North Korean Economy Watch

The Chosun-Shinbo reports (via the Daily NK) “North Korea can produce instant noodles again” because construction has been completed on Pyongyang’s newest (and largest) noodle factory, the Pyongyang Wheat Flour Factory.

“Starting this year, domestically produced instant noodles will likely be supplied to people on a large scale.”(Daily NK)

…signaling that the DPRK government still seems intent on re-launcing the collapsed Public Distribution System (which has floundered many times).

[The] Pyongyang Wheat Flour Factory is located in Samheong-dong of Mankyungdae District, in Pyongyang, and mainly produces wheat flour, cookie, noodle, and yeast. North Korea built its first noodle factory, Daedong River Instant Noodle Factory, with foreign capital in August 2000 along the Daedong River in Pyongyang.(Daily NK)

Last October Yonhap, reported that Hyundai’s 44,000-strong union donated US$553,800,  appx. $13 per worker, to help finance a corn noodle factory in Pyongyang.  This is likely the “older” Daedong River Instant Noodle Factory.  If this is the case, then Pyongyang has two noodle factories coming on line at about the same time.

The rest of the story:
Although the DPRK government is a newcomer to the noodle business, noodle production and consumption have been burgeoning in North Korea’s private economy, and there is supportive journalistic evidence that the business now suports those on the lower rungs of the  economic ladder (see here, here, here, and here).  Small scale noodle production requires little capital, so it is a natural fit for those who have nothing but have taken to supporting themselves. 

The opening of new government-operated food processing plants is tantamount to a “re-nationalization” of a “privatized” industry in the DPRK.  Past reports claim that noodle sales earned private vendors between 900 to 1,600 won.  Now these vendors, who operate at the fringes of North Korea’s semi-legal private economy, will at a minimum, be forced to compete with “free” or heavily subsidized government operators. 

What will be the result?  On the pessimistic side, we could claim that the DPRK government is attempting to monopolize the food supply to control the population (as it has in the past).  On the other hand, their ambitions might be more modest and they are only looking to establish some form of carrot they can point to as legitimization of the government’s leadership.

From an economic reform perspective, however, North Korea needs fewer government-run noodle factories and a better business environment for noodle entrepreneurs. 

The full stories can be found here:
North Korea Can Produce Instant Noodles Again
Daily NK
Park Hyun Min
2/12/2008

Hyundai Motor union leaders visit N. Korea for noodle project
Yonhap
10/31/2007

Last Friday, Yonhap reported that Kim Jong Il has ordered an anti-corruption investigation of two key agencies, both of which manage South Korean investments in the DPRK: the United Front Department (which Lankov claims is involved in clandestine operations) and the National Economic Cooperation Council.

North Korea is in the midst of a massive anti-corruption drive which has already resulted in the arrest of one of its top officials handling business with South Korea, informed sources in Seoul said Saturday.

The campaign, ordered by leader Kim Jong-il, was prompted by widespread allegations that some top party and administration officials took bribes as they pushed business projects with South Korean industrialists, said the sources well versed in North Korean affairs.

“The probe was launched as National Defense Commission Chairman Kim Jong-il said there was a lack of supervision over the United Front Department [a key party organization that supervises inter-Korean affairs], although lots of suspicions were raised over the department’s corruption,” one source told Yonhap News Agency.

According to the sources in Seoul, the North Korean leader was enraged after getting a report that some party and government officials allegedly pocketed bribes and diverted food and other aid from South Korea to black markets.

Also under investigation is the National Economic Cooperation Council, a government body that handles business with South Korean entrepreneurs, the sources said.

The Council’s chief, Jeong Woon-eop, remains under arrest pending investigation into allegations that he took “huge amounts” of bribes, said the sources, who wanted to remain anonymous. (Yonhap excerpted)

Frequently “anti-corruption campaigns” in developing countries have nothing to do with making the bureaucracy more accountable or responsive to public demands, but rather are political maneuvers to prevent “rents” or funds from being channeled to uses that lie outside the leadership’s control (or some faction of the leadership).  In other words, they are regime enhancing.  The announcement of this campaign demonstrates two important principles that deserve explicit mention:

1. Not all profits earned by North Korean joint ventures are channeled to the leadership, and in fact many of them are siphoned off by middlemen who actually control the financial machinery.  Once skimmed off the top, it is likely that these funds are used in illicit private commercial operations since they cannot be legally declared by the owner (unless there are domestic channels for laundering money in North Korea).

