North Korean Economy Watch

The PR of China published official data on the number of North Koreans that visited the country in 2011. The numbers were originally reported in this Voice of America report (in Korean). The VOA story was covered in English by two Korean news sources, and I have posted them below.

It is important to remember that these are official Chinese numbers, therefore they represent a lower bound of the actual numbers of North Koreans crossing the border.

According to the Daily NK:

China’s National Tourism Administration has revealed that the number of North Koreans legally visiting the country reached a new high in 2011.

According to a report carried by Voice of America yesterday, the 152,300 North Koreans who visited China last year exceeded the 2010 figure of 116,400 by more than 30%, and comfortably beat the previous high of 125,800 recorded in 2005.

Approximately half (75,266) the total number of visitors apparently went for work, while a further 39,042 went for business purposes or to attend meetings. 4,589 were tourists. However, the statistics show that just 99 of the visits were for the purpose of visiting relatives.

72,885 of the visitors were age 45 through 64, while a further 64,823 fell into the 25 to 44 bracket. Women were heavily outnumbered by men; 21,828 against 130,472.

Yonhap reported an additional point:

Ferries were the most popular means of transport for the North Koreans at 62,160 passengers, followed by 33,933 who arrived by plane, 31,829 by car, 19,132 by train and 5,246 by foot.

Although the majority of official North Koreans border crossers are men, it is reasonable to assume that the majority of unofficial North Korean border crossers are women.

Read the full stories here:
Largest-ever number of N. Koreans visited China in 2011: report
Yonhap
2012-2-10

Official Visitor Numbers Hit New High
Daily NK
Park Seong Guk
2012-2-10

Institute for Far Eastern Studies (IFES)
2012-2-8

As of January 2012, the Kaesong Industrial Complex (KIC) employs over 50,000 North Korean workers.

South Korea’s Ministry of Unification (MOU) reported that North Korea sent 449 additional workers to the complex last month, bringing the total number of North Korean employees at the KIC to 50,315.

The majority of the workers are women, comprising 72 percent of the total employees. A total of 81.8 percent are high school graduates, while 9.5 percent are college graduates and 8.7 percent are graduates from specialized/professional schools.

The KIC has had a low worker turnover rate. Some of the workers are licensed doctors and nurses, signifying the popularity of employment at the complex.

However, the MOU added that, “in order to meet the demands of the South Korean corporations in the KIC, 20,000 more workers are needed.”

Currently the average monthly wage of the workers is 110 USD, which is paid directly to the North Korean authorities in US dollars by the South Korean companies.

Out of the total wage, 45 percent is deducted and collected by the North Korean government as social security (15 percent) and social cultural policy funds (30 percent). The North Korean workers receive 55 percent of the total wage, which is paid either in coupons or North Korean currency.

Since the KIC’s opening in 2004, the total amount paid to the KIC workers reached 193.58 million USD as of November 2011.

Despite the deadlocked relations between the two Koreas, the number of employees, along with production and number of businesses, has steadily increased.

The number of employees in 2007 was 23,529. Thus the number has increased to over 50,000 in just four years, and the yearly production output has risen from 180 million to 400 million USD.

Cumulative production also increased from 310 million USD in March 2008 to 1.19 billion USD as of last year. During this time, 55 additional South Korean companies joined the KIC.

Yearly export output jumped from 870,000 USD in 2005 to 36.87 million USD in 2011. However, this is a drop from the previous year’s export of 39.67 million USD. Cumulative export as of November 2011 was 190 million USD.

In the assessment of the MOU, “the decrease in export reflects buyer’s anxiety from instability in inter-Korean relations and North Korean military provocations and many of the manufactured goods were sold domestically in South Korea.”

In addition, the issue of KIC-made products to be granted a “made in Korea” label is still under debate. According to an undisclosed MOU source, “This July will mark the one year anniversary of the ROK-EU FTA and the Committee on Outward Processing Zones (OPZ) is scheduled to meet to discuss the matter of KIC’s recognition as OPZ. But it will not be an easy game to win.”

UPDATE:  The Hankyoreh also wrote about the Kaesong Zone’s growth.

According to the Choson Ilbo, China-N.Korea trade has reached a historically high level (as it does nearly every quarter).

China’s trade with North Korea has tripled since 2005. According to the Korea Trade-Investment Promotion Agency (KOTRA), Chinese customs statistics show that China has been bumping up its trade with the North by US$1 billion every three years since the middle of the last decade.

