North Korean Economy Watch

Pictured above (Google Earth): The Kangdong Market (39.134801°, 126.109387°)

According to the Daily NK:

It has been revealed that the cost of living in Pyongyang has more or less held steady over the past month, despite a modest decrease in rice prices.

According to sources in Pyongyang, one kilogram of rice is trading for about 1,900 North Korean won, which represents a fall of about 100 won on June prices. It is thought that a modest easing of the exchange rate of North Korean Won against Chinese Yuan and the importation of a large amount of rice from China are partially responsible for the change.

“Chinese rice is currently selling for roughly 200-300 won less than Chosun (North Korea) rice,” one source said, explaining, “Chinese merchants and the like brought the rice into the country en masse at the start of the year when the price of rice was rising, but now it’s not selling so well. The price of rice has fallen across the broad and is fluctuating at around the 2,000 won mark.”

At the end of January, the price of a kilogram of rice temporarily soared past the 3,000 won mark. There was some speculation at the time that wholesalers were colluding to raise prices. After the price went up, a natural increase in market supply and a drop in purchasing power from currency redenomination kicked in to force prices back down. Since then it has more or less stabilized at around the 2,000 won per kilogram mark again.

The price for corn, which usually trades for about half the price of rice, has also recorded a small fall to 850 won per kilogram, down 130 won on last month’s prices. Pork prices are stable at 5,800 won per kilogram, which is the same price as last month.

Moreover, second-hand clothes are showing brisk trade on the market. One source attributed their popularity to the fact that they sell for less than half the price of new clothes.

Additionally, the source claimed that the warmer weather is encouraging more people to purchase sleeveless and short-sleeve shirts, as well as shorts and skirts. “Sleeveless shirts are prohibited by the authorities, so people only wear them at home. Mostly young people are doing this,” he said.

“Short-sleeve shirts, shorts and skirts are selling like hotcakes as well, but it is required that the latter two items go down past the knees.”

The cost of living in North Korea has more or less returned to the levels they were at before the currency redenomination. It is business as usual at the jangmadang, but with trade volume well down from what it was before. The source explained that, while people are not holding onto cash as a result of the currency revaluation, it is only food items and lifestyle goods that are selling relatively well, while sales of high-ticket electronic goods have actually decreased.

Here is the price data collected from the Kangdong Market on the outskirts of Pyongyang (JPG):

Left: June 2011, Right: July 2011

Links to the discussion of North Korea’s food crisis can be found here.

Read the full story here:
Market Prices Stable, Sleeveless Shirts Popular
Daily NK
Choi Cheong Ho and Park Sung Kook
2011-7-20

According to Bloomberg:

North Korean rice prices have quadrupled this year amid concern the regime is facing further economic isolation, according to a South Korean research report.

Rice prices jumped to as much as 2,200 North Korean won per kilogram during the first six months of the year from about 500 won at the end of 2010, South Korea’s state-run Korea Development Institute said today in an e-mailed statement. The difference was mostly caused by a slump in the domestic currency, which is a factor the government considers in setting the price, the report said.

North Korea’s won is not freely traded though the U.S. dollar is the de facto currency used in many markets.

South Korea in May last year cut off most trade with North Korea, accusing Kim Jong Il’s regime of torpedoing one of its warships in March that killed 46 sailors. The U.S. is assessing whether to provide food assistance to North Korea, which is also under United Nations sanctions for its nuclear tests.

The North Korean currency has weakened “sharply” since the regime shelled South Korea’s Yeonpyeong island in November amid concerns worsening relations will lead to further shortages of goods, the report said. North Korea has also increased coal exports to China to make up for the shortfall in trade with South Korea, causing energy shortages, it said.

While the regime lifted its ban on street markets that was placed at the end of 2009, high prices and goods shortages are preventing them from helping meet North Koreans’ needs, the report said.

Read the full story here:
North Korean Rice Prices Quadruple
Bloomberg
Bomi Lim
2010-7-5

A visitor to the DPRK sends in a picture of a 10% discount coupon received at a hard currency shop in Pyongyang.

The coupon is issued by the 6.17 Trading Company, and according to a member of my crack translation team it reads:

One coupon per party is given when the party has spent more than 50 Euros at our restaurant during their visit. The next time you visit our restaurant, 10% discount will be applied to your bill.  This coupon cannot be used twice or split over visits. The expiration date of this coupon is in two months.

I am also told that the coupon lexically equates “discount” with “service” as in “we will serve you at 10% lower price”.

The coupon is interesting because it signals that there seems to be some real price competition among hard currency shops in the capital. These shops not only cater to foreigners, but also to North Koreans with sufficient forex balances, so they don’t just have to compete against each other, but also with the black market.

Do other readers have any experience with discount coupons in the DPRK, or is this a relatively new phenomenon?