2.  If funds are being siphoned off of high-profile official joint venture operations, then the leadership is not in control of its internal fiscal affairs.  Indeed it is likely that, as in the Soviet Union, the people who keep the private economy running are the trusted mid- to senior-level officials who can skirt the rules and know how to actually get things done within the system.

Update 2/24/2008:

North Korean authorities have been investigating the chief of a North Korean committee in charge of inter-Korean economic cooperation for months after seizing $20 million from his house, a report said Friday.

The full article can be found here:
NK Official Suspected of Embezzling Funds From Seoul
Korea Times
Jung Sung-ki

Update 2/12/2008:

The chief of Daesung General Bureau, a division of the 39th Department which manages foreign transactions, was fired on suspicion of embezzling US$1.4 million last fall.” (Daily NK)

The full article can be found here:
North Korea launching massive anti-corruption drive
Yonhap
2/9/2008

Institute for Far Eastern Studies (IFES)
NK Bfrief No. 08-2-5-2
2/5/2008

It appears that from the end of last year through this January, North Korean Party, regional, cabinet and People’s Committee officials have been carrying out inspections of trading companies, ordering massive layoffs and closings of companies where mis-management or other abnormalities are found.

In Yonhap News, a North Korean insider in Beijing, China was quoted on the 31st as saying, “Since November of last year, North Korean authorities have carried out inspections on trading companies under the control of each organization, with layoffs at most trading firms with abnormalities, deficits, or other mismanagement.”

According to the source, over 100 trading companies are registered in Chungjin, South Hamkyung Province, but after the current housecleaning measures are enforced, only around 15 will remain in operation, with practically all problematic offices being closed down.

Another North Korean source in Shenyang, China reported, “These inspections include trading offices run by the Party, military, and other so-called ‘powerful institutions’, so across the board, there are no exceptions, and as to the growing intensity [of the inspections], they are much stronger and wider in scope than formal annual inspections that have been carried out in the past.” “The order handed down at the end of last year to greatly reduce staff in the Party, military and Cabinet happens every year, but this year massive lay-offs in the workforce at trading companies appears to related to a different kind of personnel liquidation.”

These inspections reportedly stem from an incident at the end of last July in which Oh Moon-hyuk, branch manager of the Ruengra 888 trading company in Yunsa, North Hamkyung Province, was executed after being implicated in the smuggling of timber. The trading company was responsible for the export of timber, and operates under the control of the Party’s accounting bureau. The inside contact stated that because of this incident, North Korean authorities carried out further inspections, leading in October of last year to the dismissal of one official receiving vice-minister pay, and the broadening of the inspections nationwide.

Through the inspection-broadening measures, trade officials under the North Pyungan Province trade office also received an inspection party from the central government, causing many problems for Chinese traders who could not travel in from Dandong. Through these inspections, North Korean authorities reportedly uncovered several cases of embezzlement and misappropriation of company finances while the trading companies were exporting marine products or coal, iron ore, and other mining materials.

The goal of these inspections appears to have been the restoration of public order, just as the recent measures preventing women under the age of 45 from working in markets was a reaction to diminishing public discipline. In the future, price controls, regulations on export goods, or other government regulations regarding international trade are likely to be strengthened.

Daily NK
Yang Jung A
1/27/2008

An expert on North Korea has recently disputed a widely circulated claim that North Korea’s hard line diplomacy is due to influence from the North Korean military.

Park Young Tack, an active duty officer at the Korea Institute for Defense Analyses (KIDA) said, “The North Korean military usually influences the policy decisions that are related to military roles and functions only.” Park wrote this in his recent article published on January 15 in the 2007 winter edition of the Korean Journal of Defense Analysis entitled ‘The Increasing Standing of the North Korean Military and the Military’s Influence on Decision Making’.

Park said, “Unless Kim Jong Il asks the military for opinions, the military cannot take part in matters other than its own.”

It is widely believed at home and abroad that the North Korean military exerts huge influence on the country’s major policy decisions and therefore is responsible for driving the country to take a hard line.

U.S, envoy Christopher Hill said prior to his visit to Pyongyang last year that he would like to meet high-ranking military officials and persuade them to give up the country’s nuclear programs.

Park said, “It is mistaken to believe that the standing of the military is superior to that of the Party as was the case in the past, and that the military plays a key role in decision making regarding the country’s fate.”

