Archive for the ‘Sinuiju Special Administrative Region’ Category

Sinuiju International Economic Zone

Tuesday, December 1st, 2015

No sooner do I publish an article on the Sinuiju International Economic Zone (read it here at 38 North) than the DPRK releases more information on it.

In the December issue of Foreign Trade (2015 No.4), the DPRK includes information on the zone, including this map:

Sinuiju-SEZ-Foreign-Trade-2015-4-scan

UPDATE: Dr. Haggard uploaded a nicer version of the image which you can see here.

The map indicates that the downtown area of Sinuiju and the western coast down to the new Amnok River Bridge will constitute the first phase of development. Space has been allocated for trade, industry, sewage, warehousing, and other designated areas. The map also indicates a new road is to be built linking the Wihwado Economic Zone (to the north east of the Sinuiju SEZ) with the new Yalu River Bridge (which has yet to be opened for business) and Ryongchon County.

Here is a satellite image of the specific areas being designated for the first phase of the zone with proposed roads added for visual effect:

Sinuiju-SEZ-Google-Earth-2015-12-1

This is what the article had to say about the zone:

Sinuiju International Economic Zone

Located in a border area, the zone has a bright prospect for the development of water and marine transport. Its development area is 40km2.

The Zone is a flat area composed of deposits of organic fine sand in the mouth of the Amnok. The average height of ground inside the bank is 45m, geomorphology is 0-.7% and the average height above the sea level is up to 100m.

Its annual average duration of sunshine 2,427 hours, annual percentage of sunshine is 58% and annual average precipitation is 1001.5 mm.

The first and second annual main winds are northeast and and north winds respectively. It has the northeast and north winds in winter and southwest wind in summer in the main.

The Sinuiju International Economic Zone will provide opportunity for bonded processing, bonded transportation, trade and financial business, tourism, hi-tech industry, and various other business activities.

To this end, it is planned to develop the zone into a comprehensive economic zone with a large-sized latest IT industry area, competitive production area, exports processing area, cargo area, trade and financial area, public service area, tourist area and a bonded port, and into an international city with an airport and trade port.

Encompassing the whole of Sinuiju and two ri surrounding it, the zone is already furnished with infrastructure. However, it is necessary to upgrade the existing infrastructure and expand its capacity and build in its suburbs on a preferential basis.

The items of the construction of infrastructure include port, airport, railways, roads, power station, heating, and gas-supply system, telecommunications (international, domestic, mobile and computer network), and water supply, sewage-treating and garbage disposing systems.

As the zone has rich and good workforce whose education level is higher than secondary education, and many competitive heavy- and light-industry factories and enterprises around it, the investment by foreign business will be cost-effective and conducive to its development.

Previous posts on the Sinuiju International Economic Zone can be found here. Previous posts on the Sinuiju Special Administrative Region can be found here.

The North Koreans have also set up the Sinuiju-River Amnok Tourist Zone which you can read about here.

The JoongAng Ilbo has additional information here.

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Taiwan TV visits Sinuiju SEZ

Monday, June 1st, 2015

You can watch the video here:

The video highlights a few sights and restrictions, however, they do highlight the three price tiers that officially exist in the country:

price-tiers-sinuiju-doc

These shoes (RMB200) were purchased a the market price:

Red-shoes-200RMB

There’s no place like home!

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Sinuiju SAR/SEZ Version 5: Hwanggumphyong-ri and Wihwa Islands

Wednesday, June 8th, 2011

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

UPDATE 13 (2011-6-14): US urges caution.  According to Yonhap:

“We urge transparency, extreme caution and vigilance in any business dealings with North Korea. We urge all United Nations member states to fully implement U.N. Security Council Resolutions 1718 and 1874, which target North Korea’s continued involvement in proliferation, nuclear weapons development and procurement of luxury goods,” the White House official said on condition of anonymity.

The U.S. and South Korea have been putting economic pressure on the impoverished North, which refuses to dismantle its nuclear program and continues military threats. But China, the North’s largest benefactor, has maintained close economic ties with North Korea, prompting criticism that it is undermining U.N. sanctions on Pyongyang imposed after its nuclear and missile tests in 2006 and 2009.

UPDATE 12 (2011-6-9): Here is coverage of the groundbreaking ceremony in KCNA.

UPDATE 11 (2011-6-10): Barbara Demick, writing for the L.A. Times, highlights the low-key nature of the ground-breaking ceremonies as well as providing details of the lease agreements.  According to the article:

Pyongyang publicized the ceremonies, but official Chinese news outlets did not send reporters attend and carried just brief dispatches based largely on news releases. The lack of publicity in China may reflect Beijing’s ambivalence about doing business with an unreliable neighbor and a desire to avoid international criticism for propping up a nuclear-armed country with an abysmal human rights record.

