North Korean Economy Watch

According to Yonhap:

The number of North Koreans officially visiting China reached 28,600 in the first three months of the year, up 35 percent from the same period last year, a news report said Wednesday.

More than half of them visited China to work in either factories or restaurants, while 6,000 people visited China for conferences or businesses, the Voice of America reported, citing Chinese government data.

The VOA also said 700 North Koreans toured China for sightseeing, while fewer than 100 North Koreans visited China to meet relatives or friends and 7,300 visitors had other purposes. The report did not elaborate.

The data did not include information on North Koreans staying illegally in China after defecting, the VOA said.

Tens of thousands of North Korean defectors are believed to be hiding in China, a major land route through which many North Korean defectors travel to Thailand and other Southeast Asian countries before resettling in South Korea.

According ot the Choson Ilbo:

Chinese tourists will start visiting Russian and North Korean cities without visas on Wednesday under a formal agreement between Beijing and the two countries. The tour course starts in the Chinese border city of Hunchun in the lower reaches of the Duman (Tumen) River and goes on to eastern Russia and the Rajin-Sonbong special economic zone in North Korea.

A group of 21 tourists left Changchun, the capital of northeast China’s Jilin Province, on Tuesday for the Hunchun. Travelers will then visit Slavyanka, Vladivostok and Khasan, the official Xinhua news agency said. They then go to North Korea by train and tour the cities of the Duman River and the Rajin-Sonbong area.

The four-day tour starts every Wednesday and costs 2,300 yuan (approximately W390,000). Only Chinese travelers are eligible for the visa-free arrangement.

Read the full stories below:
Number of N. Korean visitors to China rises in first quarter
Yonhap
4/27/2011

Chinese Tourists Visit Russia, N.Korea Visa-Free
Choson Ilbo
4/28/2011

Pictured above on Google Earth: Ryongyang Mine Ore Dressing Plant (Pre-renovation)

According to the Hankyoreh:

“We invested a lot of money, and now we cannot even find out the present status.”

Korea Resources Corporation (KORES) President Kim Shin-jong let out a deep sigh as he explained about the development status of the Hwangnam graphite mines in North Korea at a forum held by the corporation on Apr. 15. The event was organized amid a sense of profound concern, with a number of North Korean mineral resources development efforts running aground amid worsening inter-Korean relations.

According to accounts Sunday from officials with the Ministry of Unification and KORES, South Korea is currently involved in a total of ten North Korean coal mine development efforts. Investment for seven of these comes from the government, including the ministry and KORES, while the other three involve private sector investments. None of them has followed their original schedule since the Lee Myung-bak administration came into office.

The most representative case is that of the Hwangnam graphite mines. This was the first North Korean resource development effort undertaken as an inter-Korean economic cooperation venture, and progress was quick enough that the graphite produced there was being imported into the South right up until the Lee administration came into office. Now, the situation has changed completely.

A company official conveyed the situation by saying, “Since 2008, the Hwangnam Coal Mine has been forgotten completely.”

The situation is the same for the Komdok, Ryongyang, and Taehung coal mines in the area of Tanchon, South Hamgyong Province, an effort spearhead directly by the Unification Ministry.

An official with the ministry said, “We had already finished the third feasibility examination by February 2008, but since then there has been no further progress as inter-Korean relations have worsened.”

The Ryongyang mine contains large deposits of the rare metal magnesite, a material South Korea does not produce.

Exploration has also been effectively halted at the Ayang mine in Sinwon County, South Hwanghae Province, where KORES completed an on-site investigation following the signing of a September 2007 memorandum of understanding on mineral development with North Korea, and the Pungchon mine in Yonan County, South Hwanghae Province, where the first inter-Korean joint drilling effort was undertaken in October 2008.

The situation has been particularly severe for the privately invested projects.

An official with one company engaged in a fertilizer effort said, “We carried out three rounds of working-level discussions in North Korea and China regarding the mining of apatite, but all of them have been suspended since the current administration took office.”

“If these projects had just gone ahead properly, we would not have had to buy apatite at high prices from faraway places like Nauru,” the official lamented.

Apatite, one of the key ingredients in fertilizer, is one of the mineral resources for which South Korea depends entirely on imports.

With South Korea’s development projects in North Korea at a standstill, China’s have taken flight. According to KORES figures, Chinese exports of North Korean military, which stood at the $300 million level in 2005, showed a sharp rate of annual increase to reach more than $900 million in 2010. In the space of five years, the amount of North Korean minerals purchased by China rose more than threefold. Industry observers are calling the situation “hoarding” of North Korean minerals by China. Government authorities are known to have determined that even strategic minerals listed as forbidden for overseas export, including uranium, have been going into China since late last year.