According to Daily NK:

Things are growing more difficult for many North Korean people as they pass through the spring lean season, according to a new interview with a citizen from the edge of Pyongyang, Kang Mi Soon. There has been little distribution this year, even in the capital, which has traditionally received preferential treatment, and while people are trading to try and improve matters, it’s not easy at the moment.

This is because, as a lingering after-effect of the currency redenomination, a lot of people have exhausted their reserves of cash, while prices have returned to levels commensurate with before the redenomination. In spite of relative commercial freedom in the jangmadang, the number of transactions has fallen and the class of small traders which lives day-to-day is struggling.

Kang, who hails from Gangdong County in Pyongyang, revealed this and more news from the city in an interview she gave to The Daily NK in Yanji, where she recently visited relatives,

The following is a transcript of the interview with Kang:

- What is the state of the distribution system?

In December last year and then January this year, there were eight days-worth of distribution. In February there were ten days, including the 16th (Kim Jong Il’s birthday), but in March there was no distribution. In April there were five days, including the Day of the Sun (Kim Il Sung’s birthday).

(One day of distribution ordinarily means 700g of rice or other grain for laborers, 900g for miners and workers in other strategic industries, 800g for members of state security, 400-500g for students (depending on grade) and 300g for housewives)

- Is the jangmadang operating well?

The jangmadang is working normally. However, the situation is that though the number of sellers is on the rise, people do not have money so products are not selling well.

- What things are selling the most?

Mostly, rice and corn are the mainstays of jangmadang sales. Since February of this year, there has been a drastic reduction in sales of other household items and industrial products. Though the supplies of rice and corn in the jangmadang are similar to last year, the number of buyers and the amounts being bought are both decreasing.

- What is the overall situation in terms of prices?

Overall, they have risen to a level similar to that of before the redenomination. In the case of Chinese products, prices have increased to more than before the redenomination. Socks made in China were 1,500won before, but now they are 2,000won.

- They say that the food situation during the spring lean season is hard. Can you tell us more?

Starting from last year, after the currency redenomination, the situation started getting worse, and this year it is really bad.

- Has anyone starved to death?

In Gangdong [Kangdong] County, since the beginning of February about twenty people, including two families which committed suicide, have died of hunger.

(Gangdong County had a population of 221,539 in 2008)

- What is the overall food supply situation?

60% of people in the county are living off three meals a day of corn porridge or corn flour noodles, 30% on corn rice and the remaining 10% are eating three meals of rice a day. In March and April of last year, the number of people eating three meals of rice was 30 or 40%, and less than 5% were living on corn porridge or noodles; the rest are corn rice.

- What about other regions?

With the exception of central Pyongyang and other big cities (Sinuiju, Pyongsung, Chongjin etc), it seems to me that other rural regions are in the same situation as Gangdong. The price of rice looks likely to stay the same or rise, and so, until around June 10th when the potatoes are gathered, the numbers of starving people is likely to rise.

Read the full story here:
Gangdong County Hit by Spring Shortages
Daily NK
Choi Cheong Ho
2011-5-17

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

The The UN World Food Prgram’s Rapid Food Security Assessment Mission (RFSA) offered some exchange rate data that I thought was worth pointing out:

Currently the official exchange rate is about USD1=KPW100 yet the market rate is closer to USD1=KPW3000. In other words, the redenomination of the national currency that occurred in November 2009 is all but neutralized. The effects of this policy on ordinary citizens appear to be mixed where people with over KPW 100,000 lost their savings. The purpose of such a policy was to control inflation by reducing money supply and to curb the growth in private enterprise. Worker salaries remained the same, but prices were reduced significantly.

The PDS prices were revised downwards in the wake of the currency revaluation making it even more affordable, at least in principle. For example, PDS prices of rice declined from KPW 44 to KPW 24 per kg and maize declined from KPW 24 to KPW 14. At these low prices the issue is the lack of commodities in the market, rather than consumers lacking money to purchase them.

An average worker makes around KPW 3,000 to KPW 4,000 per month. This translates into a dollar per month which only works in DPRK because everything is heavily subsidized and ordinary citizens do not rely on direct purchases of imported commodities. If PDS were to run out of cereals at the end April, people would not have the means to purchase cereals on the black market, where prices are KPW2000 per kilogram of rice and about KPW 1000 for maize. It is highly doubtful that the barter system which is the backbone of this informal economy will be able to withstand a shock of this magnitude over more than a couple of weeks. A humanitarian crisis is the likely outcome of such a series of events.

According to the Daily NK:

Overall average prices in North Korea have doubled since the end of last year.

Sources say that the reason behind the price rises is insufficient supplies within North Korea coupled to the effect of relatively strict crackdowns on the smuggling of goods in from China.

