeen in a shabby condition.

UPDATE 4 (2012-10-26): Rajin-Wonjong Road Opened to Traffic

Pictured Above (KCNA): Photos of the official opening of the renovated road

According to KCNA:

Rajin-Wonjong Road Opened to Traffic

Pyongyang, October 26 (KCNA) — A ceremony took place in Rason City of the DPRK on Friday to open to traffic the Rajin-Wonjong road in the Rason Economic and Trade Zone jointly developed and operated by the DPRK and China.

Attending it from the DPRK side were Jo Jong Ho, chairman of the Rason City People’s Committee, officials concerned and people of the city and from the Chinese side were Zhang Anshun, secretary of the Yanbian Autonomous Region, Jilin Province, Committee of the Communist Party of China, Chen Weigen, vice-governor of the Jilin Provincial People’s Government, Tian Baozhen, consul-general to Chongjin, and other officials concerned.

Congratulatory speeches were made at the ceremony.

Hwang Chol Nam, vice-chairman of the Rason City People’s Committee, said it is very glad that the road has been opened to traffic amid great expectation and interest of the peoples of the two countries at the historic time when the traditional bilateral friendship is growing stronger.

The whole course of the road project served as an occasion in deepening the friendly relations of the DPRK and China and displaying the validity and vitality of their joint development and operation of the Rason Economic and Trade Zone, Hwang added.

The road helps increase the cargo traffic and transport of freight from northeastern China to Rajin Port and promote the development of economic relations between the two regions, including tourism, he said.

Zhang Anshun warmly welcomed the opening of the road on behalf of the Jilin Provincial Party Committee and Government, saying that it is a good start for the progress of the zone to be jointly developed and operated by the two countries.

Zhang hoped that the two countries would develop the economy and their peoples would enjoy happiness under the guidance of the Communist Party of China headed by Hu Jintao and the Workers’ Party of Korea headed by Kim Jong Un.

Members of the platform cut the tape to declare the opening of the road. Then vehicles passed along the road amid display of fireworks.

Here are additional articles that mention the bridge:

1. Recent articles on Rason’s future (2011-5-4)

2. Rason’s Chinese investor tour (2011-4-4)

UPDATE 3 (2011-9-7): A reader send in a photo of the road:

Click image to see lager version and source.

UPDATE 2 (2010-6-23): Hunchon Bridge opens.  According to Kyodo (via Breitbart):

China has repaired a bridge in Hunchun at the Chinese and North Korean border, giving it a safer access to North Korea for use of Rajin port to ship coal to Shanghai, according to Jilin Province officials.

China paid 3.6 million yuan ($528,526) to repair the bridge over the Tumen River, a project jointly pursued with North Korea, the officials said Tuesday.

Work was completed June 14.

The bridge serves as a gateway to Pier No. 1 at Rajin port, which a Chinese company has obtained the right to use for 10 years.

In April, the Chinese government approved a plan to transport coal and other items produced in Jilin to Shanghai via Rajin in northeastern North Korea.

China and North Korea have been in talks about financing of a plan to build a 50-kilometer road leading to the port, the officials said.

UPDATE 1 (2010-6-6): DPRK border bridge to reopen this month, highway to border opens in October
By Michael Rank

A bridge on the Chinese-North Korean border that will take traffic to the North Korean port of Rajin is due to reopen at the end of this month, while a highway from the Jilin provincial capital of Changchun to the border city of Hunchun 珲春 will open in October, according to Chinese reports here and here.

As NKEW reported in April, the 70-year-old bridge over the Tumen river near Hunchun  is being rebuilt as part of a reported $44 million plan to modernise the road from the border to Rajin. Built during the Japanese occupation in 1938, the bridge is 535 metres long and 6.6 metres wide, and joins the Chinese border post of Quanhe 圈河 with the North Korean town of Wonjeong 원정.

The highway will open on October 1, China’s national day, and will cut the journey time from Changchun to Hunchun from eight hours to five, the report said. But it indicated that the 60-km road from the border to Rajin, said to be mostly unpaved and prone to frequent accidents during rain, would not be ready by then.

A Chinese company, Chuangli Group, based in Dalian in Liaoning province,  was reported in March to have signed a 10-year deal to lease a pier at Rajin (also known as Rasŏn or Rajin-Sŏnbong), giving China access to the Sea of Japan for the first time since the 19th century when the Qing imperial government signed treaties under duress from Japan and Russia.

