North Korean Economy Watch

UPDATE (2011-5-19): Martyn Williams writes in PC World:

Control of North Korea’s top-level Internet domain has been formally assigned to a government-backed venture after the previous operator, a German company, let the national domain disappear from the Internet for several months.

The dot-kp domain was officially transferred at the beginning of May to Star Joint Venture, a North Korean-Thai company that has been chartered with providing “modern Internet services” to the insular country. Star JV has been in de-facto control of the domain name since December last year.

Dot-kp was first assigned in 2007 to the Korea Computer Center, one of the country’s top computer science establishments. KCC had agreed to let a German businessman, Jan Holtermann, set up a satellite Internet connection to North Korea and run the dot-kp domain through a German company, KCC Europe.

The company ran the domain and a handful of North Korean websites from servers in Berlin until mid 2010 when they suddenly disappeared from the Internet.

“In 2010, the authoritative name servers for the .KP became completely lame, effectively stopping the top-level domain from operating,” said the Internet Assigned Numbers Authority (IANA), the body that coordinates basic addressing functions of the Internet, in a report published this week.

“Korea Computer Center reached out to KCC Europe, its Germany-based technical registry provider, to have service reinstated. After several months without response, Korea Computer Center terminated KCCE’s agreement to operate the .KP domain,” the report said.

At around the same time, Star JV was beginning to bring Internet connectivity to Pyongyang via China. The company had already taken control of IP (Internet Protocol) addresses long reserved for North Korea but never used, and it brought the country’s first website onto the global Internet around October 2010.

The site, for the domestic news agency, was initially only accessible via its IP address since the dot-kp DNS (Domain Name Service) was still under the control of KCC Europe.

But that changed in December “in light of the continuing lack of operation of the dot-kp,” said the IANA report.

The Korea Computer Center supported giving Star JV interim control of the dot-kp domain and the first websites began using North Korean domain names in January this year.

The change was made official in May when the IANA database was updated to show Star JV as the coordinator of the domain.

Several attempts to contact Jan Holtermann, the German businessman that ran KCC Europe, both for this story and previous stories have proved unsuccessful. German company records show KCC Europe was dissolved on Jan. 31 this year.

ORIGINAL POST (2011-5-5): According to Martyn Williams:

Control of North Korea’s dot-KP Internet top-level domain has been assigned to Star JV, the North Korean-Thai joint venture that’s behind the recent wiring of Pyongyang to the global Internet.

The Internet Assigned Numbers Authority (IANA), which administers country code domains, updated its database on Monday, May 2, to assign the KP domain to “Star Joint Venture Company.”

This means control for the KP domain now rests with Star JV. Star took control of North Korea’s Internet address space last year and has been building up the North Korean Internet.

Switch of control to Star doesn’t come as a surprise as the company started issuing dot-kp domains in January this year. It’s a further sign that the joint venture between the North Korean government and Thailand’s Loxley Pacific is now responsible for the DPRK’s Internet links with the rest of the world.

The administrative and technical contact details are now listed as:

President
Star Joint Venture Company
Potonggang2-dong, Potonggang District
Pyongyang
Democratic People’s Republic of Korea
Email: mptird@star-co.net.kp
Voice: +8502 381 3180
Fax: +8502 381 4418

That’s the address and contact details of the international relations department of North Korea’s Ministry of Posts and Telecommunications.

The website for domain name registration is listed as www.star.co.kp. This website came online in the last few weeks, but it’s still being built.

Administrative control of the domain name was previously held by the Korea Computer Center with technical control in the hands of Jan Holtermann, the German businessman who previously ran a satellite-Internet connection to the country.

Martyn has been keeping an eye on the Star JV co for some time.  See here, here, and here.

Previous posts on the Korea Computer Center are here.

There are two KCNA web pages.  The older one is run by the Chongryun in Japan (here). The newer one is managed by the Korea Computer Center (KCC). This newer web page was recently updated. It went off line a few days ago and emerged today with a different format. You can see a screen shot above.

The URL is slightly different.  The previous version of the KCC’s KCNA web page was http://www.kcna.kp/kor.  The new one is simply http://www.kcna.kp. The default language is Korean, but if you can read a little Korean, you can find the language settings and change the language to:

English: http://www.kcna.kp/goHome.do?lang=eng

Spanish: http://www.kcna.kp/goHome.do?lang=spa

Japanese: http://www.kcna.kp/goHome.do?lang=jpn

Another great change has been the addition of a reasonably functional search bar.  The older Chongryun KCNA web page has no search function (Hooray for the Stalin Search Engine).  The previous version of the KCC’s KCNA web page contained a search bar that was too small to type “Kim Jong il”.  Now you can do a search for “The Great Leader Comrade Kim Jong il”–which produces one result.