Rice is now reportedly 2,000 won per kilo (as of the 11th). Late last year it was between 900 and 1,000 won.

In late January, rice even reportedly reached 3,000 won in some areas. A source explained why, “There were rumors that state rice stores were empty, because even those people who are targeted for state distribution didn’t get any food in late January in some areas.” So, he went on, “Around that time, wholesalers colluded to fixed the price at 3,000 won.”

Thereafter, the source said, “Now, rice has dropped to around 2,000won,” explaining that, “When the price went up, the supply increased, so the price was amended again.” According to the latest research by The Daily NK, rice is now selling for 2,000 won in Pyongyang and Shinuiju, while in Nampo it is 1,900 won and 1,800 won in Hyesan..

Corn, which generally costs half as much as rice, now sells for between 1,000 and 1,200 won, which is exactly double the price at the end of last year. Pork, which sold for 3,500 won per kilo in December last year, now goes for 6,500 won.

Sugar is even worse, having tripled: late last year it was 1,700 won per kilo, but has now reached more than 5,000 won. Red chilli pepper powder has also gone up from 7,000 won per kilo to 15,000 won.

Even though the North Korean authorities emphasized improving light industrial and agricultural production in the New Year’s Common Editorial, in reality the country is experiencing serious inflation due to a lack of goods in the markets. Therefore, it seems inevitable that people’s lives will get harder.

Read the full story here:
Inflation on the Rise in 2011
Daily NK
By Park Jun Hyeong
2/13/2011

According to the Choson Ilbo:

The price of rice and foreign currency exchange rate in North Korea have both dropped drastically in a matter of a week, according to Radio Free Asia.

The radio station reported Saturday that rice in Hyesan, Yanggang Province was selling for 2,000 won per kg as of Friday, down from 3,300 won or nearly 40 percent from six days earlier. The Chinese yuan was trading for 400 North Korean won, down from 520.

A local source said that various rumors had prompted merchants to stockpile rice and then suddenly release it. The source also added that the rice requisitioned for the military, a key cause of recent price increases, is being siphoned off and sold, bringing the price down.

Read the full story here:
Rice Prices in N.Korea Plunge 40%
Choson Ilbo
1/31/2011

Pictured above: Nampho Glass Bottle Factory visited by Kim Jong-il

Institute for Far Eastern Studies (IFES)
(NK Brief No. 11-01-26)
1/26/2011

According to North Korean media, Kim Jong Il began this year’s onsite instruction with a visit to the Nampo Glass Bottle Factory. The January 20th issue of the Choson Sinbo also ran an editorial stating that “These days, in our country, improving the lives of the people is especially emphasized.” It also noted that Kim Jong Il’s first onsite visit of the year was to a site important to improving people’s standard of living. The paper boasted that great efforts were being made in the development of light industry — especially factories producing daily-use goods and food products — and revealed that the bottle factory in Nampo will play an important role in meeting the increased countrywide demands for packaging from factories large and small.

Despite this praise, the reality is that the people of North Korea are suffering ever-worsening economic conditions. Just as South Korea is in the middle of a cold spell, the North has suffered chilling conditions ever since the end of December. The Korean Central News Agency reported on January 22, “The cold-weather conditions are expected to continue until the end of January,” and, “this cold spell is causing more than a little damage to the lives of the people and to spring farming preparations.”

As the cold spell drags on, their hardship will continue. North Korea is ill-prepared to deal with such cold weather; freezing pipes make it difficult for the people to access fresh water, while food and firewood are in short supply. Hunger and cold are exacerbated this winter because those without access to firewood or heating oil are also faced with an environment devoid of wild plants or animals.

Power shortages have also grown more severe in the new year. On January 20, Open Radio for North Korea (ORNK) reported that an area of the Yanggang Province has been without electricity since the first of the month. Even Pyongyang has been experiencing power difficulties, with electricity only available to most residents for 1~2 hours each day. ORNK reported that “recently in North Korea, students and parents have been burdened with supplying firewood for school heating, while the prices of coal and wood are skyrocketing in the markets.”

The cost of food has also shot through the roof. Rice, corn, pork, and other staple foods are becoming increasingly more expensive. Young-wha Lee, a spokesperson for the Japanese human rights organization Rescue the North Korean People! Urgent Action Network (RENK), announced on January 17 that a source inside North Korea had reported a 500 Won jump in the price of rice within Pyongyang, from 1,400 Won per kilogram on the January 7 to 1,900 Won within 3~4 days. Corn jumped from 750 to 950 Won, and pork was up from just under 4,000 Won to its current price at around 5,000 Won. Gasoline now costs 3,500 Won.

