Archive for the ‘Foreign direct investment’ Category

China’s Xi promised funding for bridge connections in North Korea, reports say

Tuesday, July 30th, 2019

By Benjamin Katzeff Silberstein

This is quite interesting, and hardly surprising. Overall, I’ve seen very little to suggest that China regards the current sanctions pressure as anything but a temporary measure. That would fit the historical pattern well. (For more on this, feel free to check out my chapter on Trump’s “maximum pressure” strategy and its impacts on the North Korean economy.) This time is very different because of the longevity and extent of the Chinese sanctions pressure, but in nature, I don’t believe China’s medium- to long-term strategy on North Korea and sanctions has changed. Talk of China “abandoning” North Korea, which used to be rife when Chinese trade data on North Korea pointed in a downward direction, has often been and remains much overblown.

The news is that Xi Jinping, during his June visit to North Korea, supposedly promised that China would fund facilities on the North Korean side of the new-ish border bridge between southwestern Dandong, as well as fund work on the Hwanggumpyong SEZ. Asahi Shimbun:

China has promised to foot the bill for the construction of related facilities for an already-completed bridge across the border between China and North Korea, sources said.

Chinese President Xi Jinping made the pledge when he visited North Korea in June, they said.

During the visit, Xi also promised that China will promote construction of an economic development zone on North Korea’s Hwanggumpyong Island in the Yalu River, which forms a natural border between the two countries, the sources added.

Construction of the bridge and the economic development zone were agreed on when former North Korean leader Kim Jong Il was still alive. But the projects were effectively frozen after his son and successor Kim Jong Un became the country’s leader.

Xi’s willingness to pay the costs of building an access road to the bridge on the North Korean side of the border, as well as customs-related facilities, suggest that economic relations between the two neighbors are moving to a firmer footing.

According to sources knowledgeable about trade between the two countries and those with links to North Korean authorities, Xi’s promises were conveyed to high-ranking North Korean government officials during meetings to report on the outcome of a summit meeting between the two countries.

Xi’s largesse was also shared in the North Korean military as it will be involved in the construction of bridge-related facilities as well as the economic development zone.

The New Yalu River Bridge connects Dandong in China with Sinuiju in North Korea. Although the bridge has been completed, it is not yet open to traffic.

China will provide about 2.5 billion yuan (39 billion yen, or $360 million) for the construction costs. Chinese engineers have been conducting field surveys since late June.

Since around that time, the upper parts of the bridge have been lit up at night.

In mid-July, cars carrying Chinese government officials traveled to a border gate in the middle of the bridge.

Construction of the bridge started in 2011 when Kim Jong Il was in power. China spent about 1.8 billion yuan in construction costs. The bridge was completed in 2014 under Kim Jong Un’s regime.

Source:
China to fund costs so bridge to North Korea can open to traffic
YOSHIKAZU HIRAI
Asahi Shimbun
2019-07-29

On the North Korean side, the bridge has been lacking a connection to the broader road network (or to anywhere, really) since construction began in 2011, as these pictures show:

The new Yalu river bridge, October 1st, 2011. Image from Google Earth/Digital Globe.

The new Yalu river bridge, March 2nd, 2019. Image from Google Earth/Digital Globe.

Overall, this emphasizes the reality that China really is the only country that North Korea has close, substantive and sustainable trade links with. It was truly unlikely that Xi’s visit to North Korea would occur without any promises for economic benefits or the like. Kim Jong-un’s visits to China have rendered similar benefits, though perhaps not of the same economic magnitude.

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Possible North Korea five-year strategy document leaked, says Japanese newspaper

Monday, April 22nd, 2019

Benjamin Katzeff Silberstein

The following is interesting if true, and it makes a great deal of sense. One of North Korea’s main challenges is diversifying itself away from the overwhelming reliance on China for trade and economic ties. It’s easier said than done, though, and a wise (from a North Korean point of view) strategic ambition is one thing; realizing it is entirely different. I’ve written elsewhere about the age-old North Korean aim of diversifying itself economically away from reliance on China. Still, not much has happened since Kim Jong-il’s speech in the 1990s…

Hankyoreh’s re-write of Mainichi Shimbun:

A document titled “National Economic Development Strategy (2016–2020)” that North Korea adopted in the 2016 congress of the Workers’ Party of Korea (WPK) stated that the country needs to become less dependent on China, the Japanese press has reported.Japanese newspaper the Mainichi Shimbun reported on Apr. 21 that the strategy document set the goal of achieving an average annual economic growth rate of 8% and proposed “reducing our reliance on China and expanding foreign trade in a number of areas, including Russia, Southeast Asia, and the Middle East.”

