Archive for the ‘Economic reform’ Category

North Korean authorities call street vending a “crime against the people”

Wednesday, December 8th, 2021

Benjamin Katzeff Silberstein

Reports Daily NK:

North Korean authorities recently designated streetside commerce as a “crime against the people” and have begun ideological education efforts to tamper down discontent surrounding government crackdowns on street merchants.

Daily NK recently obtained “political activity materials” written by the Central Committee’s Propaganda and Agitation Department entitled “Let’s Completely Eliminate the Phenomenon of Commerce near Markets and in the Streets.” The materials were used during lectures at factories, enterprises and inminban (people’s units) throughout the country from early to mid-November.

The materials start by saying, “COVID-19 is causing great anxiety and concern in the international community as it spreads throughout the entire world, while the appearance of variants is causing a major global disaster.”

The materials then say that with the authorities declaring a national quarantine emergency and closing the border to stop infections, some “unawake” people were in a flap over “temporary difficulties” and obstructing quarantine efforts by carrying out “chaotic” commerce near markets and on the streets. Essentially, the authorities are stressing the justification for the controls on streetside commerce.

Daily NK previously reported that North Korean authorities — led by the Ministry of Social Security — have strengthened their controls on streetside commerce since March, forcefully confiscating the wares of so-called “grasshopper merchants,” as streetside merchants are called in North Korea. They have gradually strengthened their crackdown since then, dragging off people involved in the trade to forced labor camps.

Despite the “mop-up operation,” however, locals reportedly continue to engage in streetside commerce to overcome economic difficulties brought on by the COVID-19 pandemic, evading surveillance by regulators. People have also expressed considerable bitterness over being prevented from doing business as they like. Aware that people are very unhappy, the authorities have begun ideological education efforts in response.

The materials condemned “many people” for “creating disorder near markets and on the street, failing even to wear masks” and “threatening quarantine efforts by serving food of questionable sanitation and safety,” all out of an obsession with “earning just a few coins more.”

(Source: Kim Chae Hwan, “North Korea calls streetside commerce a ‘crime against the people’,” Daily NK, 6/12/2021.)

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Some news on the donpyo implementation

Tuesday, November 23rd, 2021

By Benjamin Katzeff Silberstein

An interesting and illustrative reminder of how much economics is about the public’s trust (or lack thereof) in the system… Daily NK:

There was a recent incident at a market in Pyongyang’s Sosong District in which a money changer refused a request by an employee of the financial section of a particular enterprise to change donpyo for foreign currency. Ultimately, the money changer exchanged the vouchers at a rate of KPW 2,500 for each KPW 5,000 voucher, but he was arrested by police after they were called to the scene.

The incident suggests that North Korean authorities are paying enterprises that need state funds in donpyo rather than cash, and that those enterprises are putting money together by changing the vouchers into foreign or local currency through money changers.

The source said that the financial sections of enterprises are also trying to get rid of their donpyo as quickly as they can by immediately exchanging them or depositing them in banks. This suggests just how little faith locals have in the vouchers.

Meanwhile, the groups will reportedly focus their efforts on improving the public image of the donpyo, even as they crack down on rumors about the vouchers and businesses that refuse to change or accept them.

The source said the authorities do not believe locals will voluntarily use the donpyo if they start by “strongly making examples” of people. He said the party ordered that educational efforts to teach the principles behind the donpyo should be prioritized over forcing people to use the vouchers.

(Full article here: Seulkee Jang, “North Korea organizes inspection teams to ensure smooth distribution of money vouchers,” Daily NK, 22/11/2021.)

 

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Kim Jong-un on North Korea’s import problem

Tuesday, October 26th, 2021

By: Benjamin Katzeff Silberstein

Over the past few weeks, Kim Jong-un has made a few interesting statements on reducing North Korea’s imports reliance. This is not a new theme by any means, and economic self-reliance is, at least in theory, a cornerstone of North Korean ideology. At the same time, the timing is probably no coincidence. The Covid-19 border closure has led to serious shortages of imported goods in particular causing, among other things, a lack of ink and paper to print the domestic currency.