The problem is that the situation is becoming more severe as time passes. Because North Korea’s mineral transportation infrastructure of highways and ports is still deficient, the focus has been on developing minerals in areas near the North Korean-Chinese border, but there is a strong chance that China will extend its reach further into the country going ahead.

“China wants to seize North Korea’s mineral resource industry through expanded infrastructure cooperation with North Korea,” said Jeong U-jin, head of the natural resource strategy office at the Energy Development Institute.

Many observers are saying that thawing inter-Korean relations is an urgent priority if South Korea is to take full advantage of the value of North Korean mineral resources. Noting that the potential value of North Korean mineral resources is as much as 7 quadrillion won, a KORES official said, “Suffice it to say that as improvements in inter-Korean relations get put off, North Korean resources will all head overseas.”

According to the North Koreans, production at the mines is up nonetheless!

Read the full story here:
Inter-Korean coal mine projects suspended during Lee administration
Hankyoreh
Ki Kyung-rok
4/25/2011

Pictured above on Google Earth: hill-side farming plots in the DPRK

Lankov writes in the Korea Times:

Every visitor to North Korea who has passed through mountainous areas in the country has seen some peculiarities of the modern North Korean landscape.

Somewhere high in the mountains one can see small fields of strange, irregular shapes which look quite different from the orderly, rectangular shapes of the cooperative farm fields. If asked about these fields, North Korean minders will probably avoid giving a straight answer. This is understandable ― even though the existence of such fields is tacitly accepted by the authorities, from a purely ideological view, which minders are obliged to present, these fields are not supposed to exit.

We are referring to sotoji, private plots, which have been spreading across North Korea over the last 15 years and now play a major role in food production in North Korea.

It would be only a minor exaggeration to say that in his policies, Kim Il-sung tended to be more Stalinist than Joseph Stalin himself. He took the state-run economy to its natural (or unnatural) extreme and collective farming was no exception. Once upon a time, the North Korean peasantry was herded into so-called “agricultural cooperatives.” The description of these institutions as cooperatives is actually misleading because they were essentially state-run farms, where farmers had basically no influence over management or income distribution.

But North Korea has one important peculiarity: unlike Stalin’s Soviet Union, in North Korea farmers were not allowed to cultivate even small private plots. In the Soviet Union a farming family would be allowed a plot which might have been as large as a few thousand square meters. In North Korea, the maximum size of an individual plot was limited to a paltry 100 square meters – barely enough to grow some pepper and spice and clearly not enough to make any meaningful economic difference.

This was done on purpose ― North Korean policy planners assumed that farmers, being deprived of any alternative means of existence, would work more efficiently in state-owned fields. In agricultural cooperatives farmers essentially worked for their daily ration ― one full day of work was rewarded with 700g of grain (similar to the ration of the average worker in a city).

This system was never especially efficient but for a few decades it managed to exist and function somehow. However the collapse of the North Korean economy in the early 1990s produced a devastating blow to state-run agriculture. In 1995 and 1996 the harvests were around half of what was necessary to keep the North Korean population alive, so many North Koreans starved to death (the exact numbers are disputed but it seems that between 500,000-1,000,000 perished) and the survivors began to look for ways to make a living outside the state-run-economy. Predictably enough, farmers did what one would expect them to do ― they began to develop their own food production.

Unlike their Chinese counterparts, the North Korean elite refused to disband the state-run agricultural cooperatives. Therefore farmers had no choice but to acquire land on their own, outside of what would be normally considered arable land. Usually they went to the mountains, since all arable land in the valleys had long been cultivated within state-run farms.

In some cases, farmers would make agreements with local forestry departments whose officials agreed to turn a blind-eye to unlawful activities in protected forest areas. In some other cases the local authorities tolerated and even encouraged the sotoji cultivators.

A quick look through satellite images of North Korea shows the widespread nature of the sotoji phenomena. In some counties near the Chinese border, the percentage of land under the cultivation of sotoji owners roughly equals that under cultivation by state-run farms. In other areas the level of private production may be smaller but it seems clear that private food production makes a major contribution to North Korea’s food supply today.

Indeed, in the above-mentioned borderland counties, sotoji fields seem to produce as much as 60 percent of all food sold on the local market. This might be an exception because the current county in question is covered by mountains and contains a lot of places where people can hide from police. Nonetheless sotoji produced food is found widely in the country’s markets.