While this strategy was adopted in the 7th WPK Congress, held in May 2016, after a hiatus of 36 years, the specific details and figures in the strategy had not been previously disclosed. The Mainichi explained that the strategy document had recently been acquired by Cho Yun-yeong, a Korean-Japanese researcher on North Korea.This document said that China represented 71.6% of North Korea’s trade value in 2014; Russia, 4.2%; and Germany, 0.8%. “China accounts for an overwhelming share of trade. We’ve been unable to move away from our dependence on China,” the document said.

The solution posited by the document was the diversification of foreign trade.More specifically, North Korea set the goal of increasing the amount of its trade with Russia to US$1 billion by 2020. According to the latest estimate by the South Korean government, North Korea’s trade with Russia amounted to US$77.84 million in 2017. In other words, the North was seeking to increase its trade with Russia more than tenfold in the space of just four years.The Mainichi Shimbun also said the North Korean document proposed gaining funds needed for building hydroelectric plants from Russia, as well as technical cooperation for upgrading facilities such as the Kim Chaek Iron and Steel Complex and the Musan Iron Mine.

North Korea also appears to have drawn up a plan to attract investment from Russian companies in international tourism zones in Wonsan and Mt. Kumgang and an economic development zone in Chongjin, along the the East Sea, in order to “build a cooperative network for producing medical products on consignment, processing marine products and developing natural energy.”The Japanese newspaper predicted that economic cooperation between the two countries could be on the agenda of the summit between North Korean leader Kim Jong-un and Russian President Vladimir Putin, which is likely to be held in Vladivostok on Apr. 24. But given the failure of the second North Korea-US summit, in Hanoi, to live up to its expectations, it won’t be easy for the North to massively boost its trade with Russia, as it hopes to do.

Full article:

N. Korean document reveals strategy to decrease reliance on China, Japanese press reports
Cho Ki-weon
Hankyoreh
2019-04-22

And here’s the original article:

Documents obtained by a South Korean researcher have shed light on the full breadth of North Korea’s top-secret state economic development strategy for 2016 to 2020, including an 8% economic growth target and strengthened ties with Russia and other countries to break dependence on China.

The 157 pages of strategy documents, along with a Jan. 21 paper titled “Cabinet decision No. 2,” which presents North Korea’s agenda for this year, were obtained by Cho Yun-yong, a researcher on North Korea who formerly served as a Tokyo correspondent for South Korean news agency Newsis.

According to the documents, Pyongyang aims to achieve 8% annual economic growth through technological development and trade diversification. While the state economic development strategy had been presented at the seventh convention of the Workers’ Party of Korea in May 2016, its details and numerical targets were not publicly released.

The objectives outlined in the documents likely provided motivation for Pyongyang’s strong demand that economic sanctions on the country be lifted during a February summit between North Korean leader Kim Jong Un and U.S. President Donald Trump. They also likely played a part in the planned summit between Kim and Russian President Vladimir Putin later this month.

With regard to the current status of the North Korean economy, the strategy documents point to low output levels of electricity and coal and the failure to fulfill domestic demand for food supply and daily necessities. As measures to realize the economic development strategy, the documents cite technological development, trade diversification and the full introduction of a new economic management method, which implies de-facto economic reform.

Specifically, the strategy calls for a break from the North’s exclusive devotion to China and expansion of trade to Russia and other countries in Southeast Asia and the Middle East. In particular, the initiative aims to boost the amount of trade with Russia to 1 billion dollars (about 110 billion yen) by 2020. The figure is more than 10 times the North Korea-Russia trade value of 77.84 million dollars in 2017, as reported in South Korean statistics.

The five-year strategic plan also suggests having Russia provide North Korea with the funds necessary to build hydroelectric plants and other facilities, as well as technological cooperation for revamping the Kim Chaek Iron and Steel Complex and the Musan Mine.

Furthermore, the economic strategy proposes inviting investment from Russian companies for special economic zones along the Sea of Japan. These proposals may become topics for discussion at the upcoming summit between Kim Jong Un and Russian President Putin.