“Many believe that the North Korean military is trying to get in the way of the inter-Korean dialogues. However, that is exactly how the Party wants the world to assess the current situation in North Korea. It is my judgment that the Party has been manipulating the situation so that the military appears to take on the role of the hard-liners,” Park said. Park stressed that the General Political Bureau of the People’s Army by itself cannot voice opposition to the nation’s current policy toward South Korea.

Park said that Secretary for Military Munitions Jun Byung Ho, United Front Department Director Kim Yang Gon, and First Vice Foreign Minister Kang Suk Ju have established and are operating a direct reporting system to Kim Jong Il. Secretary Jun is currently responsible for conducting the country’s nuclear tests, Director Kim for operations of the policy through the direct reporting system [to Kim Jong Il], and Minister Kang for foreign announcements.

“It seems that Kim Jong Il allows the military to exert influence on decision making to some extent as a reward for the military’s pledge to help build and defend the absolute dictatorship of Kim Jong Il,” Park said.

“The military circles take part in making policy decisions by offering specialized suggestions and by advocating the Kim Jong Il regime which adopted the ‘Military-First’ policy among the ruling elite, the leaders from the middle class and the lower class,” Park said. However, Park added that the military has limited influence over matters other than its own.

Park said that Kim Jong Il is also strengthening the military-friendly system to watch and hold in check the military, which can pose the biggest threat to his regime.

“When making decisions, Kim Jong Il calls the ruling elite individually for consultations and has them report to him directly,” Park said, adding, “In any case, Kim Jong Il is at the center of the decision making process and stands at the top of the decision making ladder.”

“Kim Jong Il is a policy developer who issues policy proposals more frequently than anyone in the country. Any policy proposed by Kim is considered a supreme order and becomes a law,” Park said. “If an individual at the lower levels of the state wants to make a policy proposal, he usually first contacts an authority in the relevant field who then tries to read Kim Jong Il’s mind on the policy to be proposed. Only after he receives convincing words from the authorities, the low-level cadre is able to submit his proposal. That way, he can escape censure that would result from making an unsuccessful policy proposal.”

Park said that those working at the lower level of the state authorities cooperate with each other even if they work in different departments. If there are any policy shortcomings, they try to solve them together and share the responsibilities. They also create a task force between departments for policy implementation.

Park said, “This kind of political operation has come into existence for the following reasons: First of all, Kim Jong Il prefers to have an inner-circle, minimize the number of personnel, and simplify office procedures. Second, people at the working level have to worry about censure waiting for them when their policy implementation efforts end in failure.”

“Kim Jong Il’s administration style shows that he relies on an informal channel of communication with the ruling elite.” Park said, “He keeps a tight reign on all power groups within the country including the military, and no power group dares to challenge Kim’s authority. Even if united, these groups can hardly exercise any significant influence over decision making.”

Daily NK
Yang Jung A
1/3/2008

Through its publication “North Korea is Changing” the Korea Institute for National Unification (KINU) highlighted numerous changes and reforms that have occurred in North Korea due to the 2002 “July 1st Economic Maintenance Reform Policy” (Hereon referred to as the “July 1 Policy”). This publication deals with the changes the North Korean economy is undergoing following the economic crisis of the 1990s, and expounds on the country’s prospects for future economic reform.

The following is a summary of the main points introduced in the publication.

The “Invisible Hand” at Work in North Korean Markets

Following the enactment of the July 1 Policy in 2002, agricultural markets transformed into general markets. Soon, industrial products were being sold alongside agricultural products as the free market spirit spread to the country’s distribution system.
Along with the rise of general markets, street markets, and individualized commercial activities, a new merchant class is emerging. People who are able to put to use business acumen and an understanding of market principles are able to accumulate personal wealth. This demonstrates that aspects of Western-style rationalist thinking, including the pursuit of profit-seeking are being instilled in the minds of the North Korean people.

It is difficult to say if this experiment in free market economics will be successful in the long run. More than anything, due to the rigidity of the North Korean regime, the realm in which the “Invisible Hand” can operate is greatly restricted. This is the fundamental paradox facing North Korea’s prospects for reform and opening.

“Hardworking Heroes” Become “People with Two Jobs”

As the economic difficulties became severe, work opportunities evaporated. Living off of the wages provided by the state became impossible. North Korean laborers responded to this by taking on side jobs or engaging in independent sales.

According to defectors living in South Korea, after the July 1 Policy, there has been an increase “People with Two Jobs.” These are people who are engaging in economic activities additional to their primary occupations. People are beginning to accept the notion that it is better to work for personal benefits than to receive the title of “Hardworking Hero.”