No doubt Martyn Williams will have more to say about this page when the sun gets to his side of the planet.  Today he reports on the launch of the DPRK’s new Voice of Korea web page.

Below are some recent posts on the DPRK’s moves to the internet:

KCNA re-launched on DPRK-owned IP address

Hackers find creative way to celebrate KJU birthday

DPRK organization opens Twitter account

Uriminzokkiri on Youtube

Naenara, TaeMun, and KCNA get new URLs

Martyn William’s list of DPRK web pages

UPDATE: Lots of great information in the comments.

ORIGINAL POST: According to Naenara (Link won’t work from South Korea):

The Korea General Corporation for External Construction (GENCO) is a professional enterprise for overseas construction.

GENCO has gained a good reputation from many countries around the world as a credible constructor with a long history of 50 years since its inauguration in January 1961.

It has scores of affiliated building enterprises involving a number of designers, building operators and skilled workers as well as foreign languages and other experts.

GENCO has built lots of dwellings and public establishments in Kuwait, and recently completed the 64-storied Al-Fardan Tower, an ordered project, in a short span of time in Qatar.

GENCO is looking forward to contracts for construction projects such as dwelling houses, public buildings, metros, tunnels, bridges, airports, harbours and stadiums in different countries in diverse forms such as the whole construction work and dispatch of skilled workers.

I had assumed that all overseas constructions projects were under the auspices of the Mansudae Overseas Development Group (MODG), but it appears that there is a rival firm picking up construction contracts.  This would not be surprising since the DPRK often duplicates functions so that the leadership is not reliant on a singe source of information and revenue–plus a little competition between agencies offers the employees an incentive to increase profits which they can remit back to Pyongyang.  It could also be the case that th GENCO and MODG have split the market.  MODG sticks to monuments and GENCO sticks to more traditional construction projects.

Pictured below is a Google Earth image of the Al Fardan Towers in Doha, Qatar (25.320952°, 51.529404°):

I am not sure to what extent GENCO was involved in the project. They claim to have built one of the towers, but I find it hard to believe that they built the whole thing lock, stock, and barrel since it would be impossible to develop the necessary skills in the DPRK. Additionally, there are no comparable buildings in the DPRK.  In all liklihood, GENCO is a company that simply provides construction workers who are low cost and travel from job to job remitting their hard currency earnings back to the DPRK.

Here are some, though not all, previous posts about other construction projects by MODG or GENCO.  Although I have not published it, I have an extensive list of these projects on Google Earth.

If a reader is aware of GENCO’s construction projects in Kuwait, please let me know.

According to Yonhap:

Hundreds of South Korean companies doing business with North Korea are teetering on the edge of bankruptcy due to a prolonged cross-border trade ban, the head of the first inter-Korean joint venture said Sunday.

Inter-Korean trade flourished following a summit between the divided countries in 2000, but has been banned by South Korea since last May in response to the sinking of the Cheonan corvette two months prior, which Seoul says a North Korean submarine torpedoed.

According to the South’s unification ministry, about 860 South Korean companies are operating in North Korea.

“South Korean companies, which invested about 200 billion won (US$179 million) in Pyongyang and Nampo, North Korea, are on the brink of bankruptcy because of the suspension of the inter-Korean trade,” Kim Jung-tae, head of Pyongyang Andong Hemp Textiles, said in an interview with Yonhap News Agency.

Pyongyang Andong Hemp Textiles is the first inter-Korean 50-50 joint venture between the South’s Andong Hemp Textiles and the North’s Saebyol General Trading Co., which was established in October 2008.

Kim said the companies posted a combined $150 million in operating loss due to Seoul’s ban on inter-Korean trade.

In June, Kim formed a body consisting of about 200 South Korean businessmen to seek solutions to the prolonged inter-Korean trade suspension. In its opening ceremony, the body called for the government to implement measures to resume inter-Korean trade.

However, the unification ministry holds firm to its position that the trade ban will remain intact until the North takes responsible measures for the sinking of the Cheonan.

Read the full story here:
S. Korean firms reeling from inter-Korean trade ban
Yonhap
3/6/2011

Lankov writes in the Korea Times:

When North Koreans talk about their arts, they never fail to mention that it follows the traditions of “socialist realism.” But what is “socialist realism” in visual arts?

