North Korean Economy Watch

Pictured above (Google Earth): The University of Toulouse, France. See in Google Maps here.

According to AlertNet (Reuters):

Secretive and isolated North Korea is searching for economic allies in the unlikeliest of ways: showing videos of happy North Korean tourists to young French university students in a 13th century convent.

The reclusive communist state has no official diplomatic relations with France, one of only two European Union countries to cut ties with North Korea until it abandons its nuclear weapons programme and improves its human rights record.

But just weeks after Paris decided to open a cooperation office in the North Korean capital, its ambassador to Paris-based UNESCO accepted an invitation to address students from the University of Toulouse within the gothic surroundings of the Franciscan convent’s capitular chamber.

The meeting marked Ambassador Yun Yong Il’s first public appearance in France.

“They are the future,” said Yun, when asked by Reuters why he picked Toulouse to talk. “I’m here for the students who have been waiting to hear from a North Korean official for a year.”

Tensions have gradually eased on the Korean peninsula since the sinking of a South Korean warship 20 months ago and the North’s revelation of a uranium enrichment facility that opens a second route to make an atomic programme.

North Korea and the United States have also held a series of bilateral meetings geared at restarting broader regional de-nuclearisation talks, giving the North a window of opportunity to raise its diplomatic efforts around the world.

Yun, a former political director at the Foreign Ministry, faced about 100 students.

At times, the future political science graduates looked on bemused and surprised as the four-hour presentation cut from a hazy tourism video of the 1980s showing rolling mountains, happy North Koreans on holiday and copious seafood platters to a well structured monologue about the country’s woes and potential.

“Our country is open to everybody who wants to come. You just have to ask for a visa in Paris!” said Yun, who speaks fluent French, but opted to talk in his native language and let his deputy translate into English.

Pyongyang has slowly opened its doors under strict conditions to foreign tour groups, mostly Chinese as a way of earning hard currency.

Yun, who wears a lapel pin of President Kim Jong-il on his suit, said the country’s lack of hard currency as a result of tighter sanctions has made it turn to foreign investors on the “basis of mutual respect and interests”.

“We are looking forward to multilateral and multifaceted economic co-operation with other countries,” he said.

“We are definitely opposed to monopolistic investment of a single country,” said Yun, adding that the country’s natural resources provided opportunities for investors to tap.

CHINESE MODEL, CHINA TRAP

Michel-Louis Martin, director of Toulouse University’s security and globalisation research group said the event was not just propaganda.

“They are trying to go beyond what they usually have to say about North Korea. Don’t forget in France, North Korea is not very well known,” said Martin.

The country’s desire to diversify its economy has echoes of China when it began to allow foreign investment and gave permission for entrepreneurs to start up businesses in the 1970s.

Yun’s presentation attempted to steer clear of its frictions with the United States, South Korea and even its relationship with China, focusing instead on his country’s economic problems.

But by the end he stepped up the rhetoric, firmly laying the blame for Pyongyang’s “misfortune” on the United States.

Michel Dusclaud, a researcher at the University of Toulouse who convinced Yun to speak, said it was normal for ancestral hatreds to come out. Despite this, he said, it was clear the North was beginning to accept that if it did not diversify, it would be engulfed either by its souther neighbour or China, which still has territorial claims to it.

“They have to open up for international cooperation otherwise they will be eaten up by South Korea or China,” Dusclaud said. “It’s imperative, but it’s not because they like us.”

With his speech finished, Yun was quick to shuffle out of the Gothic chapel, declining to speak to Reuters, but also telling a student who attempted to pose a question on whether North Korea’s political system could last:

“I’ll see you in Paris and then we’ll talk.”

Read the full story here:
N.Korea makes discreet investor plea to French students
AlertNet (Reuters)
John Irish
2011-11-24

You can read the full report here (PDF).

Since I am behind on numerous commitments at the moment, I am not going to write much about this.  However, the report’s contents have been widely covered:

1. North Korea Tech (Martyn Williams) and here.

2. Reuters

From the Choson Exchange web page (November 5):

In October 2011, John Kim, a board director of the Choson Exchange, visited the Rajin-Sonbong Special Economic Zone. The following is a summary of some of his findings based on site visits and talks with senior officials in the SEZ. An longer account of his travels and impressions will be available soon. This information helps elaborate on our report from August.