According to a South Korean online source for news on North Korea, Daily NK, one can see the impact of inflation by taking notice of the price gap of around 200 Won per kilogram of rice in Pyongyang and rice in rural areas (North Pyongan Province’s Sinuiju and Ryanggang Province’s Hyesan, in particular). It is noteworthy that prices are shooting up in January, rather than during the lean season of March and April.

Good Friends, a South Korean-based humanitarian organization, has also relayed reports of inflation from sources within North Korea. It has reported that rice was selling in Pyongyang for as much as 2,100 Won per kilogram on January 7, significantly more than the 1,600 Won per kilogram reported at the end of last year. Prices continued to hover around 2,000 Won until recent rations eased shortages and brought the price back down to around 1,500 Won. As North Korean organizations and social units distribute these overdue holiday rations, there has been a fall in food prices.

However, these rations were not seen in all areas of the North, and in those regions where residents were not provided food, prices remain high. Rice in Hamheung jumped from 1,500 Won per kilogram on January 1 to 1,800 Won just one week later. On January 7, similar prices were seen in Chongjin (1,750 Won) and Sinuiju (1,800 Won). Ten days later, rice in Chongjin had climbed to 1,980 Won, and was threatening to break the 2,000 Won barrier. Corn in Pyongyang was selling for 950 Won per kilogram on January 7, while it cost 780 Won in Chongjin and 850 Won in Hamheung, Sinuiju, and Pyongsong. By January 17, corn averaged between 750 and 800 Won. Only in Pyongyang, agricultural regions, and other areas receiving rations had prices fallen to 600 Won per kilogram.

According Good Friends, grain prices in the North have shot up this year because several Party officials in charge of grain imports are behind schedule with incoming shipments, and the rising value of the US dollar and Chinese yuan have driven up the cost of overseas purchases.

Pictured above: Ontan Worker’s District, Onsong (Google Earth)

According ot the Daily NK:

In advance of next week’s lunar New Year’s Day holiday, National Security Agency agents are concentrating on getting together things for the holiday from households of those whose family members have crossed into China or South Korea.

Exploitation by the NSA or other powerful state apparatus is exceedingly common, of course, and the obtainment of necessities for holidays such as Kim Il Sung and Kim Jong Il’s birthdays, the Korean thanksgiving day (Chuseok) and lunar New Year’s Day are often covered via exploitation of the people. The difference this time, however, is that the specific targets are the families of defectors.

A source from North Hamkyung Province told The Daily NK today, “NSA agents in charge of northern border regions including Onsung have been engrossed in preparations for the holidays and generating private benefits, targeting smugglers and households with family members who have crossed into China or South Korea.”

The source explained, “Modes of exploitation by agents of the NSA and People’s Safety Ministry and cadres of the Party or prosecutors have been varied of late. They win houses which have problems over to their side and then get them to give certain things.”

The source said that as the lunar New Year’s Day comes closer, these moves have become more active and transparent. “NSA agents visit all of these houses and force them, or sometimes beg for things. They are no different from thieves, just without a knife.”

According to the source, the Conspiracy Research Office of the NSC in Onsung, North Hamkyung Province, which employs 25 agents, has allotted each agent items to get from their district.

There are two sets of items: one set is ten bottles of liquor, 5kg of pork, 20 packs of expensive cigarettes called “Yeomyung,” and the other set contains 20kg of gasoline, a certain amount of fruit and candy, and bottles of oil. Each agent has to select one set.

According to Onsung Jangmadang standards, a bottle of liquor can be bought for 4,000 won, 1kg of pork for 5,000 won, a pack of “Yeomyung” for 6,000 won, 1kg of gasoline 3,000 won, and a bottle of oil for 5,000 won.

In Ontan workers-district within Onsung, there are three agents. The goods assigned to them are also unaffordable, but only defector families have to provide them, the source said.

The source explained, “When an agent visits one’s home, they won’t leave until the host has set up a table of drinks for him. After drinking some, the agent coaxes them, ‘Have you got some news from the South?’ ‘Are you getting money well?’ or ‘When you get a call next time, you should grumble that the situation is hard, so that they will send more money.’”

Sometimes, agents call for bribes for their own family events, too. The source said, “While talking, agents hint furtively that there will be a family event and call for something for that, saying, ‘There will be nothing bad for you if you help out.’”

“Agents say openly that, ‘If more money is delivered, we can live well; it’s is a good thing, and a way to maintain socialism.’ They only need so much as to smell money and they come running,” the source complained.

Due to possible revenge from agents, people cannot complain about the situation and have to provide them with the things they demand, according to the source, who added, “However, the effect works only at that moment when they get the goods. When a problem occurs for these defector families, they are nowhere to be seen.”

Read the full story here:
Defector Families Are Moneybags for NSA Agents
Daily NK
Im Jeong Jin
1/27/2011