Article source:
Docs shed light on scope of N. Korean development strategy through 2020
Koichi Yonemura
Mainichi Shimbun
2019-04-20

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New bridge crossing open between Jian and Manpo

Monday, April 8th, 2019

Benjamin Katzeff Silberstein

Bloomberg:

China and North Korea opened a new border crossing over the Yalu River, signaling aspirations for deeper economic ties between the neighbors even as Pyongyang’s trade remains crimped by international sanctions.

The border checkpoint at the foot of a new bridge opened Monday, connecting the northeastern Chinese city of Jian with North Korea’s Manpo, Chinese state media reported. The China-DPRK Jian-Manpo highway connection is for passenger and cargo transport and hosts an advanced customs facility, the China News Service said.

The opening was marked by several tour buses crossing from the Chinese side and then returning from North Korea, the Yonhap News Agency of South Korea reported, citing a person familiar with the matter. The ceremony appeared to show that local Chinese officials were ready to step up trade and exchanges with North Korea in response to its call for economic development, according to Yonhap.

China provides a lifeline to North Korean leader Kim Jong Un and his state has long been dependent on Beijing’s help to keep its meager economy afloat. Kim’s summit with U.S. President Donald Trump in Hanoi broke down on Feb. 28 over sanctions that have cut Pyongyang off from global commerce and were imposed on North Korea for its pursuit of a nuclear arsenal.

It was unclear how the new border checkpoint — the fourth between China and North Korea — would operate under the sanctions, which ban or limit a broad range of goods from moving in or out of the country. The South Korean Unification Ministry declined to comment.

The economic penalties are expected to be a main topic of discussion when South Korean President Moon Jae-in meets Trump at the White House on Thursday. Moon, a long-time advocate of reconciliation with North Korea, has repeatedly played the role of mediator since he took office in May 2017 amid escalating threats of war between Trump and Kim.

The Manpo border area has drawn the attention of North Korea for years, with Kim’s father and former leader, Kim Jong Il, crossing there in 2010 in one of his rare trips outside the country, the Chosun newspaper of South Korea reported at the time. In the 2010 trip, Kim Jong Il visited the school his father and North Korean state founder Kim Il Sung attended on the Chinese side when he was a child.

China and North Korea agreed to embark on the bridge project in 2012 and completed construction in 2016, Yonhap reported. The opening was delayed by UN Security Council sanctions imposed on North Korea.

In 2017, China’s overall trade with North Korea declined by more than 10 percent to about $5 billion, as Trump secured Beijing’s backing for four escalating rounds of sanctions in response to North Korea nuclear weapons program testing.

Article source:

China, North Korea Open New Border Crossing Despite Sanctions

Jon Herskovitz and Dandan Li
Bloomberg News
2019-04-08

Yonhap:

China and North Korea on Monday officially opened a new cross-border bridge halfway along the Yalu River, offering clues to their possible expansion of bilateral economic exchanges amid ongoing international sanctions.

The new bridge connects Jian in the northeastern Chinese province of Jilin with North Korea’s northern border city of Manpo.

The two countries agreed to the Jian-Manpo bridge project in May 2012 and completed its construction in 2016. But they have since delayed its official opening, apparently affected by United Nations Security Council sanctions on the North over its missile and nuclear programs.

Jian, located about halfway along the Yalu River, is considered a representative base of trade between North Korea and China, along with Liaoning Province’s Dandong on the Yalu River estuary and Jilin Province’s Hunchun on the Tumen River estuary.

Four tourist buses arrived in China from North Korea via the new bridge at 8:20 a.m. Monday before returning to the North about one hour later carrying about 120 passengers.

According to a local tour company, the tourists are planning to return to Jian around 5 p.m. after visiting attractions in and around Manpo.

A source in the border area told Yonhap News Agency that China’s provincial governments appear to be boldly trying to cooperate with North Korea in response to their demand for economic development.

“North Korea’s denuclearization has not been implemented, but the environment surrounding North Korea and China appears to be partially changing,” the source said.

“China may not expand its economic cooperation with North Korea considerably in consideration of its relations with the United States. But the opening of a new bridge may signal expansion of bilateral economic exchanges,” said the source.

Article source:
China, N. Korea open new cross-border bridge
Yonhap News
2019-04-08

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North Korea’s economic situation, going into Hanoi: a roundup of the data

Thursday, February 21st, 2019

By Benjamin Katzeff Silberstein

The Hanoi summit is under a week away, Daily NK recently put out new market price data, and I’ve finally had time to update my dataset. There seems like no better time than the present to take a look at some of the numbers we have available for the North Korean economy, thanks to outlets such as Daily NK and Asia Press/Rimjingang.