In the last 15 years or so, North Koreans have developed a large and successful private economy of which the sotoji phenomenon is an important part. However their cultivators are not high on the newly emerging social ladder. Sotoji are usually tilled by people who do not have the money, skills or inclination to start a more conventional business. Some of them are essentially market-orientated enterprises which make profit but the majority lose money.

Nonetheless, the random new shapes of North Korean mountains nowadays are yet another reminder of how much the country has changed over the last two decades.

Read the full story here:
Sotoji — small private plot
Korea Times
Andrei Lankov
2011-4-24

Andrei Lankov writes in the East Asia Forum:

Until some 10 years ago, defection from North Korea implied that the person’s connections with his or her homeland would be broken for a long time, or perhaps even forever. North Korea was a huge black hole from where almost nothing could get out. But this is not the case anymore.

The number of North Korean defectors in South Korea has increased tremendously. In 2000, there were merely 1,400 North Koreans residing in the ROK. Now, a decade later, their numbers exceed 21,000.

These people are usually described as ‘defectors,’ but this name is misleading since almost none of them were driven by purely political considerations when they decided to leave North Korea. In most cases, they initially move to China, looking for food and better paying jobs. Only later do they usually find ways to move to South Korea, where, as they assume, their lives would be easier and more stable than in China.

To some extent these expectations are proven correct. By South Korean standards, North Korean refugees are not doing too well, their income being roughly half the income of the average South Korean. Nonetheless, even the 1 million won per month, plus subsidised housing and healthcare, are usually seen by refugees as affluence.

However, being Koreans they do not forget about their family members left behind in North Korea. In some cases the refugees save money to pay a professional defection specialist (simply called a broker) to relocate their family members to South Korea. A typical defection costs about 2-3 million won, but in some complex cases (for example, when the family members are old and fragile, very young or live far away from the border), it might cost considerably more.

Not everybody is willing to bring their entire family here and not every North Korean family wants to move to Seoul. Instead, defectors send money to their families back in the North. In recent years these transfers have dramatically increased in scale.

Remittances to the North are, strictly speaking, illegal according to both South and North Korean law. Nonetheless there is no way to stop this activity and, frankly, neither government is really willing to do so.

Last December the Database Centre for North Korean Human Rights conducted a survey of the economic situation of North Korean refugees in South Korea. According to the survey, 49 per cent of refugees regularly send money to their families in the North. The average amount sent by one person is estimated to be about 1 million won per year.

On balance the researchers estimated that about $10 million is sent North by defectors annually. There have been other attempts to estimate the scale of the remittances but those estimates are not much different ― most authorities agree that the annual amount is within the range of $5-$15 million. The $10 million is not a reliable amount for such a poor country as North Korea. After all, the Gaeseong Industrial Complex, often described as a major cash cow for the regime, generates some $20-$35 million a year.

Of course, one cannot make a bank transfer at a Citibank branch somewhere in the North Korean wilderness, and Western Union has yet to open its offices in the North. Remittances are made in cash and handled by the same networks of brokers who also smuggle people, letters and mobile phones to and from North Korea. Usually, money is first paid to a broker or their representative in South Korea and then moved or wired to China. Then the cash is smuggled across the border from China to the North. If the recipient lives near the border, they usually get the money straight from the smuggler. For those who live further south (in Pyongyang for example) the money might be delivered by a courier.

The complexity and risk of such an arrangement implies that service fees are expensive. The transaction fee currently fluctuates at 20-30 per cent of the total, so from the $1,000 sent by a refugee from Seoul, only $700-$800 will reach her relatives. Nonetheless, the system is quite reliable and incidents when the money does not reach its intended destination are rare.

Judging by anecdotal evidence, such money seems to be used for investments by North Korean recipients, most of whom run small businesses or workshops.

Politically, these remittances are important. North Koreans nowadays suspect that South Korea is not the destitute American colony the official propaganda used to criticize. These regular remittances make a difference; they reinforce the understanding that South Korea is a very rich place indeed. In the long run the spread of this knowledge does not bode well for the people who are now in control in Pyongyang.

Read the full story here:
Remittances from North Korean defectors
East Asia Forum
2011-4-21

Institute for Far Eastern Studies (IFES)
NK Brief (11-04-20)

Railroad services to Kaesong Industrial Complex on the Gyeongui Line increased from 21 to 23 times a day from April. Mainly a seasonal change, the last departure service into Kaesong has been pushed back to 5:00 pm from 4:30 pm and the arrival time also changed accordingly from 5:00 pm to 5:40 pm.