Rajin Port
The Rajin Port employs 1400 workers. The Chinese have conducted feasibility tests regarding two new piers, but currently the port houses three piers with 9-9.5 meters draft. A 30,000 metric ton coal storage warehouse was built at Pier 1 by the Chinese, who moved 80,000 metric tons through the facility in five shipments from January to September. Pier two, largely dedicated to container shipment, is currently dormant and a Swiss company is currently using Pier 3 to ship manganese and talc out of the region. The Russians also have a 49 year lease agreement signed in 2008.

Oongsang [Ungsang] Port
Oongsang Port exported Russian lumber until 1985, but remains largely quiet now except for the occasional fishing boat. The present draft of 7 meters constricts any major future activity, so the North Koreans hope to bring in over $100M to widen the draft to 9 meters. After Rajin Port activity surpasses capacity there, Oongsang Port will become the next regional hub for drybulk activity.

Sonbong Port
Originally opened in the early 70’s, the draft within the port is 7 meters, but a fully laden Very Large Crude Carrier containing 270,000 metric tons of oil can offload at an offshore facility further out at sea. Two pipes, 63 cm in diameter, run for 9km underground before reaching the storage facility at “Victory Petrochemical”, a simple refinery that was designed to refine crude and send oil products (gasoline, naphtha, jet fuel, diesel and fuel oil) back to the port for export. In addition to this two way flow, fuel oil also arrived sporadically at the port as part of aid packages from 1994 to 2008.

Sonbong Power
This power plant was originally designed to take fuel oil from Victory Petrochemical as feedstock and generate power to feed back to Victory. Since the refinery has been offline, Sonbong Power has at times provided electricity to the region, but with fuel oil prices close to $700/metric ton and current electricity prices at 6.5 eurocents/kwh, the economics of running the plant do not work leaving the 800 workers employed here largely idle.

Victory [Sungri] Oil Refinery
Literally translated as “Victory Chemical Plant”, this refinery was completed in 1973 with a 40,000bbl/day crude distillation unit that typically yields 40~50% residual fuel oil for an average crude feed. Investment into upgrading capacity in the international market has led to an eroding of margins for simple refineries like Victory. Currently the refinery is idle and would need over $500M in investment to become competitive.

Hye Song Trading Company
Mr Kim visited a Sewing Factory owned by Hye Song, which runs 8 such factories employing 2000 workers. Output is recorded for the entire year on a bulletin board at the front entrance of the company. All employees except the handyman were women.

Cell Phone use more prevalent
The number of cell phone users in the DPRK crossed 1 million earlier this year and one official commented that the overwhelming majority of urban households have at least one cell phone. This particular official had 4 phones for a household of 3. Foreigners are allowed to use cell phones on a different network, and users of the domestic and foreign network can not call each other. All usage is prepaid.

Handset Type: Local
Purchase Cost: 1570-2200 RMB
Usage Cost: 250 minutes and 20 text messages, while each additional minute is charged at 60 NKW (about .1 RMB/min)

Handset Type: Foreigner
Purchase Cost: 1800-2400 RMB
Usage Cost: Does not include any free minutes and are charged at 2RMB/min

Banking System has room for growth
There are two banks in Rason, the Central Bank, which is focused on domestic transactions, and the Golden Triangle Bank, which is focused on foreign currency transactions. Transactions for goods and services are conducted almost entirely in cash, usually in RMB or NKW. Mechanisms for savings are credit have room for development. As banks take a fee to deposit and withdraw cash, merchants prefer to hold money in cash (usually RMB). Credit is also available almost exclusively through friends or family.

Bottlenecks
A number of issues require solving if Rason is serious about attracting large scale foreign investment. Among these are reliable access to travel visas, reasonable communications costs with the outside world, a more mature banking system with savings and credit mechanisms and favorable tax treatment with a consistent legal framework. The mere fact that Rason is experimenting with market reform is encouraging, and Mr Kim is optimistic about economic development in the region and the nation as a whole.

According to Yonhap:

South Korea will next week start repairing a road used by North Korean commuters to reach an inter-Korean industrial complex in the North, an official said Thursday amid signs of a thaw in bilateral relations.

The 4.5-kilometer road linking North Korea’s border city of Kaesong to the nearby industrial park is used by more than 47,000 North Korean workers who are employed by some 120 South Korean firms operating in the zone. South Korean officials earlier said the road was damaged in summer’s torrential rains, prompting the South to conduct an on-site survey.

“After signing an agreement (with the North), we expect to start repair work next week,” said an official at the Unification Ministry, which handles inter-Korean relations in the South.