This style itself was invented in the Soviet Union of the 1930s and reached its height in the late 1940s when it was imported to the North by ethnic Korean Soviet painters (of whom Pak Wol-ryong was probably most prominent) and Korean students who studied in the USSR.

Most of our readers have some ideas about this style: photographic-like images of heroic workers, brave soldiers and wise leaders engaged in the socialist construction or in struggle against the scheming counter-revolutionaries, imperialists and other assorted villains (the villains appearing as ugly as their reactionary thoughts). In its North Korean variety, the style became even more syrupy, with soldiers’ uniforms in the trenches depicted as if freshly ironed and spotlessly clean.

The topics must be lofty and politically inspiring. In February 2007 North Korean artists had a major exhibition which presented some 500 works. The KCNA, the North Korean wire agency explained what was great about this triumph of creativity and artistic freedom (I use the original translation, helpfully provided by Pyongyang propagandists):

“The works truthfully depicted the revolutionary exploits of the three generals of Mt. Paektu (The ‘Three Generals’ being Kim Jong-il, his father and his mother) and their personality as peerlessly great persons and the national pride and honor of the army and people of the DPRK who hold Kim Jong-il in high esteem as their benevolent father.

Among the works are Korean painting ‘Frontline at night,’ oil painting ‘All 30 millions of people should be ready to fight’ and sculpture ‘Always believing in the people,’ which arouse viewers’ deep reverence and longing for President Kim Il-sung. There are also Korean paintings ‘Calling them proud scenes of the Army-first era,’ ‘I miss my soldiers’ and ‘Long journey for happiness’ and oil painting ‘Our General visits land of Samsu’ that vividly portrayed the immortal feats and the noble popular traits of Kim Jong-il who has made a long journey of the Army-first revolution.”

Great works, indeed! Needless to say, not just everybody can deal with such lofty topics. Under the North Korean system, a painter has to obtain a special certificate to have the right to depict the Three Generals (that is, the ruling family). Those who have received the said certificate are known as “number one artists” and the works which depict the Leaders are, as you might guess, also known as “number one works”.

Most of the number one works are produced by the “Mansudae Creative Group” which include about one thousand artists and some 2,700 supporting personnel. It occupies a large complex in Pyongyang. The group’s major task if to produce number one works, but it is also charged with making some art for export, as a way to earn a bit of foreign currency.

Not all North Korean painters are good enough to become number one artists, but in a close imitation of the Soviet model, all North Korean artists are required to join the Artists’ Union which is charged with both supervising and taking care of them. Only members of the Artists’ Union can be engaged in professional work, but this is also an agency which provides them with wages and social security. In the past, until the collapse of the North Korean economy in the 1990s, the painters were reasonably well paid, and painters from the Mansudae group were among the best paid professionals in the country.

There are grades for the artists as well. The best are given the title of “people’s artist” while slightly less prominent are “merited artists”. This echoes the Soviet system, once again. It is estimated that some 50 persons were deemed worthy of the people’s artist title while 300 or so have been recognized as merited artists.

The first recipient of the people’s artist title was Chong Kwan-chol, a graduate of a Japanese arts academy who spent all his life after 1945 depicting the heroic deeds of the anti-Japanese fighters and soldiers fighting the Yankee imperialists.

However, a better look at the most recent works of Pyongyang artists might indicate that something is changing. There is a slight deviation from the old mixture of syrupy romanticism and photography-like realism. Something similar to this could be noticed in the Soviet art of the 1960s when it began to drift away from the old conventions of socialist realism. Is something like this happening in North Korean as well? Who knows? We must wait and see.

Read the full story here:
‘Socialist realism’
Korea Times
Andrei Lankov
2/13/2011

Leonid Petrov writes in the Asia Times:

After two months, an exhibition in Moscow of North Korean graphics, mosaics and embroidery is coming to a close. Oddly entitled “And Water Flows Beneath the Ice”, the exhibition was a major project initiated and hosted by Russian entrepreneurs at the trendy Winzavod Gallery, a revamped wine factory in central-eastern Moscow.

All the pictures came from the Mansudae Art Studio in Pyongyang, a government-run enterprise that employs more than 1,000 artists to create art for export.

The late (and eternal) North Korean president, Kim Il-sung, is known to have once said, “Abstraction in art is death,” leaving no choice for North Korean artists but to embrace socialist realism as their method.

Russians, who still remember when this artistic trend was the only one permitted by the Communist Party, were given a chance to refresh their memory exactly 20 years after the collapse of the Soviet Union. It is no surprise that many felt a sense of familiarity and at times nostalgia for while visiting the unusual exhibition.