With the half of the Mount Kumgang tours, the Donghae Line is running on a more flexible schedule based on demand. Currently both lines are operating. There are 417 South Korean citizens currently residing in North Korea, with the majority (404 people) at the Kaesong Industrial Complex.

According to the Export-Import Bank of Korea, the volume of loans by the businesses operating economic cooperation with North Korea increased over the years, from 10.8 billion KRW in 2008, to 15.4 billion KRW in 2009, and 41.6 billion KRW in 2010. The increase comes as a surprise considering the enforcement of sanctions against the North from the Cheonan incident caused all inter-Korean exchanges and cooperation to discontinue except for the KIC.

The Export-Import Bank (Exim Bank) in coordination with the Ministry of Unification has continued to provide loans to businesses engaged in inter-Korean cooperation through a special loan program called, “Special Economic Exchanges and Cooperation Loan.” Special consideration was given to these small businesses suffering since the imposition of government sanctions.

Last year, a total of 25 businesses (11 economic cooperation-related, 13 exchange-related) received special loans from the Exim Bank. The loans were used mainly for stabilizing the business management to cover various business expenses including tariffs, shipping, material, distribution, manufacturing and labor costs, as well as other additional taxes and interests.

On the other hand, North Korea’s Korean Asia-Pacific Peace Committee informed Hyundai that it would retract the company’s monopoly over the tour of Mt. Kumgang, which was supposed to expire in 2028. Hyundai Asan expressed regret over the North’s decision by saying, “The agreements that were reached on Mt. Kumgang tourism must be honored and cannot be declared void or lose their validity on unilateral notification. The North’s statement should be withdrawn.”

The spokesperson of Hyundai also stated, “The root of this problem is caused by the stalled tourism project. The only solution is to resume the tours to Mt. Kumgang at the earliest time possible.” It further added its intention of working closely with the South Korean government to restart the tours. Since the suspension of Mt. Kumgang tours after a female tourist was shot and killed in July 2008, Hyundai Asan has been hitting dead ends with the project.

Regarding its plan to retract Hyundai, North Korea is pointing the finger at the “South Korean government’s vicious North Korea policy.” According to North’s Uriminzokkiri website, terminating Hyundai’s monopoly rights was an “inevitable decision based on low prospect for resuming the tours of Mount Kumkang.” It further added, “Although the South Korean government is condemning our decision as against international norms, the situation is compelling the DPRK to exercise our rights which is in accordance with domestic and international laws.”

According to the Daily NK:

Kim Jong Il was less active in the first quarter of 2011 than in the same period of last year, clocking just 35 public appearances in comparison with 41 in 2010.

The news was revealed by the Ministry of Unification this morning, following its periodic analysis of North Korean TV and radio news reports.

Kim’s most regular companion during his first quarter nationwide on-site inspections was the director of the Party’s Light Industry Department, sister Kim Kyung Hee, who was by his side 28 times.

Revealing the statistics, Ministry spokesperson Lee Jong Ju explained, “Although this is less than the 41 cases in the same period last year, when compared to the average number of National Defense Commission Chairman Kim Jong Il’s public appearances in the first quarter since 1999, 21, it can be seen as relatively active.”

The statistics reveal a total of 12 appearances by Kim at sites in the economic sphere, ten appearances at performances by various groups, and nine events involving the military.

“Appearances are focused on the economic sphere at the beginning of most years, which can be seen as an attempt to encourage more results,” Lee also pointed out. 40% of Kim’s total of 161 on-site appearances in 2010 were in the economic sphere, and were concentrated in the first quarter in 2009 as well as 2010.

“Particularly, the fact that Chairman Kim Jong Il is making a talking point out of self-reliant production and the CNC technology of industrial facilities at every industrial location he has visited this year is interesting,” Lee added, noting the oft-drawn link between modern technology and the succession propaganda of Kim Jong Eun.

Behind Kim Kyung Hee on the record of visits came Party Propaganda Secretary Kim Ki Nam (24), Central Military Commission Vice Chairman Kim Jong Eun and Party Administration Secretary Tae Jong Su (22 each), and National Defense Commission Vice Chairman Jang Sung Taek (20).

“North Korea can thus be said to be a place running a system with family at its core,” Lee concluded.