“It will likely take about three months to complete the work, unless the weather becomes too cold, and cost us around 1.8 billion won (US$1.59 million),” the official said, speaking on condition of anonymity.

The repairs will involve restoring damaged paved sections and filling in holes on unpaved sections. Repairing the road is expected to save time for North Korean commuters and reduce traffic accidents.

The Daily NK offers some additonal information:

A government official explained today that the decision was made pursuant to agreement between the Kaesong Industrial Complex Management Committee, LH Construction and the North Korean authorities.

“The agreement has not yet been signed, but we are hoping to start the construction at the beginning of next week,” the official explained.

“Our side has taken on responsibility for planning the road repairs and supervising the construction,” he went on. “The weather could change things, but the construction should require three months and is expected to cost 1.8 billion South Korean won.”

Aside from the aforementioned construction, there are also plans to reconstruct two turning points for buses serving the complex. The human resources for the construction will be provided by North Korea.

There are plans to extend bus service to cover the areas of Pongchon (봉천), Kumchon (금천), and Phyongsan (평산). However, the roads to these areas are unpaved and extension of transportation services to these areas will require negotiations with the North Korean authorities.

Read the full story here:
Seoul to start repairing road leading to Kaesong complex next week
Yonhap
2011-11-3

Pictured Above (Google Earth): The new PRC/DPRK economic zone: Hwanggumphyong-ri (“HGP” in Sindo County) and Wihwa Island (Sinuiju and Uiju Counties).  See islands in Google Maps here and here.

According to Yonhap:

North Korea has opened a bureau tasked with running a free trade zone near its border with China, a source familiar with the country said Wednesday, indicating the North’s continued efforts to revive its forlorn economy.

The move came shortly after North Korea and China agreed to create joint economic complexes on the border islands of Hwanggumpyong [HGP] and Wihwa following a summit between their leaders in May.

“North Korea has opened a bureau with some 10 staff members on Hwanggumpyong,” the source said, asking for anonymity. “It opened around August or September.”

The staff includes a ranking official who was in charge of operating the Kaesong industrial complex near the western border with South Korea in the early 2000s, the source said, a sign that the North may want to develop Hwanggumpyong in a similar way to Kaesong.

The inter-Korean industrial park in Kaesong combines South Korea’s capital and technology with cheap labor from the North. More than 47,000 North Koreans work at about 120 South Korean firms operating in the zone to produce clothes, utensils, watches and other goods.

In a related move, North Korea has added two more vice chairmen to a state-run investment committee charged with attracting foreign investment, the source said. The committee, which was launched in July last year, is known to be under the control of Jang Song-thaek, brother-in-law of North Korean leader Kim Jong-il and vice chairman of the North’s powerful National Defense Commission.

North Korea is seeking to boost economic cooperation with China, its closest political and economic ally, as Pyongyang struggles to achieve its stated goal of becoming a prosperous country by 2012.

Read previous posts on Hwanggumphyong (HGP) and Sinuiju here.

Read the full story here:
N. Korea opens bureau to run free trade zone with China: source
Yonhap
2011-11-2

Pictured above (Google Earth): The location of the Trade Fair in the Three Revolutions Exhibition House, Pyongyang

According to the Pyongyang Times (October 2011):

The 7th Pyongyang Autumn International Trade Fair ran between October 17 and 20 in the Three-Revolution Exhibition House.

The annual event serves as an occasion in bolstering up economic relations and bilateral and multilateral cooperation among the countries on the principle of equality and mutual benefits.

The fair drew more than 260 companies from many countries and regions including the DPRK, China, the Netherlands, Germany, Bulgaria, Malaysia, Switzerland, Sweden, Italy, Austria, Australia, India, the UK, the Czech Republic, Poland and Taiwan.

On display in the trade fair were several thousand kinds of products such as electronic goods, machines, building materials, chemicals, medicines, food and consumer goods.

Over ten additional trading companies of the DPRK participated in the expo. The Korean firms exhibited more goods and ads in their booths.

The Kumgang Motor Joint Venture Company put a variety of vehicles on show, the Kwangmyong Contractual Joint Venture Company displayed stainless steel pipes and couplings and the Kyongnim Trading Company put on different kinds of far infrared rays-anionic treatment apparatuses, which drew the attention of viewers.

Draws also included paper samples of the Gratenau & Hesselbacher Gmbh & Co KG of Germany and textiles of the Anhui Xinhe Textile Co Ltd of China.