Currency

Let’s start with the exchange rate. A few weeks ago, the (North Korean) won depreciated quite significantly against the USD, which I wrote about here. At 8,500 won/1usd, the USD-exchange rate on the markets hit its highest point since the inception of “maximum pressure”. The graph below is shows the average market exchange rate in three North Korean cities for won-to-USD.

Graph 1. Average won-USD exchange rate on markets in three North Korean cities, spring of 2017–February 2019. Data source: Daily NK.

As the graph shows, the won rebounded somewhat after the initial spike in early January. According to the latest data point, the exchange rate stands at 8190 won, still somewhat higher than the average for the period, 8136, but barely.

What could have caused this spike? One possibility is that the government has started to soak up more foreign currency from the market, because the state’s foreign currency coffers are waning. After all, given the vast trade deficit, the continued necessity of spending hard currency on things like fuel (bought at higher prices through illicit channels to a greater extent) and other factors, it would make a great deal of sense. Currencies fluctuate all over the globe, sometimes based even on loose rumors that fuel expectations. One anonymous reader who often travels to North Korea for work heard from Korean colleagues that accounting conditions for firms had gotten stricter, likely because the government wants to be able to source more foreign currency from the general public.

It is also noteworthy that while the Daily NK price index reports that the USD-exchange rate has gone back to more normal levels, the Rimjingang index remains at very high levels. Its latest report (February 8th) has the USD at 8,500, and on January  10th, it registered 8,743 won, a remarkably high figure that the Daily NK index hasn’t been near since early 2015. The difference between the two may simple come from the figures being sourced from different regions, or the like. North Korea’s markets still hold a great deal of opportunity for arbitrage, not least because of the country’s poor infrastructure.

So, it does seem like there may be some unusual pressure on the won against the dollar. What it comes from is less clear, but the state demanding more hard currency from the semi-private sector and others may be one important factor. In any case, we shouldn’t be surprised if the trend continues, unless sanctions ease soon.

At the same time, while the RMB has appreciated against the won over the past few weeks, it hasn’t really gone outside the span of what’s been normal over the past few years.

Graph 2. Average exchange rate for won to RMB, average of three North Korean cities, late 2015–early 2019. Data source: Daily NK.

The average exchange rate for RMB since the start of Daily NK’s data series in late 2015 is 1228 won. The latest available observation gives 1241 won/RMB, and the RMB has appreciated against the won over the past few weeks. The Rimjingang data, here, too, gives a higher FX-rate for RMB than Daily NK, at 1250 won. Their index, too, shows the FX-rate for RMB going up over the past few weeks, but not to levels out of the ordinary. Still, if the won continues to depreciate against both the dollar and the RMB, it may be a sign of a more persistent foreign currency shortage.

Food prices

Rice prices remain as stabile as ever, in fact, even more so than this time last year. They continue to hoover between 4,500–5,000, with the latest observation being at 4,783.

Graph 3. Average rice price for three North Korean cities, spring of 2017–early 2019. Data source: Daily NK.

This should not necessarily be taken to mean that North Korea’s current food situation is not problematic. Even with increasing harvests in the past few years, it’s always been fragile. The past year’s drought reportedly took a toll on the harvest. Though market prices aren’t suggestive of any shortages as of yet, that could change in the months ahead. The latest harvest was likely lower than those of several previous years and difficulties in importing fertilizer may have contributed, but the dry weather was the main factor.

Even with a slightly lower harvest than in previous years, it seems that structural changes in agricultural management has improved agricultural productivity to such an extent that food safety isn’t severely threatened even with a reduced harvest.

Gasoline

Gas prices appear to have stabilized around a sanctions equilibrium, of sorts, since a few months back. The past year hasn’t seen any spikes near those of the winter in 2017, when prices went above 25,000 won per kg. For the past year, the price has mostly hovered between 13,000 and 15,000 won per kg. The last observation available from Daily NK, is at 15,200 won per kg. This is slightly higher than the average of the past 12-month period, 13,500 won per kg. A more recent report from Rimjingang puts prices at 13,750 won per kg, so perhaps prices have declined over the past few weeks.