After first breaking past the $1-billion trade barrier in 2005, China posted $2 billion in 2008 and over $3 billion last year. Minerals, machinery and cars topped the list of exports, and two-way trade last year reached its all-time peak of $5 billion.

Additional Information:
Read the full story here:
China-N.Korea Trade Reaches All-time High
Choson Ilbo
2012-2-9

According ot the Donga Ilbo:

About 10,000 tons of fruit have been exported every year to North Korea via the Chinese city of Dandong in Liaoning Province, which borders the North at the estuary of the Yalu River.

Fruit imports for the North`s elite have reportedly posted double-digit growth over the past five years despite severe food shortages in the Stalinist country.

An informed source in Dandong said Monday, “About 10,000 tons of fruit were exported to North Korea via Dandong Marine Center last year,” adding, “They were worth 100 million yuan (16 million dollars).”

Shipments to North Korea have grown about 15 percent per year on average over the past five years, the source said.

Fruits exported to the North include the different varieties available in China, including subtropical and tropical types such as bananas, pineapples, litchis, dragon fruit and durians as well as apples, tangerines and watermelons.

The source said fruit exports surge just before major North Korean holidays, including Feb. 16 (the birthday of the late North Korean leader Kim Jong Il) and April 15 (the birthday of North Korea founder Kim Il Sung).

“Fruit exports significantly increased ahead of Christmas Day in the past, but there was no notable change in exports last year due to the death of Kim Jong Il,“ the source said.

North Korea does not celebrate Christmas but fruit exports usually increased because Dec. 24 marks the birthday of Kim Jong Il’s biological mother Kim Jong Suk. The shipments are sent to Pyongyang for use at events or consumed by the power elite. Payment is made mostly with U.S. dollars, but the yuan is often used to settle accounts.

The Dandong city government also established an agency in charge of fruit exports to the North. Liaoning Province announced on its website Thursday that a center for market purchase of exported fruits for border area trading was set up in Dandong.

The purpose of the market is for Dandong to supply fruit to meet growing demand in North Korea, and assure the quality and safety of them.

Furthermore, the agency aims to manage chaotic fruit export markets for North Korea. In Dandong, a number of fruit stores targeting trade with the North rather than sale to residents are reportedly operating.

One fruit vendor said, “We`re shipping fruit via vehicles that regularly travel back and forth to and from Shinuiju and Dandong.”

The center is designed to control and manage the overall fruit export market to the North, including fruit exports by such small merchants. From now on, all fruit exports to North Korea will be reportedly be sent through this center.

The center is a subsidiary of Dandong Guopin Co. Ltd., a state-run company established by Dandong. It has a system worth 10 million yuan (16.4 million dollars) designed to enhance capacity in sorting, refrigeration, packaging, inspection and transport of fruits.

The center has taken charge of about half of fruit shipments from Dandong to North Korea every year, and its office is in Dandung Marine Center.

Read the full story here:
Chinese city exports $16 mln worth of fruit to N.Korea yearly
Donga Ilbo
2012-2-6

The CEO of Egypt’s Orascom Telecom, Naguib Sawiris, has made his second visit to the DPRK. You can read about his first visit in January 2011 here.

Pictured above (KCNA): Naguib Sawiris meets with Kim Yong-nam.

KCNA reported that Mr.Sawiris arrived on February 1 (video here):

Pyongyang, February 1 (KCNA) — Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE, and his companion arrived here on Wednesday.

On February 2, KCNA reported that Mr. Sawiris met with Kim Yong-nam (video here):

Kim Yong Nam, president of the Presidium of the DPRK Supreme People’s Assembly, met and had a friendly talk with Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE of Egypt, and his companion who paid a courtesy call on him at the Mansudae Assembly Hall Thursday.

KCNA reported that Sawiris left on February 3, however, before leaving he praised Kim Jong-il and offered a gift to Kim Jong-un. Accoridng to KCNA:

Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE of Egypt, was interviewed by KCNA before his departure from here.

Expressing profound reverence for leader Kim Jong Il, he said:

The Korean people lost a great leader. I also lost the most friendly man. General Kim Jong Il was a great father of the people.

I can never forget the day when I had the honor of being received by him.

While meeting him, I was totally attracted by his humanity.

He was the greatest man possessed of the noblest virtue.

His untimely passing was a great loss not only to the Korean people but to progressive humankind.

He devoted his all to his people with ardent love for the people.