ORIGINAL POST (2010-4-13): Bridge on China-North Korea border being renovated
By Michael Rank

A 70-year-old bridge on the Chinese-North Korean border is being renovated to improve transport to and from the North Korean port of Rajin 라진 (Rason [Raseon]/Rajin-Sonbong) which a Chinese company has taken over on a 10-year-lease, a Chinese website reports.

The bridge over the Tumen river near the city of Hunchun 珲春 in Jilin province will be reopened at the end of June after almost five months of work. Built during the Japanese occupation in 1938, the bridge is 535 metres long and 6.6 metres wide, and joins the Chinese border post of Quanhe 圈河 with the North Korean town of Wonjeong 원정. The report gave no details of costs but said it was being renovated under a deal between the cities of Hunchun and Rason 라선. It said the bridge would help to boost trade in both Hunchun and Rajin and in the region generally.

The refurbishment of the bridge is part of a reported $44 million plan to modernise the road from the border to Rajin.

Ahn Byung-min, an expert on North Korean infrastructure at the Korea Transport Institute, was quoted by the Korea Herald as saying a senior Chinese local government official had told him that the governor of Jilin had signed an agreement to invest 300 million yuan in expanding and paving the road to Rajin.

A Dalian-based company named Chuang Li agreed in 2008 to revamp the road in exchange for leasing a pier at Rajin. “Chuang Li isn’t a company big enough to afford the road construction, so the Jilin government took on the direct investment instead,” Ahn said.

Additional Information:
1. The existing 60-km road is mostly unpaved and prone to frequent accidents during rain.

2. The coordinates of the new bridge are  42°34’4.45″N, 130°31’24.16″E. You can see it on Google Maps here. Thank you for the tip, Mr. Cha.

3. There are a couple of more bridges in the area: here (which looks like it has been unused for some time) and here.

4. Photos of the construction opening ceremony are here.

According to Yonhap:

The World Food Programme (WFP) has decided to curtail its nutrition program for North Korean babies and pregnant women by about 30 percent due to a lack of funding, a U.S. report said Thursday.

The WFP is operating the two-year nutrition program worth US$200 million in North Korea through 2015, targeting 2.4 million children under the age of 5 as well as pregnant women.

But a lack of funding seemed to lead the U.N. food agency to decide to reduce the operation of its nutrition program, according to Radio Free Asia (RFA).

The WFP’s total budget for its humanitarian aid to North Korea reached $137.5 million, down about 30 percent from its original plan, according to the report, it added.

The number of North Korean children and pregnant women who benefited from the WFP’s program reached some 840,000 last month, far below the agency’s target.

Ertharin Cousin, the executive director of the WFP, said in late May in Seoul that its nutrition program stands at a “very crucial juncture,” adding that it had received only 20 percent of the funding required to implement the program.

The North has relied on international handouts since 1995 to help feed its people suffering from chronic food shortages.

The WFP’s humanitarian aid to North Korea reached $26.56 million last year, compared to $86.94 million in 2012, according to the U.N. food agency.

In November, the agency said that food production in the North is estimated to have been 5.03 million metric tons in 2013, up 5 percent from the previous year.

Stephan Haggard has a review of the WFP’s efforts in the DPRK here.

Read the full story here:
Underfunded WFP cuts nutrition program for N. Korea: report
Yonhap
2014-6-19

According to the Hankyoreh:

In terms of levels of private-sector [interchanges], the situation is even worse than the previous all-time low under the Lee administration. According to the annual White Paper on unification published in March, the total amount of private aid to North Korea authorized by the Ministry of Unification in 2013 stood at 5.1 billion won (US$5million). This amount not only pales in comparison to the 90.9 billion won (US$89.3million) okayed in 2007, the last year of the Roh Moo-hyun administration, but is only one-sixth the 31.0 billion won ($30.5 million) annual average during the Lee years. Even in 2011 and 2012, years when interchange and cooperation with North Korea were banned under the May 24 measures adopted in the wake of the ROKS Cheonan sinking, aid from NGOs amounted to 13.1 billion won (US$12.9million) and 11.8 billion won (US$411.6million), respectively. Between 120,000 and 180,000 people traveled between the Koreas under the Lee administration in comparison with last year’s total of 76,000. The Ministry of Unification is calling the numbers misleading.