What’s likely happened is that China has settled on a comfortable level of enforcement of the oil transfers cap, for now. (For a detailed look at fuel prices in North Korea and Chinese sanctions enforcement, see this special report.)

Graph 4. Average gasoline price, three North Korean cities, early 2018–winter 2019. Data source: Daily NK.

There is lots to be said about gas prices and their impact on the economy, but for now, it looks like supply of gasoline in North Korea is restricted, but stabile.

Hard currency reserves

I unfortunately don’t have any data to present on this issue, but it’s too important not to mention. We don’t know how large North Korea’s foreign currency reserves are, but all throughout “maximum pressure”, people have been speculating that they’ll soon run out. One South Korean lawmaker said in early 2018 that by October that year, North Korea would be out of hard currency. That clearly didn’t happen.

The lack of stabile foreign currency income may still be a problem for the regime, as mentioned above. It’s hard to imagine how it couldn’t be a huge headache. Look at the following graph for example, showing North Korea’s trade (im)balance with China, throughout 2017 and the first few months of 2018.

Graph 5. North Korea’s trade balance with China, in $1,000 terms. Data source: KITA.

Let’s assume that China is simply letting North Korea run a trade deficit, with only some vague future promise of payment in the form of cheap contracts for coal and minerals. Or, let’s say that China is even just sending North Korea a bunch of stuff without requiring any form of payment whatsoever. It seems highly unlikely to me that even a government like China would support the full extent of these imports. Even if North Korea is only paying in hard currency for a relatively small proportion of what it imports from China, that’s still a lot of money that’s just leaving the vaults, with virtually nothing coming in to replenish them. How long can this go on for? Probably longer than many estimated at the onset of “maximum pressure”, but certainly not forever.

Summary

In sum, judging by the numbers, North Korea’s domestic economic conditions appear stabile but quite difficult. No sense of widespread, general crisis is visible in the data. Nonetheless, the regime is likely under a great deal of stress concerning the economy. How much is hard to tell, but definitely enough for some form of sanctions relief and/or economic cooperation to be high on their agenda for Hanoi.

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[Updated] Kim Jong-un oversees master plan for Sinuiju facelift and construction

Wednesday, December 5th, 2018

By Benjamin Katzeff Silberstein

A couple of weeks ago, KCNA carried a report of Kim Jong-un’s oversight of a grand, general reconstruction plan for Sinuiju, North Korea’s most important hub for trade with China.

North Korea, it seems, expects that trade primarily with China will continue to grow and remain the country’s most important source of foreign currency revenue for the foreseeable future. This is something to keep in mind through the speculations about US and other western investments in North Korea in the event that sanctions are lifted and denuclearization (whatever version of it) comes through.

The plans for Sinuiju are also notable simply because Sinuiju is not Pyongyang. There has been quite a bit of work done in the past few years, under Kim Jong-un, at extending the renovations drive and infrastructure construction to smaller, provincial cities (mostly provincial capitals). One message seems to be that Kim Jong-un’s ambitions and promises of economic development aren’t just for the elite, but for the population as a whole.

It’s unclear how the plans that Rodong speaks of are related to the Sinuiju International Economic Zone. An issue of the quarterly North Korean magazine Foreign Trade in 2015 indicated that renovations of Sinuiju would focus on infrastructure renewal, but as the example of the bridge to nowhere shows (see below), it’s unclear what actual progress is being made in reality on this.

Some specific thoughts and annotation below (my emphasis, except on the leader’s names, that’s all standard KCNA):

Pyongyang, November 16 (KCNA) — Kim Jong Un, chairman of the Workers’ Party of Korea, chairman of the State Affairs Commission of the Democratic People’s Republic of Korea and supreme commander of the Korean People’s Army, examined and guided the master plan for Sinuiju City together with leading officials of the party, administration and design organs of North Phyongan Province.

Learning about the implementation of the behests of President Kim Il Sung and Chairman Kim Jong Il for the construction of Sinuiju City and examining in detail the master plan for the construction of Sinuiju City and a diorama of the future city, Supreme Leader Kim Jong Un set forth the tasks and ways of successfully sprucing up Sinuiju City to meet the demand of the present era.

“The present era” = likely, the era of a growing middle class with demands for consumption and entertainment, many of which make their money through the markets and semi-private business.