Read the full story here:
Kim Maintains Economic Focus in 1st Quarter
Daily NK
Kim So Yeol
2011-4-20

Martyn Williams writes in PC World:

North Korea’s only 3G cellular operator continues to report strong demand for its service and saw record revenue and growth in subscriber numbers in 2010, its majority shareholder said Monday.

The Koryolink service ended 2010 with 431,919 subscribers, more than quadrupling its customer base over the year, said Egypt’s Orascom Telecom. Orascom owns three-quarters of the cellular carrier through Cheo Technology, a joint venture with the state-run Korea Posts and Telecommunications (KPTC).

Revenue hit US$66.4 million, up 155 percent on the year.

Koryolink launched its service in the final weeks of 2008 amid some skepticism about whether North Korea’s government, which keeps tight control on its people, would really permit the general populace to own cellphones.

The continuing subscription growth appears to have proven the critics wrong. Anecdotal evidence from foreigners that have visited Pyongyang also points to an increasing number of people being seen on the street with cellphones.

There remains plenty of room to grow. The current subscriber base represents less than 2 percent of the population. Koryolink offered cheaper tariffs in 2010 to put its cellphone service within reach of more people, and might have to continue lowering prices if it wants to greatly expand penetration inside what is one of Asia’s poorest countries.

The service now covers 91 percent of the population including the capital, Pyongyang, 14 other cities, and 22 major highways. In addition to basic voice service, a video phone service was introduced in the third quarter. SMS and MMS messaging services and high-speed data service are available, although subscribers cannot access the Internet through their cellphones.

While subscriber numbers and revenues grow, it remains unclear if Orascom is making any money in North Korea. The company doesn’t disclose net profit figures for the unit, but provides profit before accounting for interest payments, taxes, depreciation and amortization (EBITDA). Measured this way, the company posted profits of $57.8 million, up from $17.2 million in 2009.

But perhaps an indication of Koryolink’s profitability, or at least its potential, can be found in Orascom’s recent deal to merge most of its telecom operations with Russia’s Vimpelcom. The deal includes carriers in a handful of countries in Africa, the Middle East and Asia, but excludes two: its home market of Egypt and Koryolink in North Korea.

Orascom’s 2010 annual report (Just released) can be found here (PDF).

More about the Vimpelcom deal here.

Martyn discusses the firm’s performance here.

Choson Ilbo has more here.

Read the full story here:
North Korea’s Sole 3G Operator Sees Users and Revenue Surge
PC World
Martyn Williams
2011-4-19

For the last few years, stories have appeared in the media about people selling their official 2.16 and 4.15 holiday gifts from the leaders.

The Daily NK gets the first story this time around:

“Is it true that Day of the Sun gifts are being sold in the jangmadang?”

Most defectors answer to that question is something like, “Isn’t it obvious; selling them can give us enough money for one kilogram of rice?” In the past, gifts from Kim Il Sung and Kim Jong Il on national holidays used to be quite precious and an honor for the people, but now they have become a way to lessen difficulties.

According to defectors, special stalls selling “Day of the Sun gifts” have even appeared.

Even the annual crackdown on selling such gifts is a mere formality. Ham In Suk, who came to the South in 2009, said, “The crackdown is carried out temporarily, but it is not effective and not particularly problematic.”

On the biggest national holidays, the Day of Sun and Kim Jong Il’s birthday, the authorities present gifts to children in day nurseries (four to five years of age), kindergartens (six year old) and elementary students (seven to eleven years old).

In one pack, there are usually around 400g of cookies, 400g of candy, 50g of jellies, 100g of rice crackers and five pieces of gum, although the quality and quantity of gifts differs by province.

A ceremony for giving the gifts to children is held a few days before the birthday in kindergartens, and elementary schools, meaning roughly February 14th and April 13th.

Then, on the afternoon of the day when the ceremony finishes you can easily find gifts in the jangmadang. People sell them to traders for a comparatively cheap price decided by weight.

A one-kilogram pack is sold for 1500 won, and the traders sell them on for 2000 won. Therefore, people can earn enough for one kilogram of rice by selling one pack of the gifts and thus have a hot dinner with family to commemorate the national holiday.

According to defectors, the General’s gifts have been on sale in the jangmadang since the March of Tribulation. This is because even though food distribution was suspended during that tough period, gifts from Kim Il Sung and Kim Jong Il continued.

Before that, it was apparently hard to find the gifts in the markets at all, no matter how hard lives were. At that time on the morning of the holiday, parents even made their children bow to portraits of Kim Il Sung and Kim Jong Il before they ate the gifts.