In a speech to the Supreme People’s Assembly on September 30th, 2021, Kim spoke about the need to strengthen state “guidance” over the economy, and to make “all trade activities” in the “direction” of “decreasing the reliance on imports”:

대외경제사업에 대한 국가적지도를 심화시켜 모든 무역활동이 경제부문의 수입의존성을 줄이고 자립성을 강화하는 방향에서 확대발전되도록 하며 경제관리분야에서 국가경제지도기관들의 집행력을 강화하고 근로자들의 리익을 보장하기 위한 과학적인 방안들을 진지하게 연구적용할데 대하여 말씀하시였다.

(Source: Choson Sinbo, “김정은원수님께서 력사적인 시정연설 《사회주의건설의 새로운 발전을 위한 당면투쟁방향에 대하여》를 하시였다,” Choson Sinbo, September 30th, 2021.)

On October 19th, as reported by Yonhap here, a North Korean TV-broadcast made virtually the same statement, with the addition that the “economic guidance organs” are taking “active action” to implement the state’s decision.

These are merely two data that points document North Korean concerns about import reliance. Again, it’s nothing new, and I suspect we’ll see more similar statements in the future, perhaps more and more often.

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March, 2021: what to make of the rise in North Korea-China trade?

Tuesday, April 20th, 2021

By: Benjamin Katzeff Silberstein

According to Chinese customs data, Chinese exports to North Korea increased by 400 times in March, compared to the combined shipments in January and February of this year. As South China Morning Post reports:

Trade between China and North Korea grew to a six-month high in March, figures from Chinese customs show in the latest sign that the two neighbours are easing border restrictions amid tensions with the United States.

Exports from China to North Korea jumped from a paltry US$3,000 in February to US$12.98 million in March, according to Chinese customs data released on Sunday.

That was nearly 400 times more than the US$33,000 combined shipment of January and February, and was the highest by value since September, when China recorded outbound shipments valued at US$18.88 million to the isolated neighbour. Pyongyang imposed strict controls on goods transport ahead of the 75th anniversary of the founding of the ruling Workers’ Party in October.

According to Chinese customs, China imported US$1.308 million of North Korean goods in March, compared with US$1.75 million in February.

(Source: Laura Zhou (and Reuters), “China-North Korea trade jumps after pandemic slump but sanctions curb business with Pyongyang,” South China Morning Post, April 19th, 2021.)

What to make of this?

It could, of course, be the start of a trend reversal from the past year’s catastrophically low trade figures. Perhaps the North Korean government has begun to let up on border restrictions. In the past few weeks, news reports have said that China plans on restarting trade and open the new bridge between Sinuiju and Dandong. NK News has found evidence of new disinfection centers for goods on the North Korean side in April. The Russian ambassador to North Korea also recently said in an interview that trade will restart soon.

At the same time, I’m not sure these figures themselves give evidence of resumed trade. They could be a mere glitch in the data caused by a change in accounting routines or the like. Just look at the reported figure for Chinese exports to North Korea in February: $3,000. It simply isn’t realistic. Perhaps a portion of that month’s trade was recorded instead for March for reasons related to payments or contracts. China, moreover, ships much more goods to North Korea than what’s officially recorded as “trade”.

As so often, we will simply have to wait and see. When Chinese data is published on the specific items traded, we should also get a better sense of what this trade upswing really means.

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Kim Jong-un’s claim of the “worst-ever situation”

Sunday, April 18th, 2021

By: Benjamin Katzeff Silberstein

Perhaps I am late to the game already (the long weekend here in Israel is to blame for that), but it has been puzzling to see the media reporting on Kim Jong-un’s claim that North Korea faces its “worst-ever” economic situation at the moment, under both international sanctions and a self-imposed border lockdown.