China reportedly signed a 50-year-lease for the 4.6-square-mile Hwanggumpyong, where a 30-minute ceremony was held Wednesday. The South Korean Yonhap news service reported that large balloons flew overhead with the slogans “Friendship between China and North Korea” and “Joint Development.” The low-lying island, south of the Chinese city of Dandong, is currently used for farmland and a North Korean military installation. A smaller island called Wihwa is also part of the deal.

The Chinese are also building a new bridge to the islands that is eventually supposed to be extended to reach to the North Korean mainland.

UPDATE 10 (2011-6-10): Caijing, which is (according to the Wall Street Journal) China’s leading finance newspaper has just published a lengthy article (in Chinese) about North Korea and states at the beginning of the article the “urgent need for internal reforms to adapt to the trend of market forces”. Here is the article.

UPDATE 9 (2011-6-9): Xinhua reports on the ground breaking ceremony:

Officials from China and the Democratic People’s Republic of Korea (DPRK) have reached a consensus to jointly develop two economic zones in the DPRK, according to a press release issued by the Chinese Ministry of Commerce on Thursday.

From Tuesday to Thursday, Chinese and DPRK officials convened in northeast China’s Liaoning and Jilin provinces for the second meeting of the Development Cooperation and Joint Steering Committee.

Their meeting concerned the development of the Rason Economic and Trade Zone and the Hwanggumphyong and Wihwa Islands Economic Zone.

The joint development of the two economic zones in the DPRK will be “government-guided, enterprise-based and market-oriented,” according to the press release.

Both sides agreed to work together and give full play to their respective advantages in the development of the economic zones, the release said.

China and the DPRK have agreed to build the economic zones into a model of Sino-DPRK economic and trade cooperation and a platform to promote economic and trade cooperation with the rest of the world, the release said.

Both sides also held launching ceremonies for several cooperative projects during the meeting, according to the press release.

The meeting was jointly presided over by Chen Deming, Chinese Minister of Commerce, and Jang Song Taek, the administrative director of the Korean Workers’ Party.

The committee held its first meeting in the DPRK’s capital of Pyongyang last November.

UPDATE 8 (2011-6-9): The Choson Ilbo reports on the Hwanggumphyong opening ceremony:

The ceremony started at 10:40 a.m. and took half an hour. Huge balloons with messages like “Friendship between China and North Korea” and “Joint Development” floated in the air above while a military brass band played. Some 300-400 people attended, a stark contrast from the ground breaking for a new bridge connecting Sinuiju in North Korea to China’s Dandong across the Apnok (or Yalu) River at the end of last year, which lasted just 10 minutes with a few dozen regional officials present. AP’s Pyongyang correspondent was allowed to cover the event.

UPDATE 7 (2011-6-9): A reader notes int the comments that it is probably incorrect to refer to this development as a “Special Administrative Region” because we have yet to see if there is any new administrative apparatus which will control the new zone.  So until we see such a development I will refer to this as a “Special Economic Zone (SEZ)”.

UPDATE 6 (2011-6-7): Yonhap reports that Jang Song-thaek attended a groundbreaking ceremony on Hwanggumphyong today (Wednesday):

North Korea and China on Wednesday broke ground on a border island to develop it into an economic zone, spurring speculation that Pyongyang may embrace Chinese-style economic development to try to revive its faltering economy.

The groundbreaking ceremony came on the heels of North Korean leader Kim Jong-il’s weeklong trip to China in May to study the neighboring country’s spectacular economic development, his third trip to China in just over a year.

On Wednesday, some 1,000 people from North Korea and China, including Kim’s brother-in-law, Jang Song-thaek, and Chinese Commerce Minister Chen Deming, attended the ceremony on Hwanggumphyong Island in the Yalu River that separates the two countries.

Several dozen giant advertising balloons were floating in the air as a military brass band played festive songs, and hundreds of doves were released at the ceremony.

The messages on the balloons read “North Korea-China friendship and joint development” in a symbolic gesture for their commitment to the project.

The two sides also reportedly signed a deal on the joint development project, including lease terms on Hwanggumphyong. No details were immediately available.

UPDATE 5 (2011-6-7): KCNA announces (here and here) the establishment (and expansion) of the Special Administrative Region (SAR or SEZ):

(KCNA: 2011-6-6) DPRK Decides to Set Up Hwanggumphyong and Wihwa Islands Economic Zone

The DPRK decided to set up the Hwanggumphyong and Wihwa Islands Economic Zone in order to boost the DPRK-China friendship and expand and develop the external economic relations.