The deputy general manager of the Shenyang Huanggu Seeds Co Ltd of China who attended the exhibition for the first time said:

“The exhibition served as an occasion in promoting economic exchange and collaboration among the countries. We will boost economic exchange with the DPRK counterparts.”

During the fair there were a briefing on the investment environment in the DPRK and business talks.

Read more about the trade fair at the Choson Exchange web page.

Here, here, and here are articles in KCNA on the trade fair.

Pictured above (Google Earth): The towns mentioned in the article below from which the Kaesong Industrial Zone could draw more labor: Pongchon (봉천), Kumchon (금천), and Phyongsan (평산).

Institute for Far Eastern Studies (IFES)
2011-10-20

According to South Korea’s Ministry of Unification (MOU), the “May 24 Sanctions” that went into effect after the sinking of the naval boat Cheonan was relaxed and began to permit the resumption of construction of businesses in the Kaesong Industrial Complex (KIC). In addition, plans to build fire stations and emergency medical facilities in the area are also currently underway.

After South Korean Grand National Party chairman Hong Jun-pyo visited KIC on September 30, 2011, the ROK government has reached the following decisions: 1) to allow the resumption of halted factory constructions; 2) to build a fire station and emergency medical facility; 3) to resume repair work for commuting roads for KIC employees; and 4) to extend the operations of commuter buses.

This means seven companies that received permits in the past to begin construction but stopped after the sanctions went into effect would be able to resume the halted construction projects.

According to the Ministry of Unification, the seven companies include three metal and machinery, three textile, and one electronic factories, taking up a total area of 103,527 square meters. The total site of production facilities of stage 1 businesses in the KIC reaches 2,171,900 square meters, in which the currently operating 123 companies take up 783,471 square meters. With the sanctions lifted, the total area of businesses in operation will reach 885,950 square meters.

In addition, five companies awaiting construction for expansion will have to wait a little longer. The authorities announced to discuss this issue at a later date, looking positively on their construction to resume shortly as well.

Also the MOU announced to push forward with the establishment of fire stations and emergency medical facilities, “to protect the properties and health of businesses and employees of the KIC. The plans to break ground for fire station will begin in mid-November and is expected to be completed by late next year.”

The layout for the KIC fire station was completed in December 2009 and 3.3 billion USD has been budgeted to fund the construction. The station will be constructed on a steel frame on a 3,305 square-meter lot with the total floor space to be around 2,182 square meters.

The Kaesong Management Committee has been operating a “fire/police station” from April 2005. But with occurrences of accidental fires since last winter, it has reinforced the number of fire engines and manpower – currently at a total of eight fire trucks and 36 fire fighters.

Medical facilities in the KIC will also be completed by the end of 2012 once the construction begins early next year. About 3 billion USD is set for this project.

Currently at the KIC, Green Doctor’s Cooperation Hospital is in charge of providing medical and health services in the KIC, with South Korea Green Doctor’s Kaesong Hospital treating the South Korean employees and North Korean Comprehensive Clinic treating the North Korean employees exclusively. The South Korea Green Doctor’s Kaesong Hospital is currently operated by volunteers at a clinic level. The hospital was in the process of improving the facilities to more than ten beds. However, this project was halted after the May 24 sanctions went in effect.

On another note, the MOU also announced that maintenance work for the road connecting Kaesong City to the KIC would begin. The road is normally used by North Korean employees of the KIC. It was also announced that the number and operation of commuter buses would increase to help with the commute. The buses operate in the 20 km radius; the plan is to increase that to 40 km. Since September 2010, the number of buses increased to 400.

There are plans to extend the service to cover the areas of Kumchon, Bongchon, and Pyongsang. However, the roads to these areas are unpaved and extension of transportation services to these areas will require negotiations with the North Korean authorities.

Although these measures will alleviate some of the problems faced by the businesses in the KIC, the MOU still stands firm on its position that North Korea must take responsibility and make formal apology for the Cheonan incident in order for a fundamental resolution of the situation to occur.

1. “Relying on One’s Strength: The Growth of the Private Agriculture in Borderland Areas of North Korea”
Andrei Lankov，Seok Hyang Kim ，Inok Kwa
PDF of the article here 

The two decades which followed the collapse of the communist bloc were a period of dramatic social and economic transformation in North Korea. The 1990-2010 period was a time when market economy re-emerged in North Korea where once could be seen as the most perfect example of the Stalinist economic model. The present article deals with one of the major areas of socioeconomic change which, so far, has not been the focus of previous studies. The topic is about the growth of private agricultural activities in North Korea after 1990. This growth constitutes a significant phenomenon which has important social consequences and also is important from a purely economic point of view: it seems that the spontaneous growth of private plots played a major role in the recent improvement of the food situation inside North Korea.