During a short trip to Moscow last month, I met with colleagues, Russian scholars and researchers of Korean studies at the exhibition. They came along with their students, and we had a lively discussion about the hidden messages and artistic value of each picture. It was good to share opinions on a contentious topic such as North Korean art, and our feeling converged on many things regarding the commonalities and differences between North Korean and Soviet propaganda art.

First of all, socialist realism in art is a misnomer, since it depicts life as it should be, not as it really is. For instance, in this exhibition, there was an image of chubby children in Pyongyang Zoo feeding monkeys with ice-cream. The abundance of rice, vegetables and rabbits on show in other pictures also seemed a disservice to aid agencies diligently dispatching food and other humanitarian relief to starving North Koreans. In the artwork, life in the Democratic People’s Republic of Korea was consistently depicted as affluent and pleasant.

In fact, North Korea is a revolutionary state, struggling to achieve economic success and advance its military power. This can be viewed and sensed through the canvases dedicated to the heroism of builders working on the Taegyedo Tideland Reclamation Project or soldiers engaged in constructing the Huicheon Dam.

Heroism at war and in peaceful reconstruction is venerated and equated to the revolutionary course of juche (national self-reliance) and songun (military-first) politics. Thus, every picture, embroidery and poster carries a condensed revolutionary message that must convince the viewer that the people of North Korea are determined and invincible. Some may call it propaganda, but in North Korea this genre is known as Chosunhwa (Korean painting).

In fact, there is very little of Korean tradition in Chosunhwa. Although most pictures are created with watercolors and ink, the characters, actions and settings are Stalinist Soviet or Maoist Chinese. Even where the North Korean artists try to be experimental and use such materials as gouache or mosaic, the results resemble the typical posters and murals once omnipresent in the streets of Moscow and Beijing.

Only the embroidery works were genuinely traditional, and most viewers were stunned by their elaborate composition and vibrant range of colors.

After discussing the merit of each exhibit, my expert friends and I agreed that totalitarian societies do produce impressive pieces of art, which inspire awe and overwhelm the target audience.

While the value of such art is transient and more akin to propaganda, the technical side of it is so unquestionably powerful that it deserves recognition and research, if not admiration.

Unfortunately for the North Korean artists and Mansudae Art Studio entrepreneurs, the value of this art is restricted by the willingness of the purchaser to help the juche and songun revolution. Otherwise, mainstream North Korean art, which is dutifully devoid of abstraction, has very limited export value.

That explains the usual commercial difficulties encountered by the North Korean art exhibitions brought overseas by the North Korean Committee for Cultural Relations with Foreign Countries. Among the rare buyers of the socialist kitsch are maverick revolutionary zealots and some rich sympathizers from South Korea.

In Russia and China, former communist patrons of North Korea, the appetite for hackneyed images and themes is dwindling. What leaves the strongest impression from “The Water Flows Beneath the Ice” is not the contrived propaganda on the walls but the artistic installation placed in the middle of the gallery.

Dozens of green combat helmets hanging from the ceiling form perfect lampshades over the scarlet-red carpet hosting a lonely short-legged Korean traditional table. A bowl of white rice on the table symbolizes the prosperity that songun was designed to create and protect. The soft pink light gleaming from each helmet resembles the cherished hope of the Korean people for peace, love and harmony.

The bouquets of colorful firework shots projected on the screen at the end of the gallery hall surmount the composition and instill a sense of triumphant fulfillment. The aim is seemingly to capture the unbending spirit of Koreans (in both the North and South), as well as their hardworking and peace-loving character.

Overall, the “And Water Flows Beneath the Ice” was a bright and memorable phenomenon for the cultural life of the Russian capital. Neither the awkwardness of the premises (conditions in the old liquor factory demanded that all visitors wore clumsy overshoes) nor the overpriced pamphlet (more than US$30) spoiled the positive and inspiring atmosphere.

Although it is commercially and morally questionable as well as kitsch, the unusual initiative has awakened in hardened Russian art-lovers a long-lost belief in fairness and altruism: ideals that are highly valued by Koreans.

Read the full story here:
North Korean art stirs Muscovites
Asia Times
Leonid Petrov
2/2/2011

According to KCNA:

The DPRK Cabinet adopted its decision on “10-Year State Strategy Plan for Economic Development” and decided to establish the State General Bureau for Economic Development.

This governmental body will handle all issues arising in implementing state strategy projects for economic development.