A decree of the Presidium of the Supreme People’s Assembly was promulgated on June 6 in this regard.

According to it, Hwanggumphyong-ri, Sindo County, Sangdan-ri, Hadan-ri and Taji-ri, Sinuiju City and Soho-ri, Uiju County of North Phyongan Province shall belong to the zone.

The sovereignty of the DPRK shall be exercised in the zone.

The development of the zone shall start from the Hwanggumphyong district.

and…

(KCNA: 2011-6-7) Hwanggumphyong and Wihwa Islands Economic Zone to Be Set Up

The Japanese Tokyo Shimbun Tuesday released the following report titled “Close to setting up economic zone on DPRK-China border:”

The Presidium of the Supreme People’s Assembly of the DPRK Monday promulgated a decree on setting up the Hwanggumphyong and Wihwa Islands Economic Zone in the border with China. It was reported that the sovereignty of the DPRK would be exercised in the zone and the development of the zone would start from the Hwanggumphyong district.

Both Hwanggumphyong and Wihwa Islands are within the territory of the DPRK along the River Amnok flowing along the DPRK-China border. It was basically agreed to develop Hwanggumphyong by the joint efforts of the DPRK and China. A ground-breaking ceremony is expected to take place within one or two days.

The project for building the DPRK-China Amnokgang Bridge which started at the end of last year is making brisk headway on the river. It seems that a discussion on the above-said zone was held during the China visit by General Secretary Kim Jong Il in May and it is likely to put greater impetus to economic cooperation between the DPRK and China and development of the border area with the decision as an occasion.

The SPA Presidium of the DPRK, explaining the reason for setting up the economic zone, said it was to boost the traditional DPRK-China friendship and expand and develop external economic relations.

South Korean CBS released similar news on the same day.

In a separate note, it is nice to hear the construction on the second Yalu River bridge is “making brisk headway”.  The north Korean media has not reported on the bridge in some time.  The bridge does not run through any of the newly created Special Economic Zone.

UPDATE 4 (2011-6-5): According to the Donga Ilbo, the groundbreaking ceremony is supposed to take place tomorrow (Tuesday).  On Thursday a groundbreaking ceremony is scheduled for Rason.

UPDATE 3 (2011-5-30): The groundbreaking ceremony was cancelled.  It is unclear when development will begin. According to the Choson Ilbo,

There has been no official comment from China, but a ground-breaking ceremony for the development scheduled for Saturday has been cancelled, apparently because China had second thoughts. “Since last year, I’ve had business officials from other regions like Tianjin and Qingdao, asking me whether there’s any vacant office spaces for rent,” said a business owner in Dandong.

But people in Dandong have not lost all hope of potential development of the area. One Chinese businessman who has traded with North Korea since the 1990s, said, “Business projects with North Korea usually take a long time to materialize, and talk of developing Hwanggumphyong and Wihwa islands have been around for a long time, so I feel they will happen someday.”

Other major projects are already under way in Dandong. The Chinese city plans to build a new city in the Langtou area to house 200,000 people by 2020. A bank building and high-rise apartments have already sprung up in the area, which was a barren tract of land just three years ago. And a new bridge is being built linking Langtou with the North Korean border town of Ryongchon across the [Amnok] River.

UPDATE 2 (2011-5-10): Development of Hwanggumphyong Island is reported to begin this month (May 2011).

According to the AFP:

North Korea and China will start work on developing a river island on their border this month, a report said Tuesday, amid an international drive to coax Pyongyang back to nuclear disarmament talks.

The two countries plan to hold a groundbreaking ceremony on May 28 for development of the island on the Yalu River, the South’s Yonhap news agency said.

Pyongyang has reportedly worked out a special law to set up a free trade zone on the island, which is separated by a narrow waterway from the Chinese city of Dandong.

The two sides have agreed to turn the island into a base for logistics, tourism and manufacturing that would be linked to China’s industrial complex to be built in Dandong, Yonhap said.

There is still no sign that Wihwa Island is receiving any special development.

UPDATE 1 (2011-3-30): Huangjinbing Island (mentioned below) is the Chinese name of Hwanggumphyong Island (Hwanggumpyong, Hwangkupyong, 황금평: 39.961121°, 124.316044°). The Chinese recently built a fence around this island.

Using Google Earth (39.964363°, 124.288470°) we can see both before and after satellite images of the fence construction which separates the DPRK’s island territory from the PRC’s. Dates: 2009-10-2 (Left/Before), 2010-4-5 (Right/After)

According to the Telegraph:

Fences more than 13ft [3.962 m] high, topped with barbed wire, are now being erected along an eight-mile stretch of the Yalu river around the Chinese city of Dandong. This is a popular escape point for North Korea refugees seeking food or better lives, Korea’s Yonhap news agency reported.