It seems that Kim’s words have been misinterpreted or lost in translation. Colleagues at 38 North have rightly and importantly pointed out that the original Korean-language statement is not nearly as drastic. This is often the case with KCNA articles and translated statements from North Korea:

In the vernacular report, however, this term read kuknanhan (극난한), which would be better translated as “very hard” or even “extremely difficult.”[2] North Korea’s English-language media sometimes omit passages or provide translations that are different from the vernacular text, and without analyzing years’ worth of data, it is impossible to conclude whether they do so deliberately, or if they are simply oversights.

It is clear, however, that Kim did not say “the worst-ever situation” at this event. Even if he had, the North Korean leader has made similar remarks in connection with the country’s current circumstances in recent months. For example, Kim’s opening address at the Eighth Party Congress in January referred to the past five years as a period of “unprecedented, worst-ever trials.”

None of this means that the situation is not bad. But “worst-ever” would be extremely drastic for a country where the failings of the economic system led to a famine in the 1990s and early 2000s that took the lives of between 600,000-1.5 million people. Today’s conditions simply aren’t grave enough to warrant such comparisons.

Precisely how difficult conditions are remains hard to tell. The Russian ambassador to North Korea recently gave an interview where he said that the country’s food situation is not at all catastrophic, and that there are no signs suggesting an ongoing famine. He is probably right, but at the same time, we should be careful not to extrapolate too much about the situation in the provinces, for example, based on an assessment of the store shelves in Pyongyang. The country’s society is highly stratified and its economy relatively fragmented. The situation in one locality may well be much more dire than in another.

At the same time, we should also be careful not to take Kim Jong-un at his word. What, except for Kim’s own statement, suggests that today’s situation is worse than the one in 1995, after both economic collapse and heavy flooding took a severe toll on the economy? Sure, things are incredibly messy right now, a view that both circumstances and data support. Kim’s own statement, not least, is another solid data point showing just how grim things appear to be. But famine, meaning large numbers of people dying from starvation or malnourishment, is simply a different dimensions. Let us hope that North Korea does not get there, neither now nor in the future.

There are reasons to believe that it will not. The market system, for its faults and flaws, is able to react to changes in supply and demand, unlike the state distribution system in the 1990s. Moreover, China would likely step in with serious quantities of food aid if the situation got truly disastrous. Many signs suggest that North Korea and China expect to resume and even expand trade in the short-term. Should a drastic need arise, China would likely increase humanitarian shipments as well, although it is far from certain.

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Are fears of market crackdowns in North Korea exaggerated?

Tuesday, March 30th, 2021

By: Benjamin Katzeff Silberstein

In a recent article at 38 North, North Korea economy scholars Eun-Ju Choi and Young Hui Kim argue that the rumors of the death of Kim Jong-un’s reformist policies are highly exaggerated. Their full article is available here. As someone who has written about the increasingly anti-market policy signals coming from the North Korean regime over the past two or so years, I’d like to add a couple of thoughts.

First, Choi and Kim make a very good point: we have in fact not seen much in the way of practical, tangible evidence of a market crackdown actually going on. Indeed, most of this evidence is anecdotal and small-scale: scattered news via Daily NK and other outlets. There are two things to note about this. One is that, unfortunately, this is often how the news flow from North Korea works. When we can sufficiently say what is a broad, overarching trend and what is scattered but few news reports is often only clear in hindsight. At this time of writing, I’d argue we have enough of this anecdotal evidence to confirm that something is going on, but we don’t yet know of the scale of the process. (One could of course regard the entire border closure as an anti-market policy measure, at least in part.)

Second, however, Choi and Kim’s main argument seems to be that the fruits of the first few years of Kim Jong-un’s policy experimentation still stand. That may well be true — to this date we have seen no wholesale repudiation of any of the policy changes enacted in the first few years of Kim’s tenure. At the same time, Choi and Kim seem to be banking on Kim and the North Korean government simply not implementing the policies set out at the 8th WPK congress and before. Looking at what the government has said that it’s going to do, the anti-market policy turn becomes overwhelmingly evident. Choi and Kim, I would argue, are doing a bit of cherry-picking in their reading of these policy changes, focusing disproportionately on interpreting the emphasis on, for example, the Cabinet’s role in the economy. But there are many, many more examples.