While staying in the DPRK I was deeply moved to visit the Pyongyang Children’s Foodstuff Factory honored with the leadership provided by Kim Jong Il.

He paid deep attention to the operation of the factory.

The tireless efforts made by him for the happiness of the people will be conveyed to posterity for all ages.

The Korean people are energetically pushing forward socialist construction under the sagacious leadership of supreme leader Kim Jong Un.

I sincerely rejoice over the achievements made by the Korean people.

I wish the Korean people greater progress.

I would like to make a positive contribution to boosting the exchange with the DPRK.

His gift to Kim Jong-un remains unknown for now:

The dear respected Kim Jong Un, supreme leader of the Workers’ Party of Korea and the Korean people, received a gift from the executive chairman of the Orascom Telecom Media and Technology Holdings SAE of Egypt.

Chairman Naguib Sawiris handed it to an official concerned on Thursday.

While in the DPRK, Orascom holding announced that it had reached 1 million mobile phone subscribers in the DPRK. According to Bloomberg:

Orascom Telecom Media & Technology Holding SAE, an Egyptian mobile-phone operator headed by billionaire Naguib Sawiris, said its subscribers in North Korea exceeded 1 million.

The Cairo-based company made the annoucement in a regulatory filing today.

The Economist offers some business statistics:

Koryolink earns a gross margin of 80%, making North Korea by far the most profitable market in which Orascom operates. The company has worked hard to court the regime, its chairman travelling to Pyongyang last year to meet the late supreme leader, Kim Jong Il.

North Korean mobile-phone users spend an average of $13.90 a month on calls and text messages, and they tend to pay in hard currency. According to a foreign diplomat, many customers turn up at Koryolink shops with bundles of euro notes. There are even incentives for paying in euros, such as free off-peak calls. This provides foreign currency for a government that craves it.

Mobile-phone customers obtain the hard currency from the informal private trading on which many North Koreans depend. Such business is forbidden, but the government has failed to feed its people, forcing it to turn a blind eye to some capitalist practices. Many insiders benefit: Pyongyang’s “golden couples” consist of a government-official husband and an entrepreneur wife.

Mobile usage now appears to be spreading beyond Pyongyang. The gadgets are a common sight in other cities such as Nampo, not far from the capital, and increasingly are owned by non-officials. As yet, though, only a sixth of the country has a mobile signal.

Martyn Williams has specifics on the corporate structure of the service and service statistics:

The company is operated by Cheo Technology, which is a joint venture between Egypt’s Orascom Telecom Media And Technology Holding (OTMT) and North Korea’s Ministry of Posts and Telecommunications. OTMT holds a 75 percent stake and the North Korean government owns the remaining 25 percent.

Koryolink’s service has popularized cell phones and visitors to Pyongyang say they are now a common site on the city streets. The Koryolink network covers the capital city in addition to 14 major cities, 86 smaller cities, and 22 highways. That equals 14 percent of the landmass but about 94 percent of the population, according to Orascom.

Pictured above: Korea Computer Center, Pyongyang (Google Earth)

According to Mainichi Daily News:

Prosecutors indicted two executives of small trading houses in Nagoya and Tokyo on Wednesday on charges of exporting used personal computers to North Korea in violation of Japanese government trade sanctions.

Lee Mun Ryang, 61, in Nagoya, and Kaoru Morino, 44, in Tokyo, allegedly exported used PCs and other items worth a total of 8.2 million yen to North Korea in June and December 2010, according to the Osaka District Public Prosecutors Office.

The exported goods are believed to have been delivered to the Korea Computer Center, North Korea’s governmental information technology research center set up by late North Korean leader Kim Jong Il.

Both Lee and Morino were quoted by prosecutors as saying they knew that the goods would be delivered to the KCC.

Japan has imposed a total ban on exports to North Korea since June 2009 in protest at its nuclear program.

Lee and Morino began exporting daily necessities to North Korea in 2006, according to investigative sources.

Additional Information:

1. Martyn Williams also wrote about this.

2. In 2010 The Japanese also arrested an individual for exporting pianos to the DPRK.

3. The North Koreans just released several Japanese they were holding.

Read the full story here:
2 executives indicted over PC exports to N. Korea
Mainichi Daily News
2012-2-2

According to the Korea Herald:

The trade volume between China and North Korea jumped from $1.97 billion in 2007 to $5.62 billion in 2011 with the North suffering a deficit of about $700 million, according to figures compiled by the Korea Trade-Investment Promotion Agency. In contrast, the volume of South-North commerce showed a slight decrease from $1.79 billion to $1.71 billion over the cited period, with the North recording a surplus of about $114 million.