This step was taken at a time when miracles and innovations are being performed in the socialist economic construction everyday on the basis of a solid springboard laid for building a thriving socialist nation under the outstanding and tested Songun leadership of Kim Jong Il.

The above-said plan set a state strategic goal for economic development. It puts main emphasis on building infrastructure and developing agriculture and basic industries including electric power, coal, oil and metal industries and regional development. It, at the same time, helps lay a foundation for the country to emerge a thriving nation in 2012 and opens a bright prospect for the country to proudly rank itself among the advanced countries in 2020.

When the above-said strategy plan is fulfilled, the DPRK will emerge not only a full-fledged thriving nation but take a strategic position in Northeast Asia and international economic relations.

The DPRK Cabinet entrusted the Korea Taepung International Investment Group with the task to fully implement major projects under the strategic plan.

The historic Conference of the Workers′ Party of Korea and events to mark the 65th anniversary of the founding of the WPK successfully held in the DPRK fully demonstrated the might of the single-mindedly united country in the aspects of politics and ideology and in military technique. All the people are dynamically advancing to fling open the gate of a thriving nation in 2012.

According to Yonhap:

Cho Bong-hyun, a Seoul-based analyst with IBK Bank, said North Korea had been working on the 10-year plan since late 2009 and that it covers 12 areas worth US$100 billion.

According to Cho, the dozen categories include agricultural development, the building of five logistics districts, an airport and a port, and urban development.

“Setting up this 10-year plan is to help find breakthroughs for the North Korean economy through foreign investments, since the North has reached a point where it can’t solve economic problems on its own,” Cho observed.

The analyst also said the North’s current regime appears to be trying to build economic achievements credited to Kim Jong-un, the heir apparent to Kim Jong-il, and smooth the impending hereditary power succession.

I am unsure of the relationship between this new organization and the Korea Taepung International Investment Group and the State Development Bank (previous posts here).  I have a major exam next weekend so I will take a closer look after then.

Here also are some quick country rankings by per capital GDP: IMF, CIA.

UPDATE  1 (2011-1-19): According to the Wall Street Journal:

A Chinese firm has signed a letter of intent to invest $2 billion in a North Korean industrial zone, representing one of the largest potential investments in Kim Jong Il’s authoritarian state and a challenge to U.S. policy in the region.

The agreement was signed with little fanfare in Pyongyang on Dec. 20—a day otherwise marked by pitched tension on the Korean peninsula following the North’s shelling of a South Korean island—according to documents viewed by the Wall Street Journal. Confirmation of the deal comes as Chinese President Hu Jintao visits Washington this week in a bid to forge closer security and economic ties with the U.S.

U.S. officials said the administration is aware of the possible Chinese investment, but noted that previous projects haven’t gone anywhere. “No investment project will enable North Korea to meet the needs of its people as long as its government continues its destabilizing behavior,” said a senior administration official.

The letter of intent involves China’s Shangdi Guanqun Investment Co. and North Korea’s Investment and Development Group. An assistant to the managing director of Shangdi Guanqun, who identified himself only by his surname, Han, said his company’s planned investment is focused on the Rason special economic zone, situated near North Korea’s border with Russia.

The zone was called Rajin-Sonbong when it was established in 1991, but failed to attract sufficient investment. It was revived, and re-named Rason, following a visit there in 2009 by Mr. Kim.

Mr. Han said the plan is to develop infrastructure, including docks, a power plant and roads over the next two to three years, followed by various industrial projects, including an oil refinery, over the next five to 10 years. He said the company was waiting for a response from the North Korean government before applying for approval from China’s Ministry of Commerce.

“It’s all pending at this stage, and it’s really up to the Korean side to make the decision,” Mr. Han said. He added that the $2 billion figure was what the North Korean side had hoped for, not necessarily what his company could deliver.

The company’s Web site says the company was “under the administration” of a state-owned enterprise, Shangdi Purchase-Estate Corporation. Mr. Han, however, said his company was “100 percent private.”

For the Obama administration, securing China’s cooperation in restraining North Korea’s military and nuclear-proliferation activities is a cornerstone of a warmer bilateral relationship. But the potential investment is a reminder of possible limits of Chinese cooperation.

The U.S. wants to step up sanctions to force Kim Jong Il to give up his nuclear-weapons arsenal and military activities. China, meanwhile, is increasingly promoting business projects and direct investment to influence the North, say Chinese and American analysts, arguing financial pressure hasn’t worked.