“It’s the first time such strong border fences are being erected here. Looks like it is related to the unstable situation in North Korea,” a resident said of the work which began last November but is ongoing.

Previously the border was only marked by a 10ft-high fence which “anybody could cross if they really wanted”, the resident added.

Fears for the stability of North Korea have been heightened in recent weeks with reports of a growing food crisis following the severest winter in 60 years and an outbreak of foot-and-mouth disease that has hit the oxen that are still mainly used to plough the North’s fields.

This week, in a highly unusual step, foreign aid agencies based in Pyongyang issued a joint statement warning that 6 million North Koreans now need urgent food aid because crops of potatoes, wheat and barley have all failed.

As an aside, at least one report claims this island has been leased to China.

Read the full Telegraph story below:
China builds higher fences over fears of instability in North Korea
Telegraph
Peter Foster
3/30/2011

ORIGINAL POST (2010-2-25): In September 2002 the North Korean government announced the Siuiju Special Administrative Region/ Special Economic Zone.  It did not end well.  The idea of implementing a Sinuiju SAR/SEZ, however, has never faded away–though it has taken different forms.

Sunuiju Version 1: The initial vision of the city, under a Yang Bin administration, was the creation of a very liberal and independent territory which would supposedly be free of Pyongyang’s dictates in exchange for tax revenue.  The Hong Kong-style “Basic Law” can be found here.

Sinuiju Version 2: In March of 2007 the North Koreans decided to move the SAR/SEZ territory out of the Sinuiju city center on two Islands in the Tumen River:  Bidan and Wihwa.

Sinuiju Version 3: In August 2007 creation of a special zone had reportedly already begun, however, this time the project is located in the Sinuiju city center (not remote islands).

Sinuiju Version 4: In January 2009 the Yomiuri Shimbum reported that the SAR/SEZ had once again moved out to  Wihwa Island.

Today Adam Cathcart emailed me a report in the Huanqiu Shibao featuring the following statement by a PRC foreign ministry spokesman :

环球时报记者段聪聪报道 2月25日,中国外交部发言人秦刚在例行记者会上就中国企业有可能获准开发两个朝鲜岛屿的事情表态:“不要混淆联合国制裁和两国正常的经贸往来。” Global Times reporter Duan Congcong reports on Feb. 25: Chinese Foreign Ministry Spokesperson Qin Gang, at a press conference, stated [the Ministry’s] position on the situation of the possibility of Chinese enterprises obtaining permission to start business on two Korean islands : “Don’t confuse U.N. Sanctions with normal bilateral trade dealings.”

据报道,朝鲜为了吸引外国投资,决定将位于中朝边境临近辽宁丹东市的威化岛和黄金屏岛定为自由贸易区域,交由中国企业进行开发。两岛的投资规模分别为5亿和3亿美元。秦刚表示,不要混淆联合国制裁和两国之间正常的经贸往来与合作。对朝鲜实施制裁,联合国的有关决议有明确的规定,规定了制裁的项目。而报道中提到的 项目属于中朝之间正常的经贸往来,并不违反联合国规定. According to the report, North Korea is attracting foreign investment, and has decided to establish a free trade zone on the islands of  Weihua [威化岛] and Huangjinbing [黄金屏岛] in the Sino-Korean border area of Liaoning’s Dandong city.  The dimensions of the two islands’ total investment will total 500 and 300 million U.S. dollars, respectively.  Qin Gang stated that it wasn’t necessary to confuse UN sanctions with normal bilateral economic dealings and cooperation.  Regarding the implementation of sanctions on North Korea, the related United Nations resolutions are very clear in their stipulations of the project.  But, the report noted, projects referring to inclusion of normal bilateral trade between China and North Korea are not forbidden by the UN stipulations.

据报道,朝鲜政府高层就比邻中国丹东的边境地区建立特别经济区方案正在进一步细化过程当中。参与此次朝鲜岛屿开发的中国丹东华商海外投资公司将组团赴朝就具体合作意向进行最后敲定。 According to the report, high officials in North Korea’s government nieghboring China’s Dandong border area are currently moving in a detailed way with establishing this special economic zone.  Participating in the development of this North Korean islands are Dandong Huashang Overseas Investment Corp. which will organize and send a delegation to North Korea in order to cooperate and move forward with final resolution.

I will call this “Sinuiju SAR: Version 5.” Wihwa Island is back, but Bidan Island has been replaced by “Huangjinbing Island.”