Still, I hope that Choi and Kim end up being right, and that myself and many others end up being wrong. Only time will tell.

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Continuity and change in North Korea-China relations

Tuesday, February 23rd, 2021

By: Benjamin Katzeff Silberstein

The recent appointment of Ri Ryong Nam as North Korea’s ambassador to China hints at ambitions for greater economic exchange with China, as reported here. As Ri has a strong background in institutions in North Korea related to foreign trade, not least as the country’s trade minister and, later, vice premier in the country’s cabinet.

Above all, the appointment of Ri is interesting as a sign of continuity rather than change in North Korea’s external economic relations. At the moment, cross-border trade is in its deepest lull in many, many years, as a result of the North Korean government’s self-imposed border shutdown to protect against Covid-19. This border shutdown came on top of already harsh and heavy sanctions.

But this border shutdown, like other measures around the world related to Covid-19, has an expiration date. There’s been rife speculation that the border may reopen soon. And when it does, business will likely, at some point, return to the old normal of China being North Korea’s only meaningful source of economic exchange. The appointment of Ri is one data point to suggest this, but there are many other data points that show an increasingly close relationship between China and North Korea since 2018, after a lull in the preceding years of frequent North Korean missile tests and other destabilizing action. For example, North Korea and China and started expanding 12 of its 13 road or rail crossings only in 2020, despite the pandemic.

While all this may only amount to business as usual, it is interesting and noteworthy for several reasons. For one, North Korea’s previous five-year economic strategy, launched in 2016 and subsequently abandoned, reportedly sought trade diversification away from China as one of its main objectives. North Korean publications have long lamented overt dependence on one single country for foreign trade, noting that it easily translates to political dependance as well.

At the same time, North Korea’s trade dependence on China has actually increased over the past few years. Xi Jinping has long since promised Kim Jong-un that China would fund cross-border infrastructure refurbishment and special economic zones along the border. For all the talk of the potential for economic exchange between North and South Korea back in the heyday of inter-Korean diplomacy between Moon and Kim, the fact remains that if any party is likely to expand its economic ties and influence in North Korea, it’s China.

So the recent appointment of Ri as ambassador to China should be seen as a sign of continuity, not change. Given the dire state of the economy, and the economic policy retrenchment drive as of late, North Korean policymakers are likely to stay cautious and safe in economic measures for some time to come. That is precisely the sort of move that strengthening ties and trade with China would be.

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North Korea’s Kumgang plans

Monday, December 21st, 2020

By: Benjamin Katzeff Silberstein

Kim Tok Hun, the North Korean premier, visited the Mt Kumgang Tourism Zone on Sunday December 20th, 2020. KCNA:

He called for pushing ahead with the development project of turning Mt Kumgang area into modern and all-inclusive international tourist and cultural area under yearly and phased plans and thoroughly maintaining the principle of conveniences and architectural beauty first in the construction so that people can fully enjoy natural beauty.

He stressed the need to build the tourist area our own way in which national character and modernity are combined while in good harmony with the natural scenery of the diamond mountain so as to turn the famous mountain of the nation into the one well-known for serving the people and a cultural resort envied by the whole world.

(Source: “Kim Tok Hun Learns about Development of Mt Kumgang Tourist Area,” Korean Central News Agency, 20/12/2020.)

Why pay attention to the tourism industry in the middle of a global pandemic? It may seem odd, but in fact, it follows along the same pattern as many other North Korean pronouncements on economic policy through the year. Consider, for example, Kim Jong-un’s many dressing-downs of industrial managers, who can scarcely be personally blamed for the poor state of the economy. The government knows that the pandemic will be over one day, and is attempting to lay the groundwork for when that happens. Tourism has been a key focus of Kim Jong-un’s economic policy, and the pandemic itself has not changed this.