China’s share in North Korea’s total trade rose from 42.7 percent in 2007 to 56.9 percent in 2010, while South Korea’s proportion declined to 31.4 percent from 38.9 percent.

Excluding inter-Korean commerce, China accounted for a whopping 83 percent of North Korea’s external trade in 2010, up from 67.1 percent in 2007. China’s investment in the North rose from a mere $1.1 million in 2003 to $41 million, or 94.1 percent of the total foreign investment, in 2008 before decreasing to $12.1 million in 2010, according to figures from the Chinese Commerce Ministry.

Experts here are concerned that the North Korean economy will be further absorbed into the circle of China’s economic influence to the point of making it difficult for the South to expand its economic presence in the North after shifting its policy toward inter-Korean businesses.

“North Korea has imported most of machinery and other industrial equipment from China, which may lead to cementing the structure of its long-term economic dependence on China,” said Cho.

Observers say it goes too far to say North Korea will become a Chinese province, but China has been pushing the North toward reform and openness as part of a larger scheme to develop its three northeastern provinces, which lag behind the east coastal zones.

Some North Korea watchers say Kim Jong-il might have been pressed by Beijing to visit China four times in the last two years before his death.

China has been the main developer of the Raseon special economic zone, the combined towns of Rajin and Seonbong, in the northeastern coast of North Korea, which also provides it with access to an ice-free port for shipping abroad manufactured goods and other products from its northeastern provinces.

China also agreed with North Korea to jointly develop another special economic zone on the border islands across the Yalu River from the city of Dandong, its main gate into the North.

Jang Song-thaek, the uncle and key mentor of the young Kim, has been in charge of the economic projects with China.

You can see a picture of some of the data here.

Read the full story here:
Concerns mount over China’s grip on N.K. economy
Korea Herald
Kim Kyung-ho
2012-2-1

Institute for Far Eastern Studies (IFES)
2012-1-25

A month into Kim Jong-un’s ascension to power, it is reported that food distribution is likely to resume nationwide in North Korea.

Many experts evaluate this as a symbolic measure to propagate the construction of a powerful economy and improve the lives of the people. For the North Koreans, the most apparent and obvious economic accomplishment is the improvement of the food situation. Thus, North Korea is most likely to take action to normalize food rations as its top priority.

According to a statement made by a South Korean government official on January 20, “Kim Jong-un and his leadership will begin the food distribution as a way to prove to its people about changes forthcoming in the new regime.”He also added, “After years of propagation for the building of a strong and prosperous nation, they must demonstrate it to the people with noticeable results.”

The amount of rations to be provided is still unclear. However, the source emphasized that it was very likely for rice rations to resume, especially with the approaching national holidays, such as the Lunar New Year and Kim Jong-il’s birthday (February 16).

He also commented that “the food distribution will be a nationwide movement and the food ration system will go into effect based on the distribution network of available food supply.”

According to the Food and Agricultural Organization (FAO) and the World Food Programme (WFP), North Korea’s food production in 2011 compared to the previous year rose by 8.5 percent, sitting at about 5.48 million tons (of rough grains or 4.66 million tons of milled grains).

The minimum amount of food consumption in North Korea is 5.4 million tons, but a shortage of about 400,000 tons is expected, including the international food aid and industrial food imports. Among the recent years, this marks the largest deficiency in food supply.

However, such shortages can be overcome with additional food imports and distributing mainly rice reserves.

The last national food distribution in North Korea was in 2005, seven years ago.

North Korea is also likely to exert more effort in food processing production to improve the distribution of daily necessities. With relatively little dependence on raw material imports, North Korea is planning to improve the food situation through expanding the food processing production in agricultural, fishery, and livestock industries, with less competition with Chinese products.

According to Yonhap:

The U.N. Educational, Scientific and Cultural Organization (UNESCO) said Tuesday it will help North Korea eradicate pests at forests near ancient tombs.

The Complex of Koguryo tombs, located in the North’s cities of Pyongyang and Nampo, has some 30 individual tombs from the late period of the Koguryo Kingdom, which controlled the northern half of the Korean Peninsula and northeastern China for more than 700 years until 668 A.D.

Read more about the UNESCO World Heritage sites in the DPRK here.

