North Korean Economy Watch

Daily NK
Yoo Gwan Hee
5/14/2010

A source in North Korea has told The Daily NK that fertilizer shortages near the North Korean border have been alleviated by imports arriving from China.

“Chinese fertilizer has been imported through Hoiryeong. It was not done officially by the authorities, but by trade enterprises. They imported fertilizer in bulk and then sold it to the markets,” the source, who lives in the city, told The Daily NK yesterday.

Therefore, individuals and collective farm managers are still not able to get it through the national distribution system, but can obtain it on the open market.

“In Hoiryeong, a 50kg sack of fertilizer is being sold for 200 Yuan, which is approximately 22,000 North Korean Won,” said the source. Another source from Hyesan reported to The Daily NK the day before that, in the Hyesan jangmadang, the same quantity of fertilizer was being sold for 220 Yuan.

Until late last month, sources were reporting that fertilizer was “nowhere to be seen in the market.” Before that, one source said, “We could see it in the markets, but that was left over from last year.” Then, it was going for between 30,000 and 50,000 North Korean won per 50kg sack. Now enterprises are importing it from China, its price has dropped by around half.

In North Korea, May is the month when farmers are at their busiest, or to cite a proverb, it is the period during which “even the fire-pokers bustle with activity.” Therefore, individuals and farmers are all desperately seeking fertilizer.

Lee Min Bok, a former researcher with the Agriculture Institute of North Korea, explained why. “Growth of plants at the beginning of the planting period is really important because that decides the amount of grain it produces,” he said. “Therefore, applying fertilizer is decisive for the year’s farming. In times of fertilizer shortage, a maximum of 60% productivity can be achieved.”

It has been reported that many residents living near the border and who rely mainly on small farms believe China has relieved their worries.

However, it remains to be seen whether the importation of Chinese fertilizer will have an impact on the farming process in state-owned farms. It is not possible to say at this time whether the imported fertilizer has been or will be provided to those farms.

In North Korean farms, fertilizer ought to be applied three times a year: at the beginning, middle and end of the farming process. But with unfavorable circumstances negatively affecting the supply of fertilizer since the 1990s, use has been circumscribed, and it has only been added at the beginning and end of the

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-28-1
2010-04-28

The price of rice in North Korean markets, steadily declining until the end of March, saw an upswing in April. Rising prices indicate early concerns over food shortages expected during the lean crop season of May-June.

Recently, in the Nammun Market of Hyeryeong City (Satellite image here), rice that sold for 300 Won/Kg at the end of March was priced at 500 Won/Kg, and when there were no special rations delivered on the ‘Day of the Sun’, Kim Il Sung’s birthday (April 15), rumors spread that no state rations would be forthcoming, driving market prices up further.

Pyongyang itself was not immune to the rising prices. As rations were handed to Pyongyang residents in March, rice fell to as low as 200 Won/Kg in the Seongyo Market (Satellite image here), but by April 15, it had climbed back to 300 Won/Kg with rumors of upcoming shortages.

In the past, rice prices have fluctuated due to rumors of rations and/or food shortages, but since the latest currency reform, prices have been much more susceptible to people’s emotional concerns. Daily NK has been watching rice prices in Hyeryeong’s Nammun Market since February, and concluded that as rumors of price increases spread, price tags in markets shot up, at which time sellers felt the urge to dump their goods, bringing prices back down.

Immediately following last year’s currency reforms, North Korean authorities ordered the closing of markets. These markets reopened on February 5. Authorities had also dictated that rice be sold for 24 Won/Kg, but the time markets reopened, a ‘compromise plan’ allowed prices to climb to 240 Won/Kg. Within a month (March 7), prices shot up to 1,500 Won, only to crash back down weeks later (April 2) to 300 Won. Such drastic price fluctuations indicate a limited availability of food in the markets. This kind of seesawing prices reflects a lack of trust in authorities. As residents lost faith in North Korean authorities, they tried to sell their holdings, but differences in domestic prices, exchange rates, and black markets meant severe price instability.

From December to January, restrictions on the use of foreign currency, along with a sharp drop-off in rice trading, really drove up prices. However, authorities’ restrictions on foreign currency began to waiver, and this, combined with the launch of investigations into illegal hording of food supplies by businesses and foreign trading companies, led to an influx of rice into markets, bringing prices back down.

Now, with the future of rations in question even in Pyongyang and other major cities, rice prices are again on the rise. With many people predicting that economic conditions and food supplies will be lean in the near future, market prices will likely continue to increase. In North Korea, the price of rice is an important index, reflecting economic stability.

Great reporting by the Choson Ilbo–which provides video footage (before and after) of the DPRK’s currency reform on the market  in northern Onsong.

(October 2009)

(March 2010)

Video of the market is available from the the Choson Ilbo and ABC web pages.

According to the Choson Ilbo:

Footage taken in October shows a bustling market, but the same place in March is almost deserted, with only a few traders selling goods. In October, the market was overflowing with food, clothes, shoes, cooking oils, squid and other goods. But three months after the currency debacle, only a few bags of corn are visible in the stalls. Products that were part of South Korean aid shipments to North Korea can also be spotted.