Such phenomena have also changed people’s perceptions about occupations in general. For example, the elite classes now prefer diplomatic positions and jobs where they can make international connections, rather than working in party or government positions. The common people prefer agricultural jobs with the benefits of access to the food distribution system and the ability to earn side profits by being a merchant. In addition, common people also prefer being personal drivers, photographers, workers at the Food Distribution Office, servicepersons, or fishermen.

Business Conglomerates Are Emerging in North Korea

With the implementation of the July 1 Policy, North Korea has witnesses the creation of its first business conglomerates. A case in point is the Korea Pugang Corporation, which has expanded to include 9 subsidiaries and 15 foreign offices engaging in various lines of work. The website of the “Korea Pugang Corporation” reveals that the company has around $20 million in capital and does an average of $150 million of business each year.

The executives in charge of the company’s growth are brothers Jon Sung Hun and Young Hun. President Jon Sung Hun is in his early 50s and studied abroad in Tanzania before returning home to teach English at Kim Il Sung University. He later became a businessperson. His English skills are among the top 10 in North Korea. Young Hun is in his 40s and is the president of a company affiliated with the Finance and Accounting Department of the Workers’ Party. His company dominates North Korean diesel imports.

If the Jon brothers are the representative examples of conglomerate-based new capital, Cha Chul Ma ranks high among those who earned capital due to their power in North Korean society. With his focus on doing business with China, Cha is known for his ability to earn foreign currency and dominates the foreign currency earning businesses belonging to the Standing Committee of the Supreme People’s Assembly. His personal wealth is said to be over $10 million.

As the son-in-law of Lee Jeh Gang, the First Vice Director of the Guidance Department of the Workers’ Party, Cha gets some support from his father-in-law. Cha, who is known to live so freely that he was seen wearing Bermuda shorts on the streets of Pyongyang, is said to be a “Representative Case of a North Korean who succeeded in business on his merits, regardless of assistance from surrounding figures”.

The Number One Worry is Sustenance

North Koreans are said to live three different lives: their family lives, their working or school lives, and their political lives. Their lives are organized by politics from “cradle to grave,” and they must attend various political meetings, organizations, and study sessions. However, there are many people who are unable to participate in regular meetings of their political units due to economic difficulties. As they do not receive sufficient food distributions and their wages are too low, they must seek their food independently through individual economic activities.

Because the transportation infrastructure in the country is not advanced, it takes at least half a month to one month to go into the countryside to search for food and then they must return and sell the food or daily-use items they acquired, leaving little time for any other activities. Ninety percent of North Koreans engage in some form of business, and as a result, only an estimated 30% to 60% participate in required political activities.

Marriage Culture

These days, in North Korea, the ideal spouse is the one who makes the most money. Previously, when North Korean women chose their spouses, they considered the social status of their potential suitor. However, after the economic crisis, they started to prefer businesspersons and people who earn foreign currency, instead of discharged soldiers and cadres. For men as well, they now prefer money to looks as society increasingly revolves around the economy. As a result, an overwhelmingly higher proportion of men marry older woman than before.

Marriage customs are simplifying as well. Before the economic crisis, women usually provided the domestic items for the household and men provided the estate. However, after the economic crisis, dowries have downgraded into simple things like clothes. Because the allocation of estates has been delayed, more and more people are living at their parents’ homes.

Especially for women, there have been some phenomenal changes. Many women consider marrying late or not marrying at all. Reasons for this include the fact that woman cannot marry men just because the men can’t work and needs a woman to bring home money. Even in such a patriarchal culture, such complaints are becoming increasingly common.

Daily NK
Park Hyun Min
12/28/2007

The future dream of North Korea’s teenagers is no longer to become party leaders or soldiers, or even join the Party, but to become “merchants.”

“Good Friends,” an aid organization for North Korea, said through “Today’s News on North Korea” No. 104 on the 27th, “Most of the elementary and senior middle school students nowadays, upon being asked what they would like to do post-graduation, say they would like to be merchants.”

The source relayed, “Many of their peers have stopped going to school and have started doing business. It is too burdensome for some students to attend school, so they sell noodles or vegetables by sticking around the jangmadang (markets) and contribute to their families’ livelihoods.”