China is North Korea’s biggest trading partner and aid donor, but the scale of this deal raises concerns in Seoul that Beijing is running its own version of the “Sunshine” policy under which the South boosted investment in the North from 1998 to 2008.

This policy disconnect is expected to be one of the issues Chinese and U.S. officials discuss this week. “These types of deals pursued by China generally present a real challenge to the sanctions” being effective, said Victor Cha, a North Korea expert who helped oversee Asia policy in George W. Bush’s National Security Council. “The net effect is that it does make it more difficult for these sanctions to have the desired effect.”

Such deals have emerged in the past and have come to nothing, analysts said, and it is possible this one, too, could peter out. A number of similar North Korean economic zones have failed to live up to their billing because of poor infrastructure and corruption, and a lack of economic reform. News of the deal was first reported in the Korean-language press, including the Voice of America’s Korean service.

It is unclear how long the agreement has been in the works. But its Dec. 20 signing came on the day South Korea conducted a closely watched artillery test from Yeonpyeong Island near North Korea.

The test marked a high point in tensions after North Korea’s surprise late November shelling of Yeonpyeong, which killed four South Koreans. Pyongyang had threatened a swift military response should Seoul carry out an announced artillery test on Dec. 20. But the day’s drill came and went amid high security in the South, with the North saying in a statement it “did not feel any need to retaliate.”

Top administration officials have recently both praised and chided the Chinese over the North. On a trip to China last week, Defense Secretary Robert Gates commended the Chinese for their “constructive” role in reducing tensions on the peninsula after Pyongyang’s recent shelling of a South Korean island. Secretary of State Hillary Clinton in a Friday speech pressed China to be more aggressive in helping tamp down the North’s nuclear program.

The proposed investment is among the strongest evidence yet of China’s strategy of using direct investment rather political pressure to push for change in North Korea. Chinese experts say that after North Korea’s first nuclear test in 2006, China tried to make improved bilateral relations dependent on Pyongyang dismantling its nuclear program. But after a second test in 2009, China changed tack.

Beijing now believes, according to Chinese experts, that the North Korean regime won’t respond to political pressure and could collapse completely if China cuts off aid and investment, triggering a flood of refugees into northeastern China, and bringing U.S. troops right up to the Chinese border.

The investment strategy was cemented when China’s Premier Wen Jiabao visited North Korea in October 2009 and signed a slew of economic and trade agreements. One of those agreements was for China to fund construction of a $250 million bridge across the Yalu River that separates the two countries.

Construction of the bridge, which would link China with another North Korean special economic zone, had been slated to start in August. Local officials said in November it appeared to have been put on hold indefinitely. Now they say a ground-breaking ceremony was held Dec. 31.

U.S. officials are particularly concerned about how China’s financial links to North Korea may be facilitating Pyongyang’s weapons programs. In November, Pyongyang showed a visiting American scientist 2,000 centrifuges stationed at a cover site, drastically raising fears about the North’s ability to expand its nuclear-weapons arsenal.

“China’s increased economic support undercuts the rest of the region’s efforts to convince Pyongyang that there will be consequences for further belligerence, nuclear weapons development or transfer of nuclear capabilities,” said Michael Green, who also served as a senior official on Asia during the Bush administration.

Read the full story here:
Chinese Firm to Invest in North Korea
Wall Street Journal
Jay Soloman and Jeremy Page
2011-1-19

ORIGINAL POST (2011-1-7): According to the Joong Ang Ilbo:

A Chinese state-run company recently agreed to invest $2 billion in North Korea’s Rason free trade zone, the JoongAng Ilbo learned yesterday from documents related to the deal.

Shangdi Guanqun Investment Co., Ltd. signed a 10-point memorandum of understanding with Pyongyang’s Investment and Development Group on Dec. 20 in Beijing, the documents showed.

The signing ceremony was attended by Mi Chang, president of Shangdi Guanqun Investment, and Kim Chol-jin, president of the Investment and Development Group.

The goal of the investment, stated in the documents, is to build Rason, a northeastern North Korean city on the East Sea that borders both China and Russia, into the “biggest industrial zone in Northeast Asia” in around 10 years.

The project calls for coal-fired power plants, roads, piers and oil refineries in the North Hamgyong Province city, the documents said.

According to the documents, the deal is “a strategic joint project based on trust between high-level figures” in China and North Korea, which suggests it may have been negotiated by North Korean leader Kim Jong-il during two visits to China last year, on which he met Chinese President Hu Jintao.