He said that it is necessary to form the center of Sinuiju City deep up to the southern Sinuiju area with the statues of

Kim Il Sung and Kim Jong Il at the center square of the city as the axis, arrange high-rise apartments and public buildings at provincial and city levels in its surroundings in a dimensional way, successfully arrange the blocks of high-rise and skyscraper apartment buildings along the main axis and arterial road of the city and the bank of the Amnok River in formative artistic way and build many parks within the dwelling area and thus turn the city into the one in the park.

This all sounds very expensive. Meanwhile, North Korea faces largely unfunded humanitarian needs, which could be met relatively cheaply. In fact, the equivalent of one-sixth of North Korea’s total luxury goods imports in 2017 would be enough.

Saying that it is necessary to build many modern and majestic architectures rich in national character in order to build the city befitting to a gateway city of the country, he called for successfully arranging the public buildings such as theatre, cinema, sports village, ice rink and sci-tech library and service facilities including hotel and department store in a rational way and to be of modern taste.

Books have been written about the concept of “rationality”, so I won’t go into what the use of that phrase means in this context. But it does sound like what Kim is talking about is simply making Sinuiiju “modern”, with all of what that entails. These days, there’s quite a bit of reporting and chatter around about how Pyongyang, and other North Korean cities, have undergone stark modernizations during Kim’s tenure. This is clearly true, but it’s worth remembering the reason why these things are news: the presence of “service facilities”, “department store[s]” and the like, things taken for granted in much of the world, is still not widely spread in North Korea outside of Pyongyang. (This is also true for Wi-fi.)

He also gave a direction of sprucing up the present industrial areas and remodeling the railway station of the city and Uiju Airport in a modern way.

Speaking of infrastructure: this is the only part of the article where infrastructure is mentioned. It is interesting and notable that despite the attention and grand plans for Sinuiju, the new bridge connecting the city to Dandong had still not been connected to North Korea’s road network as of mid-February this year, as far as I can tell from satellite imagery. This is the most recent date for which imagery is available.

The end of the new bridge from Dandong, on the North Korean side. Photo: Google Earth.

Underlining the need to pay deep attention also to the creation of cultural environment including urban greening, he called for creating green belts near the city’s main road and around the industrial area to make sure that one citizen has 50 square meters of green tract of land, and for building city park, botanical garden and recreation ground in a cozy and peculiar manner to suit the specific conditions of the local city.

Again, that’s going to cost a lot of money, and not least, human effort. Citizens might be happy about green spaces, but they’ll be less so at having to go out and construct them through “voluntary” labor.

Noting that it is most important in urban construction to make sure that citizens don’t feel any inconvenience, he said that it is necessary to increase electricity production and make a maximum use of natural energy so as to round off the city electricity supply network system, perfect the heating system, put the water supply on an international standard and properly establish the system for purifying industrial waste water and sewage as the city has dense arrangement of residential quarters and industrial establishments.

Electricity and energy supply is one of the main achilles heels for the North Korean economy, and its industry is highly vulnerable to shortages in electricity supply. “Maximum use of natural energy” sounds like hydrogen power to me, which is North Korea’s most plentiful source of electricity. Aside from coal, that is, but given the export value of coal, its use for domestic electricity production comes with a high opportunity cost. In any case, the North Korean administration is clearly aware (and has been for decades) that energy is a big problem, and bringing it up in conjunction with a city plan inspection is likely a way of sending the message that the authorities are working on it. How exactly that is being done is less clear.

On the theme of energy in Sinuiju, it might be worth noting that the city is home to one of the country’s main oil refineries, the Ponghwa Chemical Factory, south of the city.

Ponghwa Chemical Factory, south of Sinuiju. Photo: Google Earth.

As I keep stressing all the time, the provincial party committees should pay special attention to the work of intensifying the provincial design organs and construction forces and put constant efforts on it and thus decisively raise the level of the building in the construction projects of local areas, he pointed out.

Calling for reviewing the master plan for Sinuiju City and the long-term goals for city construction in cooperation with powerful design organs of the country, remapping it out to be realistic and submitting it within a few months, he said that the Party Central Committee would discuss and decide on the plan after going through relevant procedures, and the construction of the border city would be conducted year by year and phase by phase with the state backing after setting the goals of 5-year plan.

Noting that the work of remodeling Sinuiju City for which President Kim Il Sung and Chairman Kim Jong Il gave instructions dozens of times is a very important task of carrying out their behests, he stressed the need to gain good fruition within a few years to come.