Additional Information

1. The Dandong Huashang Overseas Investment Corp. web page is here. (again, h/t Adam)

2. China has also reportedly approved the creation of a trade zone on its side of the North Korean border.

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DPRK-PRC summit and the outlook for bilateral economic cooperation

Wednesday, May 12th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-05-11-1
5-11-2010

As North Korean leader Kim Jong Il spent four nights and five days in China, meeting with President Hu Jintao, Premier Wen Jaibao, and other top Chinese leaders, it appears that the issue of bilateral economic cooperation was high on the agenda, and was discussed in depth.

‘Strengthening economic and trade cooperation’ was one of the five proposals for bolstering PRC-DPRK relations made by Hu Jintao during the May 5 summit meeting with Kim Jong Il, giving some indication of just how much emphasis he and Kim were putting on economic cooperation during the latest visit.

Hu stated that strengthening cooperation between Beijing and Pyongyang would help both countries build their socialist systems, and would be in their shared interests as it would further development and help to bring peace, stability and prosperity to the region. According to China Daily, the five suggestions made by Hu Jintao are as follows:

1) To maintain high-level contacts. The leaders of the two countries should keep in touch by exchanging visits, as well as sending special envoys and messages.
2) To reinforce strategic coordination. The two sides should exchange views in a timely manner and regularly on major domestic and diplomatic issues, international and regional situation, as well as on governance experience.
3) To deepen economic and trade cooperation. The relevant departments of the two governments should discuss and explore ways of expanding economic and trade cooperation.
4) To increase personnel exchanges. The two sides should expand exchanges in the cultural, sports, and educational fields, and the contacts between the youth in particular to inherit the traditional friendship from generation to generation.
5) To strengthen coordination in international and regional affairs to better serve regional peace and stability.

In response, Kim Jong Il expressed his appreciation for Hu Jintao’s heartfelt invitation and warm greeting, and agreed with Hu’s five suggestions for developing bilateral cooperation. He highlighted the construction of a new bridge over the Yalu River as the latest sign of friendly cooperation between China and North Korea, and added that he “welcomes investment in North Korea by Chinese companies and boosting bilateral working-level cooperation based on the principle of mutual prosperity.”

Economic issues were at the heart of Kim Jong Il’s meeting with Premier Wen Jiabao, as well. Following their meeting, Wen said, “PRC-DPRK economic cooperation has great potential,” and that he actively supports bilateral efforts. He stated that he had high hopes for infrastructure projects and other cooperative efforts in the border region.

He went on to say, “China actively supports North Korea’s economic development and improvements in the lives of its people,” and that he would like to introduce to North Korea “Chinese-style know-how” by sharing China’s experiences with reform and economic construction.

In October of last year, Premier Wen introduced the “Chang-Ji-Tu Development Plan” during his visit to North Korea, pushing hard for the North’s cooperation in developing the border region. That, along with North Korea’s extension of the contract giving Chinese companies access to Rajin Port and the latest talks during Kim’s visit to China give a clearer picture of the future direction of PRC-DPRK cooperative economic efforts.

The Chang-Ji-Tu plan to develop the Jilin and Tumen River regions calls for the establishment of an economic ‘beltway’ by 2020, and the revival of the antiquated industrial areas of China’s three northeastern provinces. To be successful, the plan requires North Korean cooperation on securing access to the East Sea. In 2008, North Korea granted China usage rights to Pier 1 in Rajin Port, and then signed an agreement with China last November on the joint development of the port into an ‘international distribution hub’ providing a link for China to the global market. China’s Jilin Province has already earmarked 3 billion yuan (500 billion won) for Rajin Port’s development.

This, along with the construction of a new border-crossing bridge on the Tumen River and other similar projects, reflects the infrastructure development plans for the border region. Construction on the new 33 meter-long bridge began last October, and China is bearing the burden of a 1.7 billion yuan (290 billion won) price tag. In March, China also began restoration of the bridge over the Tumen River linking Hunchun and North Korea, and is expected to move forward quickly with a road construction project linking the bridge to Rajin Port.

Another cooperative effort is focused on the development of the Hwangeum Industrial Complex, a free trade zone on Hwanggeum Island, in the Tumen River. Ryongaksan General Trading Company, which currently holds the development rights to Hwanggeumpyeong and Uihwa islands, is actively seeking to attract foreign investment. Kim Jong Il’s latest trip to China is seen by some as an opportunity to push for increased Chinese investment and assistance in developing the region.

Workers’ Party of Korea Unification Strategy Department Director Kim Yang Gong, as chairman of the Korea Taepung International Investment Group, traveled with Kim Jong Il in China, and it appears to have been in order to more strongly call for investment in North Korea, and the development of Rajin Port, in particular.