What does this tell us about North Korean plans for Mt Kumgang? The statement itself does not give any hints of a change in policy direction, but the word “international” above is perhaps noteworthy. North Korea has made clear for some time that it does not intend to involve the South Korean government in plans to develop Mt Kumgang. Rather, it seeks to have tourists come from other neighboring countries, and South Koreans will of course be welcome, depending on how relations between the countries evolve, but not in running the zone. Perhaps the word choice seeks to emphasize this direction.

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A crackdown on the North Korean market economy?

Tuesday, December 1st, 2020

By: Benjamin Katzeff Silberstein

(This is a rather long post with two parts: the first analyzes some recent events suggesting a government crackdown against the market economy, while the second recaps the some recent events within this trend. For readers interested primarily in the latter, I suggest scrolling down to the subheading “The events: a brief recap” below.)

Is the North Korean government cracking down on the market economy as such?

I would argue that we are not quite there yet, but an ever-increasing number of news seem to be suggesting that economic policy may be going in this direction. It’s also entirely possible that there is in fact no coherent strategy. One should not overestimate governments in general when it comes to coherence – this is nothing unique to North Korea. Nonetheless, these developments are crucial to keep a close eye on.

This post goes through some of the most central developments over the past few weeks below, but in short, some of these events are:

  • the general rhetoric and personnel politics from Kim Jong-un over the past year or so, repeated statements from high official organs about the need for economic control (most recently in a politburo meeting on November 30th),
  • the crackdown on foreign currency use and the reported execution of a foreign currency trader,
  • a reported change in the management of general markets to greater centralization and direct state control,
  • and last but not least (for now), an amendment to the enterprise law, effectively placing a common form of private enterprise under state scrutiny and administration.

This list is by no means exhaustive. For example, North Korean academic journals, often good proxies for what’s cooking in the policy circles, have repeatedly emphasized the need to “create an administrative system” since late last year. In North Korean parlance, this is likely code for increased state oversight and control. (Hat-tip to my good friend and colleague Peter Ward, perhaps the most thorough and dedicated researcher of North Korean journals in the analyst community.)

As I write more about in a forthcoming article for 38 North, the state has placed a high priority on reigning in – and at the very least, governing and administering – the market economy for some time, and with heightened intensity since the 2019 December plenum in particular.

There may, however, be more to it. There still is not sufficient evidence to conclude that the state is actively trying to stomp out markets or market mechanisms as such, but it is a possibility.

First, a basic question: if there is a general crackdown going on against the market economy, what would be the purpose? Again, no one knows, but one can speculate about a few different possibilities.

Perhaps most basically, North Korea is still, at least nominally and theoretically, a communist state with a centrally planned economy. Legally, private property does not exist. There has yet never been an official, explicit, major break with this model. We have often taken the state’s reluctance to crack down on the markets, and indeed, its occasional embrace of market mechanisms, as tacit acceptance that they are in the North Korean economy to stay. Maybe this assumption was wrong all along, or maybe things have changed over the past couple of years.

On the same theme, let’s not forget that North Korea’s political and social system is highly totalitarian. It is only natural that it would tend towards greater control, ultimately aiming to either eradicate or (more likely) tame groups such as the donju and integrate them into the official system. Economic reform and liberalization will always be potentially threatening, as they expand a sphere beyond state control, whether it be in the economy or society overall. Perhaps the North Korean leadership thinks the limit has been reached and it is time for a general rollback.

There may also be a pragmatic purpose to it all. As I have argued before, growing resource scarcity is a likely driver for increased economic control by the state. This is perhaps the most charitable and optimistic reading, as it suggests that the trend may one day be reversed.

Whatever the case, this is all troubling. The state and Kim Jong-un personally may very well be overestimating the capacity and potential of the state economy as an alternative to the market sphere. North Korea is a state with relatively capable governance in some areas, but with a very low capacity in others. Quite likely, the state simply has little grasp of the size of economic activity, and little overview of what this activity consists of. (See, for example, this recent report by Daily NK about a general survey of firms and enterprises leading up to the Party Congress in January 2021.) The border closure due to Covid-19, among other examples, shows that the state is prepared to accept a high degree of suffering among the general public for the purpose of social stability.