The North’s economy has suffered under international sanctions on trade and financial services overseas, imposed after its nuclear weapon tests, and is desperately seeking foreign investment.

China is investing in Rason as an export base to serve markets in Japan, southern China and Southeast Asia.

Rason is a merger of two towns, Rajin and Sonbong, and was designated the first free trade zone in the North in 1991. It was promoted to a “special city,” which means it has fewer restrictions on businesses.

“We have a deep interest in North Korea’s ample natural resources,” an official of Shangdi Guanqun Investment Co., Ltd. told the JoongAng Ilbo. “To facilitate the export of natural resources [from the region], we will invest $300 million first and construct a coal-fire power plant at the coal mine and build a railway, roads, and harbors and piers [near it].”

The Chinese firm’s official said the company opened an office in Pyongyang at the end of last month.

Shangdi Guanqun Investment, established in 1995 by the Chinese government, is a trading firm specializing in oil processing, natural resources and international financial services. It is one of the key companies in China’s 12th five-year economic development plan that starts this year.

North Korea’s Investment and Development Group is in charge of developing the country’s four free trade zones. The other economic special zones are in Kaesong, Mount Kumgang and Sinuiju.

The Shangdi Guanqun Investment official said the company will build an oil refinery in Rason, where it plans to refine crude imported from the Middle East and Russia and sell the output to China or other countries.

I believe this Chinese story also relates to the same project.

Read the full story here:
China backs North’s Rason project
Joong Ang Daily
Ko Soo-suk
2011-1-7

According to the Korea IT Times:

Eunbyul 2010 is a “Go” game, or commonly known as baduk in Korean; a software program developed by North Korea and played in North and South Korea. Winner of the third Computer Go Competition UED Cup in 2009, defeating so many outstanding programs from all over the world, Eunbyul 2010 is maintaining 3-dan at cyberoro.com and also ranks number one in sales in Japanese computer Go program market.

Go was invented by Chinese emperor Yao around 2300 BC, and has been widely played in the three countries in Far East: Korea, Japan, and China. In North Korea, the game was previously considered ‘the bourgeoisie game,’ thus a taboo; however since the 1990’s, the government has promoted Go as a traditional game that dates back to the Three States era; in addition it highlights the game as a brain exerciser that helps children develop their intelligence and old people keep their brains from aging. North Korea classifies Go – also called brain combat or brain fight in the country- as a type of martial arts just like Taekwondo or Ssireum, the Korean wrestling. North Korea’s Go was controlled by Chosun Sports Association, but under the command from Kim Jeong-il in 1990s; it was transferred to Chosun Martial Arts Federation that had better training environment, and subsequently categorized as public sport; now Taekwondo Commission is in charge of the game. Cho Daewon, 22 and MunYoungsam, 33, both amateur 7-dan, are noted as the top players in the country.

The estimated number of Go players in North Korea was around 10,000 in 1994, and is currently over 30,000. North Korean government encourages children to play Go as they believe the game has a significant effect on improving many brain activities such as concentration, observation, memory, imagination, and structure perception. Go classes are organized at kindergarten and the government tries to promote the game by holding various Go competitions for children.

Along with their passion for the game, North Korea is also regarded as one of the world’s best developer of computer Go game. Since early 1990s, the university computer development group composed of Kim Ilseong University, Kim Chek Engineering College, etc. – has developed computer Go programs. In 1995, Eunbyul Computer Technology Trade Center which is now called Korea Computer Center (KCC) focused on making software programs for Go, chess, Janggi and the like. The Go software ‘Eunbyul 2010 (see the picture above)’ – was imported into South Korea and is now available to the public consumers (here).

Eunbyul 2010 is the latest version of Eunbyul 2006, which was released in 2006 drawing attention to the industry. It integrated Monte Carlo Method into the algorithm of the original 2006 version, substantially improving the level of performance. While Eunbyul 2006 was rated level 6 according to Korea Baduk Association’s system, its 2010 counterpart attained 2-dan after the battles with random user at Cyber Oro, the internet Go match website. The user won 54 and lost 46games – 31 victories and 25 defeats in 1-dan battles and 23 victories and 21 defeats in 2-dan battles -hence, with 54 percent of winning rate. The software also won the International Computer Go Tournament held last year in Japan, sweeping all the matches and, thus, proving to be the best of its kind in the world.

There are two types of engines in Go programs. Tree search system, in theory, takes more than 361 (factorial) searches for one match because it has to create a move by move searching tool to explore every path. There is Monte Carlo method engine, which randomly selects one of the undefeated moves after proceeding hundreds of thousands of simulated battles to the end. Despite the relatively higher performance (on amateur beginner’s levels), this method was difficult to be adopted for commercial use because it required computation by either supercomputer or tens of CPUs from parallel wired computers.