______________________

3. Korea Sharing Movement anti-malarial program (Via Cancor)
Read a PDF of on the project here

______________________

4. What is it like to teach at the Pyongyang University of Science and Technology (PUST)?
Find out from one instructor here. More on PUST here.

UPDATE 6 (2011-10-19): I finally received a list of companies participating in the first Rason International Trade Fair. Below is a picture of the names of participating companies listed on a display at the show and a PDF of their names (in English). I apologize for any typos:

Here is a PDF of the company names in English.

Most are obviously Chinese companies, though there appears to be at least one American company listed in the mix, White Stone Corporation Co., Inc. USA!

UPDATE 5 (2011-8-22): KCTV produced video footage from the fair.

UPDATE 4 (2011-8-25): KCNA announces the closing of the first Rason International Trade Fair:

First Rason International Trade Fair in DPRK Closes

Rason, August 25 (KCNA) — The first Rason International Trade Fair was closed with due ceremony on Thursday.

Present there were Jo Jong Ho, chairman of the Rason City People’s Committee, officials concerned and exhibitors of different countries and regions.

In a speech a speaker referred to the fact that the fair was successfully progressed and an advance was made in conformity in favor of mutual interests in economy, exchange of science and technology and trade through wide-ranging contacts.

Diplomas were awarded to the exhibitors who presented excellent goods at the closing ceremony.

UPDATE 3 (2011-8-25)): KCNA publishes a short article advertising the economic advantages of Rason:

Rason Economic, Trade Zone with Bright Prospect of Development

Pyongyang, August 25 (KCNA) — Rason City, the DPRK, is situated in an important area which can link China’s three northeast provinces and Russia’s Far East region, both full of natural resources, and many Asia-Pacific nations with each other.

Rajin, Sonbong and Ungsang ports in Rason and Chongjin Port adjacent to the area provide good conditions for transit trade for Northeast Asia and other continents.

The sea off the ports does not freeze in winter, so they are not subject to seasonal restriction.

The reconstruction projects of the Rajin-Khasan railway and Rajin Port launched in Juche 97 (2008) will make it possible to reduce the transport distance from Asia to Europe, sharply cutting down the transport fee.

The Rajin-Khasan railway will serve as a transport route between the DPRK and Russia and between Asia-Pacific and European nations.

Rason City has seafood, agricultural product and wild vegetable processing bases operated by Korean trading companies. The city also boasts of many ponds, lakes and bays favorable for fresh-water fish culture and offshore farm.

Its natural and geographical environment is suitable to an international tourist resort. There are sea-bird, seal and other animal sanctuaries in the area with beautiful islets, like Pipha and Sol.

Some foreigners have already launched business in the area and an increasing number of investors are interested in the zone.

Rason City with amazing geographical and economic conditions is likely to greatly contribute to the development and prosperity of Northeast Asian nations.

UPDATE 2 (2011-8-21): The first Rason International Trade Fair opens Monday. Some interesting information below:

Pictured above (Google Earth): The Rason International Trade Fair Exhibition Hall (See in Google Maps here)

Also, a reader sent in this promotional flyer which is full of information on the trade fair:

See images of the flyer here: Part 1, Part 2, Part 3.

Video footage of the trade fair can be seen here.

UPDATE 1 (2011-8-17): The First “Rason International Product Exhibition” to be Held in Rajin-Sonbong Special Economic Zone
Institute for Far Eastern Studies (IFES)

Rajin-Sonbong or “Rason Special Economic Zone” is a co-development project developed by North Korea and China. The Rason SEZ International Product Exhibition is scheduled to take place from August 22nd to 25th — an exhibition targeted to attract foreign investors to the region.

According to the KCNA article released on August 14, “The exhibition will display a wide array of items from various countries including vehicles, pharmaceutical and clothing products.” It was said that the exhibition promises be an important event to encourage cooperation and exchange with various countries in trade, economic and science, and technology sectors.

This event is expected to not only bring Chinese but also European and other foreign companies into the economic zone, pushing investment into the area.

There is also talk of developing Rason into an international tourism zone to attract tourists from China, Russia, and Japan.