Read the full story here:
UNESCO to help N. Korea’s pest control efforts at ancient tombs
Yonhap
2012-1-24

Huichon Power Station on Google Earth
The Huichon Power Stations 1 & 2 (희천1호발전소, 희천2호발전소) are too new to appear on Google Earth satellite imagery. I have, however, mapped them out by hand on the old imagery to give a better idea of their locations. I have also tagged them on Wikimapia.

In the picture above you can see that the Huichon Power Station’s headwaters begin in Ryongrim County (룡림군) where the newly-built Ryongrim Dam holds back a large reservoir. This reservoir drains through a tunnel [in orange in the image above] approximately 30 km long (18.5 miles) and empties through the Huichon Power Station No. 1 in Tongsin County into the Chongchon River. The river flows south where it crosses into Huichon County and builds up behind a second reservoir.  From this second reservoir the water drains out directly through the Huichon Power Station No. 2.

The construction of the Ryongrim Dam has resulted in the destruction of at least two villages, Toyang-ri (도양리) and Sinchang-ri (신창리).  Toyang-ri was destroyed for the dam itself. Sinchang-ri was flooded by the reservoir.  A third village, Kuryong-ri (구룡리), was also likely flooded or relocated—although this cannot be confirmed with current satellite imagery. The destroyed villages were probably relocated to Ryongrim Town itself. On several recent occasions North Korean television has highlighted improvements in housing and leisure facilities within the town.

When Kim Jong-il gave guidance visits to this site he often stood on the eastern side of the dam which offers the view captured in the image above (R).

The Huichon Power Station No. 1 itself is located in Tongsin County aproximately 30km due south from the Ryongrim Dam (40.273568°, 126.526565°).

In the satellite image above I have drawn the physical location of the power plant.  Next to and below it I have posted images from KCTV dated 2011-3-10.

The Huichon Power Station No. 2 lies on the Chongchon River just south of the border with Tongsin.

This project might have resulted in the destruction of one village, Kyonghung-ri (경흥리), in Tongsin County, but this is impossible to confirm without better satellite imagery.

So where will the electricity produced at these new power stations be consumed? On January 21, 2012, Rodong Sinmun reported the answer:

Like the warm hands of leader Kim Jong Il, the transmission lines from the Huichon Power Station are now almost stretching out for the capital city of Pyongyang.

To meet the great expectations of Kim Jong Il who entrusted them to such a gigantic work, the builders of the power station have gained great successes.

They have erected big dams, cut waterway tunnels and carried out other bulky tasks that were said to take ten years and more; and in the wake of trial operation of generating equipment at the Huichon Power Station No. 1, they successfully assembled the hulks of generators at the Huichon Power Station No. 2.

These successes had an immediate chain reaction on the scaffold workers laying transmission cables from the power station to the capital city.

They have already laid transmission cables in scores of kilometer long section, while preceding the construction of pylons in two months.

By their heroic labor, the excavation work to lay the foundation for the pylons have been wound up, too.

Now, their job is concrete tamping of the pylons’ foundations. By introducing new work methods they are hastening their work of erecting pylons as firm as would stand for many hundred years.

Now that power lines have been lain in major sections, they have buckled down to laying the power lines in the remaining sections and erecting transformer substations to reach the capital city as early as possible.

It won’t be long before we can see the power lines reach Pyongyang amid the cheers of the citizens.

Since I have mapped out a significant portion of the North Korean electricity grid on Google Earth, I can point out an area where I believe these power cables are being constructed. In the image below, dated 2010-9-14, I have connected the power cable tower construction sites with a yellow line:

In the image above there are approximately 146 power cable towers under construction between Pakchon (North Pyongan-top of image) and Sunan (Pyongyang-bottom of image). Of course, to be certain that these are the specific lines connecting Huichon and Pyongyang,  I will need more imagery.

 More on the Huichon Power Stations here.

Ryesonggang Power Station 2 update

I previously wrote about the Ryesonggang Power Station No. 2 here. Since a newer satellite image has come to my attention that shows the project completed, however, I thought I would post an update.

Ryesonggang Power Station No. 3 

On June 25, 2011 North Korean television showed construction of the Ryesonggang Power Station No. 3 had begun.  The DPRK submitted this project to the UNFCC’s Carbon trading program. Using satellite imagery, we can see that construction is indeed well under way:

The satellite images above are dated 2007-10-4 (L) and 2011-3-23 (R). In the right-hand photo I have boxed in the construction site and the quarters and facilities of the construction workers.

UPDATE: This was picked up by Radio Free Asia.