4OneBiz, the sales rights holder in South Korea, signed the contract with North Korea in June 2006 before beginning the sales in the South. In September the same year, the company held an 8-day workshop in which an engineer who spent over a decade on developing Go programs at KCC and a professional5-dan Go player participated in the activities. The main objective of the workshop was to decide whether they should improve the performance of the existing Eunbyul program or develop a completely new engine from the design. Ultimately, they chose the latter.

North and South Korea agreed to develop a whole new level of Go program engine that contains tactical data, which narrows down the potential moves to only a few, so as to make the next move in a simpler way. They also aim to make a program with optimal performance that is light and fast enough to be installed in a mobile device. South Korea provides an expert-levelalgorithm design whereas North Korean developers will take charge of creating a program based on the theory and basic algorithm. This new expert-level Go engine is already completed, and its automatic evaluator and situation-determination module are currently being supplied to a popular Korean Go website. Further use is currently under negotiation. One engineer who specialized in expert-level Go engine and gave up after spending more than 10 years on developing the engine once contended that “it is beyond human capability to develop an amateur-expert level of Go engine.”

However, the recent success can be largely contributed to the thoughtful collaboration between South and North Korea: i.e., the North Korean engineers spent more than a decade focused and devoted to Go engine development, and South Korea’s also has well-known competence in Go game. The incredible synergy was all thanks to the socialist system of North Korea where the engineers could stick to the Go engine development project for nearly 20 years regardless of its profitability; and also the capitalist South fostered the best Go players with its wealth and the professional Go player system. For those reasons, North Korea could have developed Eunbyul 2010, the best artificial intelligence Go program in the world.

Read the full story here:
North Korea’s Artificial Intelligence Go Software
Korea IT Times
Choi Sung, Professor of computer science at Namseoul University
1/4/2011

According to the Daily NK:

North Korean trading companies operated by several organs have been selling steel to China in exchange for food.

One Chinese trader who does business with North Korea reported to The Daily NK on Monday, “China-based North Korean workers in charge of trading with China for Cheongusan Trading Company (under the Escort Command), say that this year Chosun is expanding the volume of its steel sales with China.”

The trader said, “In November last year, the analysis table of steel quality was delivered to us, and accordingly a contract has also already been signed.” He added, “In Chosun, the company is waiting for a permit to trade from an upper organ after having loaded materials on freight trains.”

He explained further, “For the price of the steel, Chosun has asked for rice, flour, noodles and also construction materials,” adding, “Food in bulk can enter Chosun.”

He explained that since North Korea is facing a serious lack of food, cement and other construction materials due to isolation from the international community, the country is trying to barter steel for food with China, from which the North is able to import.

Another trader in China verified the story, explaining, “Recently in Dandong, workers from Kangsung General Trading Company (under the General Staff) and other companies visited China for the purpose of selling steel.”

He added, “From now on, our company is going to do only steel trade with Chosun. We have decided not to do business in other things because our experiences have shown that there is no credit there.”

He went on, “North Korean trading units may have suffered from limitations put on items by Chinese companies,” going on, “If Chosun does not make a deal with us, they will starve to death this year. Even though they emphasize independent rehabilitation, when have they ever been rehabilitated?”

North Korea’s media frequently emphasizes the glorious production of “Juche” steel at Kim Chaek Steel Mill and Gangsun Steel Mill. Indeed, the Common Editorial issued on the first day of this year stated that, “By the power of the realization of the faith and model of Kim Steel (steel from Kim Chaek Steel Mill) and Juche steel, let’s have waves of victories.”

According to KOTRA, South Korea’s trade statistics agency, from January to October, 2010, North Korea exported steel to China worth $82 million.

One potentially positive aspect to this story is the recognition by the DPRK of the benefits of comparative advantage in trade.  Rather than aiming to produce all of its own food, the DPRK can instead specialize in steel production and trade for Chinese produced food.  Through trade, China and the DPRK could both consume more steel and food than if each country practiced autarchy.  Unfortunately the DPRK’s recent history has demonstrated a callous disregard for comparative advantage and has instead focused on increasing domestic food production and aid while limiting international trade.  Lets hope to see more rational policies prevail in the future.

Read the full story here:
North Korea Bartering Steel for Food
Daily NK
Im Jeong Jin
1/3/2011