After the closing ceremony of the exhibition, visits to Rajin Harbor, Mangyongbong ferry, and the amusement park are scheduled in order to provide sightseeing tours for the participants to the exhibition.

Mangyongbong ferry, well-known in the past for transporting North Koreans living in Japan back to North Korea, is gaining special attention itself as a new tourist attraction. This cargo-passenger ferry is expected to be utilized further for tourism in the near future, including bringing Chinese tourists from Dairen and other harbors in China to Nampo Harbor close to Pyongyang.

In the late 1950s, Mangyongbong ferry began to shuttle North Koreans in Japan from Niigata Harbor to Wonsan Harbor near Pyongyang. From 1984, it was used to transport cargo into Japan, but this was halted in 2006 due to economic sanctions against North Korea which followed in response to North Korea’s missile and nuclear tests.

There are two ferries in North Korea with the name Mangyongbong. The Mangyongbong-92 will be introduced in Rajin Harbor to maximize the demonstration effect. The Mangyongbong, weighing 3,500 tons, is much smaller and older and inadequate to be used as a ferry.

The Mangyongbong-92 was built in 1992 to commemorate the 80th birthday of Kim Il Sung. The ship was built with funds collected from Chongryon (i.e., the General Association of Korean Residents in Japan). It was estimated to cost over 4 billion JPY at the time, weighing about 9,700 ton with a capacity to hold 350 passengers.

On another note, the fourteenth annual Pyongyang Spring International Product Exhibition held this May hosted over 280 companies from 10 countries. 100 Chinese companies participated in the exhibition. Since then, Chinese corporations from Liaoning and Dandong are reported to have placed contract orders worth 800,000 USD.

ORIGINAL POST (2011-8-15):

Pictured above (Google Earth): Rason geographic border (in red) and security perimeter fence (Yellow).

According to KCNA:

First Rason International Trade Fair to Be Held

Pyongyang, August 14 (KCNA) — The first Rason International Trade Fair will be held in the DPRK from August 22 to 25.

Vehicles, medicines, garments, etc. presented by companies of different countries and regions including the DPRK will be displayed at the fair.

The fair will contribute to boosting cooperation and exchange among countries and regions in fields of trade, economy, science and technology.

The DPRK is no stranger to trade fairs. By my calculations, the DPRK has hosted the Pyongyang Spring International Trade Fair since 1998 and the Pyongyang Autumn International Trade Fair since 2005. These events, which draw vendors from across the planet, are held at the Three Revolutions Exhibition in Pyongyang.

This is the first trade fair of which I am aware that is being held outside of Pyongyang. The Rajin-Sonbong area was the site of the DPRK’s first experiment with special economic zones. Although it did not generate the expected level of interest, North Korean authorities are hoping that this time around they will be able to capitalize on their proximity to the Chinese market (see here and here).

Additional Information:

1. Previous posts on Rason here.

2. Previous Posts on the Pyongyang International Trade Fair here.

3. The Chinese have been upgrading the road that links the Rason port with the Chinese border.

4. A few days ago I posted a preliminary list of DPRK trade companies published in Foreign Trade magazine. I imagine that more than one of them will have a presence at the trade fair.

According to the Daily NK:

New information suggests that the price of rice across North Korea now stands at more than 3,000 won per kilo, the highest market price since the currency redenomination of November 2009.

A source from Yanggang Province told The Daily NK on Friday, “The price of a kilo of rice has finally hit 3,000 won, having been only 2,600 won at the start of October. The won has gone down against the Chinese Yuan too, with one Chinese Yuan worth 515 North Korean won.”

Yesterday, a source from Sinuiju revealed that the cost of rice there has also risen to 3,000 won a kilo, saying, “People are bewildered as to why the cost of food has gone up so much, even though even the corn harvest has been gathered.” Sinuiju is always among the cheapest place to buy rice in North Korea due to its proximity to the major Chinese trading city of Dandong.

The situation is particularly surprising because the arrival of the autumn harvest would ordinarily be expected to drive down grain prices, or at the very least hold them steady. However, this year has seen poor weather feed concerns over crop yields, leading to rising prices throughout August and September. The average price in July, 2,000 won, was 2,500 won by late August. The exchange rate for Chinese Yuan has also been rising.

Some are predicting that the price fluctuations will level off with the end of the autumn harvest, while others believe that prices will simply move with the exchange rate, meaning greater uncertainty.

Read the full story here:
Rice Price Spike Defying Expectations
Daily NK
Kang Mi Jin
2011-10-15