Beijing permitting North Korean sight-seeing tours and joint development in its three northeastern provinces indicates its support for the increasing pace of bilateral economic cooperation with Pyongyang.

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Sinuiju SAR: Take 4

Friday, January 23rd, 2009

sinuiju2.JPGOn September 20, 2002, the DPRK’s Supreme People’s Assembly announced the creation of the Sinuiju Special Administrative Region (SAR) (KCNA announcement here).

The project was to be headed by a Chinese-born, naturalized Dutch citizen, Yang Bin…who was arrested by Chinese authorities shortly after the Sinuiju SAR was announced.  Western analysts interpreted this move as a signal that China was not supportive of either the project or the selection of Mr. Bin as its chief executive.  Needless to say the future of the project lay in doubt.

However, according to a Yonhap report (here), as of March 2007 the North Koreans still seemed interested in launching some kind of SAR/SEZ in Sinuiju, though the location had been moved from the city proper to two islands in the Yalu River, Bidan and Wihwa.

In August 2007, IFES and the Choson Ilbo reported that preparations were already underway in Sinuiju to convert the city center into a SAR/SEZ.  However, after this initial media hit, most of the news coming out of Sinuiju was related to Jang Song Taek’s 2008 anti-corruption campaign which brought most of the trading companies along the Chinese border back under the control of the Ministry of Finance.

This week, Japan’s Yomuri reports from Shenyang, China, that the Sinuiju SAR is still on and will be located on Wihwa Island:

“The zone will only cover Wi Hwa Island, which will be much easier to control, and only Chinese will be allowed to freely visit,” one of the sources said. “The plan solely aims at expanding trade with China. North Korea isn’t planning any measures that would involve a dramatic opening up.”

According to Chinese statistics, the total value of trade between China and North Korea from January to October last year was 2.12 billion dollars, up 31.7 percent from a year earlier.

Meanwhile, a diplomatic source said, “The move to beef up border trade with China is also aimed at putting pressure on South Korea.”

(FYI: Use of the phrase “beef up” is a pretty good sign that the diplomatic source was an American.)

I know the story of “The Boy Who Cried Wolf.”  I will remain skeptical about the new SEZ until I see evidence of construction myself.

You can read the full Yomuri article here:
N. Korea plans free trade zone on island
Daily Yomuri
Toru Makinoda
1/23/2009

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Development kicks off in DPRK’S Sinuiju special economic zone

Tuesday, August 7th, 2007

Institute for Far Eastern Studies
NK Brief No. 07-8-7-1
2007-8-7

According to a recent report from a North Korean insider, the border city of Sinuiju, in North Pyongan Province, was redesignated as a ‘Special Economic Zone’ in the first part of this year, and accordingly, full-fledged city development has been underway since last June, including the relocation to the city of 3000 families from Pyongyang.

The “NK Chosun” reported that this development was revealed by a North Korean official during a meeting with an associate in Dandong while on a recent visit to China. The official was quoted as stating, “Pyongyang citizens are being temporarily transferred to Sinuiju because they are ideologically prepared.” The official went on to share that the Pyongyang residents being moved to Sinuiju are the laborers that will work in the industrial zone, state security officials, police, and their families.

According to the associate in Dandong, “due to rumors of the relocation of Pyongyang residents, real estate prices in the Sinuiju area are skyrocketing.” While DPRK authorities are instituting a plan to relocate Pyongyang residents to Sinuiju, at the same time 3000 Sinuiju families are being banished from the city. Rumor has it that Sinuiju police and security forces have begun identifying residents with problematic blood lines and those considered to have ideological problems and announcing lists of ‘purgees’.

Even as large scale aggregate gathering at the mouth of the Yalu River is growing, all residents living in the vicinity of the Sinuiju train station were removed and barbed wire and dirt walls were set up around the outskirts of the area following its designation as a ‘Special Economic Zone’.

One DPRK source in Dandong stated, “The past plan for the Sinuiju Special Economic Zone promoted by Chinese [businessman] Yang Bin aimed to make money through a casino and entertainment facilities, but this time, according to the directives of Chairman of the National Defense Commission Kim Jong Il, a city is to be constructed that can fulfill the role of Kaesong Industrial Complex as well as Rajin-Sunbong .”

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DPRK taking steps to launch new economic area in Sinuiju

Thursday, August 2nd, 2007

According to the Choson Ilbo (2007-8-2):

North Korea early this year declared Shinuiju, a border town in North Pyongan Province, a special economic zone, North Korean officials said. Some 3,000 households in Pyongyang are to be relocated to Shinuiju under an urban development project launched there in June.