“Last year, there was not any real aid to North Korea until August because all ties had been cut off after their third nuclear test in February,” a senior ministry official said on condition of anonymity. “The amount of aid and the number of people involved in exchange fell because there was a six-month vacuum,” the official explained.” The NGOs are countering by arguing aid has remained at a low 2.1 billion won (US$2.06million) this year, despite a lack of major frictions.

There are, however, signs of some change in inter-Korean interchange though the NGOs are cautioning against reading too much into the government’s decisions. On June 4, the Ministry of Unification approved the first agricultural exchange effort since the May 24 measures. The Gyeongnam Unification Agricultural Cooperation Committee has sent 33 million won (US$32,400) worth of strawberry seedlings to North Korea, where they are to be grown for four months before being brought back South

Stephan Haggard posted some interesting information on Chinese investment in the DPRK. See his posts here and here.

In this graph, Dr. Haggard breaks down the Chinese investment data by year and industry:

It is worth noting that the graph only sums the number of registered projects, not the value of the investments. Based on satellite imagery and trade data, I think we can make a strong case that the mining sector would be the area receiving the largest infusion of Chinese investment inflows.

Dr. Haggard also shows that most Chinese investment flows into the DPRK originate from the provinces along its border:

In a second post, Dr. Haggard offers a graph of cumulative direct investment from China:

According to Yonhap:

Cumulative production of the inter-Korean industrial park has come to US$2.3 billion as the most salient outcome of rapprochement between the Koreas marks its 10th anniversary of operations this week, the unification ministry said Thursday.

The joint factory complex in the North Korean border town of Kaesong opened a decade ago following the first inter-Korean summit meeting in 2000, in which their leaders adopted a joint declaration calling for closer cooperation and exchanges.

On June 14, 2004, a group of 15 South Korean groups signed contracts to operate factories in the then-newly built complex, inaugurating the era of the Kaesong Industrial Complex. In December that year, the joint complex saw its first batch of goods produced in its factories.

In the first full year of operations in 2005, annual output reached $14.9 million before jumping by more than 30-fold to $469.5 million in 2012, according to the unification ministry.

But yearly output nearly halved last year from 2012 after Pyongyang suspended operations of the Kaesong complex for five months from April amid inter-Korean tensions. The figure rose to $168.1 million in the first quarter of this year.

The value of inter-Korean trade through the park came to an accumulated $9.45 billion, according to the ministry.

A total of 940,000 people have visited the inter-Korean economic zone, with 125 South Korean firms currently operating in the complex designed to match deep-pocketed South Korean companies with cheap North Korean labor.

Among the firms, 73, or 58.4 percent, are textile firms, while another 24 firms are machinery or steel makers. The complex is also home to 13 electronics makers and 9 chemicals firms, the ministry noted.

The Kaesong complex also saw the number of North Korean workers grow from around 6,000 in 2005 to 52,000 as of recently, along with monthly salary more than doubling from $50 to more than $130.

Although this story reports salaries of $130, a separate story released just a couple of days ago claims the monthly incomes are just $70. I am not sure why the discrepancy.

Read the full story here:
Cumulative output of Kaesong park reaches US$2.3 bln
Yonhap
2014-6-12

According to the Wall Street Journal:

A German industrial needle maker will open an office in the joint inter-Korean industrial complex inside North Korea, South Korea said Tuesday.

The move will mark the first non-Korean business entity inside the plant but falls short of Seoul’s goal to bring in manufacturing operations from foreign companies to help ensure North Korea doesn’t unilaterally close the complex again.

The plant was shuttered for five months last year after Pyongyang withdrew its labor force during a sharp escalation in threatening rhetoric. Seoul officials in recent years have mulled over the possibility of attracting foreign companies, which they say would help the factories run without interruption.

Seoul’s Unification Ministry, which handles inter-Korean affairs, said Groz-Beckert, a maker of industrial needles and other tools for textile manufacturers, will open a sales office inside the facility, located a few miles north of the border. The ministry didn’t specify a schedule.

Here is coverage in AFP.

Here is coverage in Voice of America.

Read the full story here:
German Firm to Open Sales Office Inside North Korean Complex
Wall Street Journal
Jeyup S. Kwaak
2014-6-10