Article source:
Supreme Leader Kim Jong Un Guides Master Plan for Construction of Sinuiju
Political News Team
Rodong Sinmun
2018-11-16

[Updated 2018-12-6: I added a few details throughout the post, as well as satellite imagery.]

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South Korea gets sanctions exemption for railway survey

Saturday, November 24th, 2018

Benjamin Katzeff Silberstein

Reuters:

South Korea said on Saturday it had received sanctions exemptions from the U.N. Security Council for a joint survey of inter-Korean railways, the first step towards reconnecting rail and road links cut during the 1950-53 Korean War.

In April, the leaders of the two Koreas agreed to adopt practical steps to reconnect railways and roads as part of efforts to improve bilateral relationships.

“The sanctions exemption has big implications given that the project has garnered recognition and support from the United States and the international society,” South Korea’s presidential spokesperson Kim Eui-kyeom said.

He expressed hope of quick construction of the railways, which he said will take inter-Korean cooperation to a new level.

South Korea requested an exemption for deliveries of fuel and other equipment needed to conduct the railway survey in the North, Yonhap News Agency said.

Pyongyang is under wide-ranging U.N. sanctions for its nuclear weapons and ballistic missile programs.

In October, the two Koreas agreed to carry out joint field studies on transport plans, with a ground-breaking ceremony in late November and early December.

But the plan was delayed amid stalled talks between Washington and Pyongyang following an unprecedented summit in June at which the two sides agreed to work toward nuclearization and peace on the Korean peninsula.

Full article:
South Korea secures U.N. sanctions exemption for inter-Korean railway survey
Hyunjoo Jin
Reuters
2018-11-24

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Mt Kumgang tours unlikely to be resumed this year, because of sanctions

Monday, November 19th, 2018

Benjamin Katzeff Silberstein

Reports Yonhap, with comments by ever-optimistic Hyundai Asan officials:

The head of Hyundai Group on Monday expressed reservations about any quick resumption of a stalled tour program to North Korea’s scenic mountain resort.

“At this point, the situation is difficult for the tour program to be resumed within this year, but I think it will be done in the near future,” Hyundai Chairwoman Hyun Jeong-eun told reporters after returning from Mount Kumgang on the North’s east coast.

She made a two-day visit to Mount Kumgang to celebrate the 20th anniversary of the cross-border tour program.

Earlier in August, Hyun had said she expects the project to be resumed within this year.

She said no detailed discussions on economic cooperation between the two Koreas had been made during her visit.

“We are preparing so that the inter-Korean economic projects can be resumed when the U.S. lifts sanctions,” Hyun said, adding that there is not much for a private enterprise to comment on the matter.

About 100 South Koreans and 80 North Koreans officials, as well as some 500 North Korean residents, attended the first celebratory event in four years at the east coast resort. It was jointly organized by Hyundai Group and the North’s Korean Asia-Pacific Peace Committee, a North Korean body that handles inter-Korean affairs.

Full article:
Tour program to Mount Kumgang unlikely to be resumed this year: Hyundai chief
Yonhap News
2018-11-19

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Hyundai’s aspiration to reverse N Korea fortunes

Wednesday, October 31st, 2018

Benjamin Katzeff Silberstein

Reuters:

South Korean President Moon Jae-in, who has pushed for rapprochement with the North since his election last year, calls the Kaesong industrial park a “lifeline” for South Korea.

Asia’s fourth-biggest economy is being squeezed globally between high-end, innovative manufacturers and low-cost producers in China and elsewhere.

Before the 2016 closure of Kaesong, some 120 South Korean companies employed 55,000 North Korean workers there, making everything from clothes and kitchen utensils to electronic components. The North Korean workers were well qualified, hard working and cost just a fraction of what workers in the South were paid, factory owners said.

Almost all small and medium enterprises which used to operate in Kaesong said they would like to go back, according to an April survey.

Seven out of 10 South Korean companies would prefer to use North Korean workers instead of foreign migrants due to language barriers and high costs associated with hiring foreign labor, a separate survey by the Korea Federation of SMEs found.

Hyundai Asan has the most riding on the prospect of a peaceful peninsula.

It paid $1.2 billion to buy exclusive rights for Kaesong and Mount Kumgang, and has interests in railroads and infrastructure projects including reconnecting inter-Korean railways.

Hyundai Asan’s rights to land the size of Manhattan in Kaesong last for 50 years, and it has a plan to build an even bigger factory town if the complex reopens, accommodating 2,000 companies and 350,000 North Korean workers.