During a recent visit to China, a North Korean official told an official from the Chinese border city of Dandong the North will relocate Pyongyang citizens to the Shinuiju Special Economic Zone since they are “ideologically prepared.” Some will be assigned as workers to an industrial complex, who will be joined by officials from the Ministry of Public Security and the State Security Department, and police officers and their families.

A Dandong official said, “I understand that housing prices in the Shinuiju area have skyrocketed due to rumors that Pyongyang citizens will move in.” He said North Korean authorities plan to evict 3,000 households from Shinuiju to the city’s suburbs to make room for the newcomers. Public and state security officers in Shinuiju have begun making a list of those with dubious backgrounds and who are ideologically suspect, which rumor has it will result in a roster for eviction.

Meanwhile, the Yalu River estuary is being dredged and all private houses near Shinuiju Railway Station are being demolished, while the special economic zone is being surrounded new by barbed-wire tangles and fences.

A North Korean source based in Dandong said an earlier Shinuiju special economic zone project promoted by Yang Bin, a Chinese, was aimed at making money through casinos and entertainment facilities. But on North Korean leader Kim Jong-il’s instructions, the current project is designed to build a city that can play the same role as both the Kaesong Industrial Complex and the Najin-Sunbong Free Trade Zone.

Read the full story here:
N.Korea Starts Clearing Special Economic Zone
Choson Ilbo
2007-8-2

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The North Korean Economy: Between Crisis and Catastrophe

Thursday, May 3rd, 2007

American Enterprise Institute Book forum
4/17/2007

A couple of weeks ago, I had the opportunity to attend a book forum at the American Enterprise Institute on Nicholas Eberstadt’s new book, The North Korean Economy: Between Crisis and Catastrophe.  It was very informative to hear three different perspectives on the direction of North Korea’s economic reform.

Panelists included:

Nicholas Eberstadt, AEI
Andrei Lankov, Kookmin University
Deok-Ryong Yoon, Korea Institute for International Economic Policy

In summary, Mr. Eberstadt and Mr. Lankov are pessimistic about the North Korean leadership’s desire to enact reforms–knowing that information leakages will undermine their political authority.  As Mr. Lankov pointed out, the North Korean nomenklatura are all children and grandchildren of the founders of the country who are highly vested in the current system.  They have no way out politically, and as such, cannot reform.

They argue that the economic reforms enacted in 2002 were primarily efforts to reassert control over the de facto institutions that had emerged in the collapse of the state-run Public Distribition System, not primarily intended to revive the economy.  Lankov does admit, however, that North Korea is more open and market-oriented than it has ever been, and  Mr. Yoon was by far the most optomistic on the prospects of North Korean reform.

Personally, I think it makes sense to think about North Korean politics as one would in any other country–as composed of political factions that each seek their own goals.  Although the range of policy options is limited by current political realities, there are North Koreans who are interested in reform and opening up–even if only to earn more money.  In this light, even if the new market institutions recognized in the 2002 reforms were acknowledged only grudgingly, they were still acknowledged, and their legal-social-economic positions in society are now de jure, not just de facto.  The North Korean leadership might be opposed to wholesale reform, but that is economically and strategically different than a controlled opening up on an ad hoc basis–which is what I believe we are currently seeing. Anyway, dont take my word for it, check out the full commentary posted below the fold:

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Sinuiju SAR/SEZ version 2: Bidan and Wihwa islands

Friday, March 23rd, 2007

According to Yonhap:

North Korea is considering establishing a special economic zone on two small islands bordering China to help resuscitate its moribund economy, a South Korean source said Friday.

The North has been pushing to form a free trade zone on the Bidan and Wihwa islands on the Yalu River on the western border between North Korea and China, and has sounded out South Korean companies on their investment plans for the area, the source privy to inter-Korean economic projects said.

“The North has been mulling building the zone since early last year but hasn’t made headway in the wake of its nuclear test. The idea is being considered again now, however, as conditions became favorable following the Feb. 13 agreement,” the source said on condition of anonymity.

The source referred to a landmark six-party agreement in which North Korea promised to begin dismantling its nuclear programs in return for aid. The agreement, signed by the two Koreas, the U.S., China, Russia and Japan came four months after the North defiantly tested a nuclear weapon, prompting worldwide condemnation.

The economic zone is to specialize in such sectors as trade, distribution, light industries, tourism and finance, the source said.

In 2002, the North designated Sinuiju, a city bordering China, as a special economic zone, but the plan fell through after Beijing arrested its governor Yang Bin, a Chinese-Dutch entrepreneur, on bribery and kickback charges. Since then, the plan has been put on hold amid the North Korean nuclear standoff and China’s alleged opposition.

