As reported earlier this year by the Daily NK, Kim Jong il’s brother in law, Jang Song Taek, was leading an anti-corruption campaign in North Korea’s northern provinces along the Chinese border. Aside from controlling financial leakages, these efforts could be interpreted as attempts by Kim to gain control over military-owned trade companies.
The inspection group withdrew all trade certificates with exception of those certificates belonging to the families of anti-Japanese guerrilla fighters, and those certificates issued by the Ministry of Finance or the Shinuiju Municipal Administrative Committee. Therefore, presently at Shinuiju Customs, all import items without trade certificates issued by the above mentioned three groups have to be sent back to China.
Jang’s efforts, though seemingly effective at reasserting financial control of the region, had apparently taken their toll on local commerce:
In Hyesan, Yangkang Province, markets have been significantly reduced in size and scope recently, due to the anti-socialist group’s inspections[.]
[T]he merchants were at unease when under inspection by the National Security Agency (NSA) and other governmental organizations which govern the jangmadang [markets].
For example, transportation of goods by traders has withered away since last year, as the authority of the People’s Safety Agency (PSA) [controlled by Jang] rose and [it] launched  a strict crackdown on traders’ belongings.
The source explained the situation in Hyesan, that “Hyesan had become the city where Chinese goods were traded for the cheapest value because Chinese goods [enter the country] at Hyesan[.] [During] the (PSA) inspection period [goods] could not be transported inland due to the inspection of trains and cars. Lives of the common people became even tougher than before, since goods could not be circulated through the jangmadang in spite of their low prices.”
“The more stringent the regulation became, the more bribes cadres received and worsened were the lives of people,” the source added.
(NKeconWatch: I have “cleaned up” some of the grammar here to make it more readable. If you want to see the original version, click here.)
The intensive inspection of Shinuiju, in which over 70% of Chinese-North Korean commercial traffic occurs, caused several aftereffects inside North Korea: commercial traffic passing through Shinuiju and Dandong decreased by half compared to the past, and the aftermath of the inspections in Shinuiju added fuel to the fire of price rises in jangmadang goods across the country.
For instance, sugar, which is a raw material for doughnuts or candies that are consumed the most by average civilians in the jangmadang, carried a price of around 1,500 won per kilogram before the inspections, but in mid-May, it rose to 2,100 won and vegetable oil hiked from 5,500 to 7,500 won per kilogram. Such an increase in prices also caused a significant threat to the survival of citizens who made a living off the jangmadang trade.
But the final result of the evaluation of the Shinuiju inspection, which caused quite a stir externally, has purportedly been negligible.
The source said, “The volume of trade has decreased over several months and the number of visitors to China has also been reduced by half. The results of the inspection have not produced too much difference, except for the execution of 14 corrupt officials.”
The source further noted, “The only change which has been visible to the eye is the rise in the cost of bribes offered to North Korean customs from 40 to 80 dollars per hundred kilograms of goods. There was a rumor that the loading volume carried into the North would be fixed at 120kg, from 360kg, but this has not been done yet.”(Daily NK)
The Daily NK now reports that in the wake of these developments, Kim Jong il’s National Defense Commission (NDC) has moved in and directly taken over the inspections—and economic conditions have improved:
[Markets] have become lively again in the past few days as inspections by the National Defense Commission (NDC) have gotten underway.
A source in North Korea reported to Daily NK on Friday that “Merchants in Hyesan these days are fish in water. They say that they would not mind at all going through such inspections for an entire the year!”
Part of the reason for the turn around has been a change in focus. Whereas Jang’s work hit many “ordinary” North Koreans (particularly those working for the wrong trading companies), NDC inspections are focused on controlling the mid- to upper-level cadres. It is entirely speculatory to ask whether Kim’s strategy was to unleash Jang to get control of the region and afterwards assert direct control himself, or whether complaints from locals forced the NDC to end Jang’s campaign.
Of course this is all unverified information from inside North Korea, so who knows how much of it is correct!