The events: a brief recap

The latest data point came a couple of days ago, at the latest of a staggering eleven politburo meetings this year. The KCNA summary contains two highly concerning paragraphs (my emphasis):

”The meeting discussed and studied as key agenda items the issue of hearing a report on the preparations for the 8th Congress of the WPK and taking corresponding measures, the issue of reorganizing a relevant department mechanism of the Party Central Committee to strengthen the field of the Party ideological work, to more thoroughly establish the Party’s leadership system in relevant institutions and to intensify policy guidance and Party guidance over them and important issues of improving the Party guidance over economic work and carrying out immediate economic tasks. Then decisions were made on them.”

And:

”The Political Bureau of the Central Committee of the WPK harshly criticized the economic guidance organs for failing to provide scientific guidance to fields under their charge under the subjective and objective environment and the prevailing conditions, and for failing to overcome subjectivism and formalism in their work. It stressed the need to put the operation and command for carrying out the Party’s economic policies on a scientific basis and display great dedication and responsibility.”

 

(Source: “Enlarged Meeting of 21st Political Bureau of 7th Central Committee of WPK Held,” Korean Central News Agency, November 30th, 2020.)

This comes against the backdrop of several similar statements from the politburo and other organs through the year and, not least, worrying measures, such as the reported execution of a foreign currency (among other measures) trader amid a strange appreciation of the won against the US dollar. Maeil Kyungje:  

“코로나19 확산에 위기감이 높아진 김정은 북한 국무위원장이 `비합리적 대응`을 하고 있는 것으로 보고됐다. 방역 위기에 경제적 어려움이 겹친 상황에서 환율 급락을 이유로 평양의 환전상을 처형하고 바다에서 어로와 소금 생산을 금지하는 등 무리한 조치를 취하고 있다는 것이다.

국회 정보위원들은 27일 국가정보원에서 최근 북한 동향을 이같이 보고받았다고 밝혔다. 정보위 야당 측 간사인 하태경 국민의힘 의원은 “김 위원장이 과잉 분노를 표출하고 있으며 상식적이지 않은 조치를 내놓고 있다”고 평가했다. 이날 국정원 보고에 따르면 김 위원장은 지난 10월 말 `평양의 거물 환전상`을 처형했다. 북한 내 환율이 최근 들어 급락했는데 이에 대한 책임을 물어 비공개 처형했다는 것. 북한은 외화난이 상시화했지만 국경 봉쇄로 외화 수요가 줄어 환율이 급락한 것으로 보인다. 하 의원은 또 “바닷물이 코로나19로 오염되는 것에 대한 우려 때문에 (김 위원장이) 어로와 소금 생산을 금지했다”고 말했다.”

(Source: Park Jae-wan, “Kim Jong-un executes foreign currency trader amid plunge in exchange rate,” Maeil Kyungje, November 27th, 2020.) See this Financial Times article for an English-language summary of events.

And then there’s the recent sudden appreciation of the won. Bill Brown explains this well here. It is, however, part of a broader push for people to use less foreign currency. There could be a whole host of reasons for this move, one of which could be to drive more of it out of circulation and into state hands. We still know too little to draw any firm conclusions.

Daily NK also reported a couple of weeks ago about new measures to centralize control over general markets under Party control. The report did not suggest direct measures to curtail market activity per se, but this may well be the consequence should the measure be fully implemented, with more red tape and central management further from the ground.

North Korea’s KCNA recently ran an article about two bills adopted by the Supreme People’s Assembly. One of them — a ban on smoking in certain areas — got quite a bit of attention, which lighter news from North Korea often does. The second one — an amendment to the country’s enterprise law — is, however, potentially much more significant, and could significantly curtail and hamper private business activity in the country. Here is what KCNA (5/11/2020) said about it:

”The amendments and supplements to the enterprise law newly point out such matters as of turning enterprises into labour-, energy-, cost-, and land-saving ones and making their employees patriotic working people who possess the spirit of economy as part of their mental qualities.