One defector who came to South Korea in 2009 said, “Selling gifts was beyond our imagination before the March of Tribulation, and we even stopped our children from opening the pack of cookies before saying a pledge of loyalty.”

In the 2000s, when people began to purchase Chinese products and food and several kinds of cookies in the jangmadang, the situation for snacks also changed; people in more affluent households sold their gifts from the authorities to the jangamdang to purchase more delicious cookies for their children.

In poor houses, however, parents take the gifts from their children and sell them to get a kilogram of rice. Instead of the General’s gifts, they give their children corn cookies costing around 150 won.

Here are previous posts on this topics.

Read the full story here:
General’s Gifts on Sale in the Jangmadang
Daily NK
Kang Mi Jin
2011-4-14

UPDATE: Some of these images were picked up by Radio Free Asia and Yonhap.

ORIGINAL POST: Google has provided new imagery of Wonsan, the capital of Kangwon Province. Using satellite imagery we can see the continued expansion of the city’s markets.

Pictured below is the formalization of Wonsan’s largest market (39.145886°, 127.455761°):

(Above) The image on the top-left is from Google Earth and it is dated 2002-11-11.  The picture on the top-right is from Bing Maps and the date is not known.  The bottom image is from Google Earth and it is dated 2009-10-3.

We can also see the formalization and expansion of a street market only 900m to the west (39.148420°, 127.443440°):

(Above) In the left-side picture dated 2002-11-11 you can see a small street market.  In the right hand picture dated 2009-10-3 you can see a large formal market has been constructed in city.

The growth in the numbers and sizes of markets throughout the country is not limited to provincial capitals.  This process can be seen in the smaller county capitals and worker’s districts as well. Below are some less prestigious examples:

Sunchon’s Puhung-dong  market upgrade (순천군, 부흥동: 39.485129°, 126.012211°):

Kangryon market expansion (강령군: 37.906801°, 125.505416°):

Ongjin Market expansion (옹진군: 37.928589°, 125.364248°):

But sometimes the process can move in reverse.  Here in Saepyol (새별군: 42.813426°, 130.205220°), the market was replaced by new housing.  I have still not located a replacement market in this city, though one will likely emerge.  In the meantime, people will simply trade in the streets or in a vacant plot of land:

You can see previous posts which show market expansion using Google Earth satellite imagery here, here, here, here, and here.

Institute for Far Eastern Studies (IFES)
NK Brief (11-04-05)

The trade volume and economic cooperation between China and the DPRK are on the rise. The trade environment for Chinese investment in North Korea has also changed.

Currently in the DPRK, there are about 200 Chinese companies in operation and more than 70 percent of these companies are concentrated around the cities of Rajin and Sonbong. China has pursued economic cooperation with the DPRK based on the four principles of state-ownership, corporate-centeredness, market-management, and mutual benefit. In the past, China persuaded North Korea with various joint venture projects arguing that, “You have nothing to lose from these projects. Although it’s based on market principles, ultimately it’s beneficial for both parties.” North Korea on the other hand maintained the stance, “You (China) invest and we will manage,” holding on to management rights of these companies. However, for this very reason Chinese companies were reluctant to directly invest in North Korea. Even after contracts were signed, large -scale investment did not transpire due to poor management.

However, North Korea finally yielded to China’s request, handing over major management rights to Chinese investors. This recent move is analyzed as an attempt to attract more foreign investment to actualize North Korea’s goal of building a “Strong and Prosperous Nation” by 2012. With large-scale management rights transferred to the Chinese companies for joint ventures, the DPRK-China economic cooperation volume is expected to grow.

North Korea also seems to be exploring other ways to improve the investment environment for the Chinese companies. Recently, Chinese trade investors are reported to be receiving special treatment. They are exempt from strict body searches at the airport and mandatory tours required for all visitors, which included visits to Mangyongdae, the birthplace of Kim Il Sung, Panmunjeom, the International Friendship Exhibition in Myohyang Mountain, and Kim Il Sung monuments. Their trips are now considered and treated strictly for the exclusive purpose of business.

When concerns are raised about the volatile North Korean policies involving foreign investment, North Korean officials offer elaborate explanations: “Even if policy changes or the regime, management rights are like private property protected by the Investor Protection Act. One’s investment will be protected even after a policy change, just as your real estate properties would. There is nothing to be worried about.” Many Chinese businessmen are reported to be expressing some concerns over these unexpected changes in policy related to attracting foreign capital and the attitudes of North Korean officials.