(more…)

Daily NK
Lee Sung Jin, Yang Jung A
12/27/2007

In contrast to the news that Kim Kyung Hee (Kim Jong Il’s blood sister) will visit Hoiryeong in commemoration of the 90th birthday of Kim Jong Suk, it was confirmed that only upper-level Party officers participated in the celebrations.

Rumors started circulating early this year that Kim Jong Il would visit Hoiryeong, North Hamkyung, which is the birthplace of Kim Jong Il’s mother Kim Jong Suk. However, with the commemorative event approaching, Kim Kyung Hee, instead of Kim Jong Il, was supposed to visit Hoiryeong.

A source in Hoiryeong said in a phone conversation with a reporter on the 23rd, “An event commemorating the 90th birthday of Kim Jong Suk was held in Hoiryeong from the 18th to the 20th of this month and after the 20th, celebrations were held in Pyongyang. Kim Kyung Hee, who was supposed to come, did not show up.”

He added, “Provisions resumed on the 21st in time for the holiday (Kim Jong Suk’s birthday). Items that were given out were rice, corn, noodles, and oil. Holiday provisions such as liquor, gum, juice, socks, hot pepper paste, snacks, and soap were disbursed starting on the 23rd.“

The footsteps of Pyongyang’s upper-level leaders have not ceased coming into Hoiryeong. Chairwoman Park Soon Hee of Union of Democratic Women, Im Kyung Sook of the Ministry of Commerce and other representatives females in North Korea visited Hoiryeong and participated in the 90th anniversary commemorations.

The news of Kim Jong Suk’s 90th birthday anniversary commemorations has been relayed through North Korea’s media.

The Chosun Central Television, with Kim Jong Suk’s birthday coming up, reported on the 21st that oath ceremonies at the party, army, and office levels took place in Hoiryeong on the 20th.

At the ceremony site, the broadcast relayed that large-sized banners were set up praising Kim Il Sung and Kim Jong Il and the propagandistic signs stating, “Our greatest tribute to Mother Kim Jong Suk, the anti-Japanese heroine. May the revolutionary life and the results of the struggles of the great brethren Kim Jong Suk be immortal!”

The participants in the commemoration were Kim Il Cheol (Minister of the People’s Armed Forces), Kim Jung Gak (First Vice Director of KPA General Political Department), Choi Tae Bok and Kim Ki Nam (the secretaries of the Central Committee of the Party), Yang Hyung Sup (the Vice-Chairperson of the Supreme People’s Committee), Jeon Seung Hoon (the Vice-Minister of the Cabinet), and others high level officials.

In Hoiryeong, a joint performance by the People’s Army’s orchestra opened the day with a concerto “May the loyalty go on forever.” On the 19th, the “Nationwide Youth Students’ Poetry and Singing” took place among 3,000 participants, which consisted of youth and related persons of the Youth League Central Committee in each region.

Even prior to this, the nationwide landscape and crafts exhibitions commemorating Kim Jong Suk 90th birthday anniversary were held on the 12th at the Pyongyang International Cultural Exhibition Hall and on the 18th, a variety of events such as the opening of the Central Arts Show at the Korean Fine Arts Museum was held.

One researcher at a national policy research institute said regarding Kim Kyung Hee’s absence, “It is known that she has been suffering from an alcohol addiction for a long time, so does not make frequent public appearances.”

The most authoritative map of North Korea on Google Earth
North Korea Uncovered v.7
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the latest version of “North Korea Uncovered” include: A Korean War folder featuring overlays of US attacks on the Sui Ho Dam, Yalu Bridge, and Nakwon Munitians Plant (before/after), plus other locations such as the Hoeryong Revolutionary Site, Ponghwa Revolutionary Site, Taechon reactor (overlay), Pyongyang Railway Museum, Kwangmyong Salt Works, Woljong Temple, Sansong Revolutionary Site, Jongbansan Fort and park, Jangsan Cape, Yongbyon House of Culture, Chongsokjong, Lake Yonpung, Nortern Limit Line (NLL), Sinuiju Old Fort Walls, Pyongyang open air market, and confirmed Pyongyang Intranet nodes.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

Institute for Far Eastern Studies
NK Brief No. 07-12-13-1
12/13/2007

North Korea has paved the way to achieve its goal of becoming a strong and prosperous country by 2012, the one-hundred year anniversary of the birth of Kim Il Sung. This goal of reaching such a status in only five years was announced at the recent nationwide open assembly of intellectuals, the first such meeting in 15 years. Pyongyang first introduced the ‘Strong and Prosperous Country’ strategy in August 1998, announcing the national strategy of the Kim Jong Il regime through an article printed in the ‘Rodong Shinmun’, the newspaper of the North’s communist party.