They also refer to the regulations which all the units must observe when organizing new enterprises or when changing their affiliations and those designed to ensure that production and business management are done on socialist principles under the unified guidance and strategic control of the state.”

Now, these few sentences reveal relatively little about what this could all mean in practice. Daily NK reported a few days later, however, that the government aims to centralize control of small business usually operating illegally, known as “kiji”, under official SOE frameworks. Corruption is certainly problematic in general, but given the fact that a massive proportion (or most) of private business in North Korea operates under frameworks that are technically corrupt, the ambition to strengthen government oversight may have serious adverse consequences. (For more on the “kiji” system, see this excellent journal article.)

In conclusion, it is too early to tell what the regime’s end goal is with these measures. At the very least, we can conclude that the state aims to lay more of the economy under its control and management. That is of course a central end goal in itself.

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North Korean government continues to strengthen market control

Friday, November 13th, 2020

By Benjamin Katzeff Silberstein

The trend continues, Daily NK reports, as the government apparently is strengthening direct Party control over the market system, all in line with the broader policy trend of stronger government control over the economy under Kim Jong-un. As I’ve pointed out in many previous posts and articles, stronger control doesn’t necessarily mean repression of market activity per se, but rather, the ability to more closely manage, direct and not least better tax market activity. This news reports suggests that that’s the case for this recent order as well (see my emphasis in bold):

North Korea recently crafted new market management regulations to give the Workers’ Party greater involvement in and control over markets, handing down orders to this effect to regional administrative organizations and market management offices.

A source in North Hamgyong Province told Daily NK on Tuesday that a written order entitled “Cabinet Decision on the New Market Management and Operation Regulations” was handed to the commercial departments of the provincial people’s committees and market management offices.

The new regulations were decided upon during an extended plenary meeting of the Cabinet on Oct. 19. Provincial people’s committees nationwide received copies of that decision one day in advance.

According to the source, who spoke on condition of anonymity, the new order calls for the establishment of a system where local provincial, municipal and county people’s committees manage the creation and dissolution of markets, with the commercial departments of the provincial people’s committees ultimately making reports to the Cabinet and the Central Committee’s Organization and Guidance Department. These changes ultimately broaden the ability of the Central Committee to monitor and exert control over the entire civilian economy.

In the past, only the commercial departments of people’s committees – which are administrative organizations – were involved in running the markets; party organizations had little to do with them. With the regulation changes, however, markets have now come under party management and control, according to the source.

The state appears to be trying a new tack with these regulation changes, the source said. According to him, North Korean authorities are “moving towards a system of direct management and control of markets nationwide through the Central Committee.” In the past, by contrast, the markets were managed and controlled by provincial people’s committees.

The order also encouraged local North Korean authorities to open new markets as needed so that they can “involve themselves in helping improve the lives of the people while also exercising control.” 

The order further instructed the commercial departments of people’s committees – in consultation with the Workers’ Party – to set the opening and closing times of markets according to the “time period” (season) and the “conditions” of each province, city and county, rather than making opening and closing times uniform across the country. It also ordered that fees on imported goods be increased.

The order directed people’s committees to regulate products in the markets while, at the same time, expand the list of goods available and – in consultation with party committees – set maximum and minimum prices. It further called for the promulgation and establishment of a system to fine those caught distributing goods at prices higher than those set by the state.

The order included a directive to restructure market use fees or payments to the state in accordance with the size of the markets or “distribution of urban populations,” and include these new fees and payments in “budget implementation.”

“The state’s new market management and operation regulations are still unknown to the general populace,” said the source, who further claimed that, “[The new orders] call for overlapping control of the markets and aim to raise market fees and other financial burdens, so they [ultimately] put ordinary people at a disadvantage.”

(Source: Kim Yoo Jin, “North Korea increases Workers’ Party control over markets,” Daily NK, November 6th, 2020.)

That is, the government wants market activity to be vigorous and rules and regulations to conform to what people actually want and need — but all under its own auspices.

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