North Korea has been resorting to outside handouts since mid 1990s, when its state-controlled economy collapsed due to mismanagement and natural disasters.

Read the full story here:
N. Korea considering building special economic zone on two islands
Yonhap
3/23/2007

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Chinese Entrepreneurs Poised to Pounce on North Korean Border

Thursday, March 8th, 2007

Bloomberg
Bradley Martin, Allen Cheng
3/6/2007

Chinese entrepreneur He Ho was burned by his first North Korean investment, a bakery in the shabby border city of Sinuiju. He lost his entire $20,000 when the plan to make the city a special economic zone stalled in 2003.

If another opportunity comes along, though, “I’ll be the first to go in,” the 34-year-old said in an interview in Dandong, the bustling Chinese city facing Sinuiju across the Yalu River. “North Korea’s a good investment because so many things are lacking.”

Business executives in Dandong, one of the main conduits for trade in and out of North Korea, see opportunity in the recent six-nation agreement to end Kim Jong Il’s nuclear-weapons program. They think the 65-year-old North Korean leader will now focus on fixing his country’s nearly flattened economy and may revive plans for a special economic zone — an area designed to promote foreign investment, with fewer rules and regulations than elsewhere in the country — on the western border with China.

“Most of North Korea’s trade with China is via Dandong, so a special zone in this corridor could make sense,” said Marcus Noland, senior fellow at the Peterson Institute for International Economics in Washington. “This could be the North Korean equivalent of the Chinese coastal SEZs in the early years of the Chinese reform.”

No Guarantee

There’s no guarantee against another disappointment for entrepreneurs like He Ho, said Peter Beck, Seoul-based Northeast Asia project director for the International Crisis Group, a Brussels-based organization that works to resolve crises around the world.

“The eternal optimist in me hopes that Kim will see the light and recognize the direction in which he needs to lead the economy,” Beck said in a telephone interview. “But the jury’s still out.”

At the same time, “the North Koreans have been talking about putting a special economic zone in the far northwest aimed at China for a decade,” said the Peterson Institute’s Noland. “If they get the politics right, this venture could work.”

China is North Korea’s top trading partner, with 2006 exports of $1.23 billion and imports of $468 million, according to its Ministry of Commerce.

A little over a year ago, Kim visited six booming Chinese cities, including the special economic zone of Shenzhen, bordering Hong Kong. North Korea’s Central News Agency described the nine-day trip as a visit to places “where the cause of modernization is being successfully carried out.”

Executives’ Speculation

Business executives in Dandong speculate that North Korea will develop a new zone in Cholsan County, a peninsula on the east side of the mouth of the Yalu some 50 to 60 kilometers (31 to 37 miles) south of Dandong and Sinuiju. China’s commerce and foreign ministries and North Korea’s embassy in Beijing didn’t respond to faxed requests to comment on their plans.

In 1991, North Korea built a special economic zone at Rajin-Sonbong, in the remote northeast of the country, which has failed to attract much foreign investment because of its location.  Another zone near the southern border at Gaeseong, only 60 kilometers from Seoul, has proven more popular, especially with South Korean manufacturers in search of low-cost labor.

In 2002, North Korea announced plans for the zone in Sinuiju, which would have included export factories and casinos to lure gamblers from China. Kim named Dutch-Chinese businessman Yang Bin governor of the zone. China, which hadn’t given its approval, squelched the plan by arresting Yang and jailing him in 2003 on charges of fraud and illegal land use.

Strained Relations

Kim’s test of a nuclear device in October, which strained relations with the Beijing government, didn’t halt commerce on the border, according to Shen Yuhai, general manager of Dandong Jade Ocean Trade Co. “We didn’t stop trading at any time,” he said in a recent interview.

Shen’s office overlooks a busy parking lot where Chinese customs officials examine trucks departing neon-lit, high-rise Dandong for the run-down and darkened Sinuiju.

The trucks cross on the Friendship Bridge’s single lane in the morning with manufactured goods and return in the evening, either empty or carrying minerals, silkworm cocoons and seafood, Shen said. Four trains a week cross in each direction, connecting the North Korean capital of Pyongyang with Beijing.

China is supplying its neighbor with “daily necessities, home electrical appliances and, in this season, farming tools and chemical fertilizer,” said Shen.

While business is booming, he said he’s still cautious about the risks. He requests payment in yuan, dollars or euros, not North Korean won, and accepts bank transfers only after business relations have been established.

Even then, he said, “sometimes we are cheated.”

–With additional reporting by Hideko Takayama in Tokyo and Lee Spears and Dune Lawrence in Beijing.

For a copy of a list of banned goods to North Korea: http://www.state.gov/t/isn/76138.htm

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