Less than 5 percent of the total property in Kaesong has been developed currently, Hyundai told Reuters.

Officials say Hyundai has also agreed with the North to run tours in the coastal city of Wonsan, which North Korean leader Kim Jong Un is trying to build into a hotspot for tourism and foreign investment, as well as Mount Paektu, the famed homeland of both Koreas.

Hyundai’s Baek said the company is also in talks with Seoul and state-run corporations about projects to reconnect railroads between the North and South.

“The government respects Hyundai’s business rights it signed with the North,” said a spokeswoman at South Korea’s Unification Ministry, who did not respond to a question about its discussions with Hyundai.

NO LOVE FROM WASHINGTON

South Korean government officials and business executives say the biggest hurdle is opposition from Washington, which wants to maintain sanctions until Pyongyang completely denuclearizes.

In July, Mark Lambert, director for Korean affairs at the U.S. State Department, called about 10 South Korean businessmen for a meeting at the U.S. embassy in Seoul to deliver a stern message: No resumption of any businesses until denuclearization.

“The mood in the room was bleak,” said SJTech Chairman Yoo Chang-geun, who used to operate a factory at Kaesong and attended the meeting.

Baek, who was also present, unsuccessfully argued Kaesong and Mount Kumgang should be waived from sanctions “to show our goodwill to North Korea.”

A spokeswoman for the U.S. State Department declined to comment on details of “private diplomatic conversations.”

Article source:
After tragic losses, Hyundai aims to reverse N. Korea fortunes
Reuters
2018-10-31

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Two Koreas start railway inspections

Sunday, October 21st, 2018

Benjamin Katzeff Silberstein

South and North Korea are likely to start their joint on-site inspection as early as this week for a project to modernize and re-link railways across their border, government officials said Sunday.

At high-level talks last week, the two Koreas agreed to begin field surveys of the western Gyeongui railway in late October and the Donghae railway along their east coast in November.

“The Koreas are known to be discussing ways to conduct the inspection (on the North section) of the Gyeongui line starting late this week,” a government official said.

“The schedule is flexible, depending on consultations between the government and the United Nations Command (UNC) over the passage of the Military Demarcation Line,” he added.

In August, the Koreas failed to carry out a joint railway field survey as the U.S.-led UNC did not approve the plan, citing “procedural” problems, a move widely seen as U.S. objection to the inter-Korean railway project on the basis that it might hamper sanctions.

“As far as I’m concerned, Seoul’s consultations with Pyongyang as well as the UNC are smoothly under way,” the official said.

If launched, the joint inspection will involve the test operation of a train on the railway linking Seoul to the North’s northwestern city of Sinuiju.

After that, the Koreas will check the eastern railway on the North’s side that connects Mout Kumgang to its northeastern North Hamgyong province.

South and North Korea are looking to hold a ground-breaking ceremony for work on the rail and road systems along the eastern and western regions either in late November or early December.

Meanwhile, the two Koreas plan to hold working-level talks starting this week to implement agreements of the inter-Korean summit held in Pyongyang last month.

Full article/source:
Koreas to start joint inspection of western railway as early as this week
Yonhap News
2018-10-21

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China-NK trade dropped by 59.2% January–September of 2018, says China

Saturday, October 13th, 2018

Benjamin Katzeff Silberstein

Global Times reports Chinese customs figures:

China has consistently complied with UN’s resolutions on North Korea and bilateral trade tumbled 59.2 percent year-on-year from January to September, said an official with the General Administration of Customs (GAC) on Friday.

The value of China’s trade with North Korea was 11.11 billion yuan ($1.61 billion) in the first three quarters, according to data released by the GAC.

During the same period, China’s export volume to North Korea was 10.11 billion yuan, down 40.8 percent on a yearly basis and imports stood at 1 billion yuan, down 90.1 percent year-on-year, the GAC data showed.

The implementation of the Security Council’s decision is an obligation that all UN members should fulfill, said Li Kuiwen, an official with the GAC.

Li noted that “China’s customs has consistently carried out the relevant resolutions of the Security Council in a comprehensive, accurate, serious and strict manner.”

China’s trade volume with North Korea in the January-to-August period fell 57.8 percent from a year earlier to $1.51 billion, the GAC said on September 23.

Article source:
China-North Korea trade drops 59.2% in January-September period: customs
Global Times
2018-10-13

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