Choi Tae-bok, secretary of the political department of the Workers’ Party central committee, stated in the closing speech of the recent intellectual’s assembly that the 100-year anniversary of the birth of Kim Il Sung was deeply significant, and stressed that “every intellectual must open the doors to [the era of] a strong and prosperous country” by the 100th anniversary of the birth of the nation’s founder.

Taking the position that North Korea has already become a strongly ideological nation by sticking to socialism, that on October 9, 2006, the North became a strong military nation by testing a nuclear weapon, and the focus in this year’s New Year’s Editorial on becoming an economically powerful country through economic development and improvement of the lives of the people, it appears that the North is proceeding with this national strategy on all fronts. This means that if the North can focus on its economic problems and become an economically strong nation over the next five years, it can proclaim to have become a Strong and Prosperous Country.

North Korea’s recent position on solving its nuclear issues and improving relations with the United States and South Korea adds some credence to the idea that Pyongyang has decided to solve its economic woes in a move to become this strong and prosperous country.

According to the North Korean point of view, the three issues of security, economy, and succession are related, and that security and succession issues cannot be resolved without first solving economic problems. North Korea showed a bold initiative in beginning to implement the February 13 agreement, and hosting the inter-Korean summit meeting was a reflection of Kim Jong Il’s ‘strategic resolve’.

Daily NK
Jung Kwon Ho
12/11/2007

Several sources in China have relayed that it is rumored North Korean authorities are planning to take extreme measures to prevent the sale of industrial products at the jangmadang (markets) next year.

One Chinese merchant, whom DailyNK met in Dandong, China on the 6th, said, “Rumors are circulating that a measure preventing all kinds of Industrial products from being sold in the jangmadang will be implemented next year, making Chinese merchants involved in trade between North Korea and China nervous.”

He informed that “In place of industrial products, only farm produce from the fields of homeowners will be allowed to sell in the jangmadang. Marine products that up to now have been selling in the jangmadang will only be made available at appointed marine shops, meat products at food shops, and industrial products at state operated stores.”

The Chinese source also maintained that, “There are quite a few overseas Chinese who, not knowing what will happen, have bought loads of industrial products with the idea that this might be their last chance, and they have brought them into the North.”

The North Korean authorities began unfolding a series of market regulations immediately following the Inter-Korea Summit in October. These included such policies as limiting the types of items for sale and imposing a minimum age limit on female merchants. However, limiting the sale of industrial products themselves, after having abolished permanent markets, can be seen as a means of returning to “agricultural markets,” where farmers traded only vegetables and a surplus of produce.

According to other Chinese merchants with whom DailyNK met in Dandong on the 3rd, “Under the name of the North Pyongan Party Committee in Shinuiju, a three-day meeting was held between the Secretaries of the Party and of the Army and enterprise managers, from November 20th to the 22nd.”

They informed that “The meeting was held to discuss whether to prohibit jangmadang operations and put people who have been trading in the market to work at enterprises or factories, since regular provisions will resume starting next year.”

The recent efforts to regulate the markets have been analyzed as means to revert the standard of societal regulation to that of the pre-90s by restoring the provision system and normalizing factory operations. However, such an extreme measure is likely to give rise to serious civilian opposition, so there are doubts as to whether or not it can be realized.

The North Korean civilians, before the mid-90s, relied on a complete provision system supplied by the State, which included the provision of goods such as soap, clothes and other necessities. However, after the food shortage, the national provision system completely collapsed. As a result, civilians began acquiring most necessities, goods and food items through the jangmadang.

However, agricultural markets, where miscellaneous cereals, vegetables and other agricultural items raised in home gardens were traded, existed around the time when North Korea’s provision system was in normal operation.

Following the execution of the “July 1st Economic Management Improvement Measure” of 2002, the North Korean government established general markets which brought simple agricultural markets out in the open in February 2003. Since then, individuals leasing stands from the city mercantile department have been able to sell all kinds of industrial products as well.

One source in Chongjin stated in a phone conversation on the 6th regarding the recent rumors, “If the sources are Chinese merchants, than the rumor is not likely groundless. A majority of citizens sustain their livelihoods through the jangmadang.”

He agreed that “It is highly feasible that measures to toughen the regulation of industrial products in the market will be executed.”