“Judging by the fact that the market was still deserted even in late March, it appears that retailers are waiting until prices go up even more,” said an official at the Unification Ministry. “The sale of goods picked up somewhat after North Korean authorities increased supply by importing products from China and other countries ahead of Kim Il-sung’s birthday” on April 15, a North Korean source said.

Onsong market before the currency revaluation used to include both roofed and open-air stalls where unauthorized merchants sold goods on mats placed on the ground. The square in front of the train station was also a bustling market where traders sold products away from the watchful eye of the authorities. But in early March 90 percent of the stalls were empty.

Pastor Kim Sung-eun of the Caleb Mission said, “If the owners of roofed stalls, who paid a fee for official approval to sell goods, disappeared, it suggests that North Korea’s middle class has collapsed.”

There was also evidence of South Korean aid products being sold in the markets. Bags of grain bearing the South Korean Red Cross symbol could be seen in various parts of the market. Some North Koreans used them as shopping bags. Goods sent as part of aid shipments by South Korea including grain bags are said to be very popular in the North. “There are rumors that high-ranking North Korean officials sold South Korean aid products in the markets, but none of them have been confirmed,” a Unification ministry official said.

“The market opens around 8:30 a.m. and closes around 7 p.m. after sunset,” said a North Korean defector from Onsong. “It’s heartbreaking to see the once bustling market so empty.”

This particular market is not visible on Google Earth.  The imagery is low-resolution and likely predates the construction of the market. See for yourself.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-20-1
2010-04-20

Ri Ki Song, a professor at the Institute of Economics, a part of North Korea’s Academy of Social Sciences, acknowledged during an interview on April 18 that the North’s currency revaluation of last November had caused some instability to unfold across the country. Professor Ri emphasized during an interview in Pyongyang with Kyoto News, “there was some temporary unrest in some areas . . . but there was absolutely no social upheaval and unstable situations were immediately controlled.”

Professor Ri, in answering questions for the Japanese news agency, was the first North Korean to acknowledge the problems caused by the reform. Regarding foreign media reports of the currency reform, Ri stated that the articles did not reflect the reality of the situation, and that the reforms had not destabilized the North Korean society. These comments were in line with those he made on April 1, when he stated at an APTN press conference, “Many people outside of North Korea have been noisily prattling on about problems emerging during exchange rate fluctuations, but there is no social unrest of the kind they speak of.”

He explained that some instability had occurred because price controls and other measures had not immediately followed the revaluation, and that “markets did not open for a few days [after the currency reform],” acknowledging that preparations for the measures had been insufficient. He also explained that following the currency reform, North Korean authorities had taken steps such as reducing prices on some foods and slashing unproductive expenditures. The government also encouraged women to take up jobs in light industry and in the service sector, and repaired the transport system. In an effort to develop the economy in 2010, the North Korean government boosted the budgets for the light industrial sector by 10.1 percent, and that of agriculture by 9.4 percent.

Professor Ri went on to say that authorities had reduced the price of a kilogram of rice from 40 won to 24 won, had lowered the price of eggs to 8 won, and had cut the prices on cooking oil and soap, as well. He added that this trend will continue for the near future.

The currency revaluation, the first of its kind since 1992, was aimed primarily at increasing the value of the North’s money and harnessing inflation, but despite the reform, the government is still managing foreign exchange rates. While keeping exchange rates under control, Ri stated that authorities could still adjust the value of the won, depending on economic developments as well as other domestic and international conditions.

In both the APTN and Kyoto interviews, Professor Ri called foreign coverage of the North’s economic situation “exceptional,” and insisted that nothing was wrong with the DPRK economy.

Andrei Lankov writes in the Wall Street Journal about the growing role women have come to play in the North Korean economy.  According to the article:

A joke making the rounds in Pyongyang goes: “What do a husband and a pet dog have in common?” Answer: “Neither works nor earns money, but both are cute, stay at home and can scare away burglars.”

North Korea is still a strongly patriarchal society, so the popularity of jokes deriding men is a surprising sign of shifting attitudes. The cause is also a surprise—women are running the country’s booming unofficial economy.

A decade ago North Korea went through a man-made social disaster which exceeds everything East Asia has experienced since Mao’s ill-conceived experiments of the 1960s. An estimated 600,000-900,000 people perished in the 1990s famine, which was largely a product of the government’s unwillingness to reform the economy. The social and economic structure of a Stalinist society collapsed. Antiquated iron mills and power plants ground to a halt, and the rationing system did not provide enough food for the average citizen to survive.

Facing this challenge, North Korean society reacted in an unusual way: It rediscovered the market economy. Unlike China, where capitalism was re-introduced from above by Deng Xiaoping and his fellow reformers, in North Korea its growth has been largely spontaneous. Nonetheless, by 2000 market exchange, both illegal and semilegal, came to play a decisive role in the lives of North Koreans.

This worried the Kim regime’s leaders, who understand full well how the marketplace undermines their political control. In recent years they launched a number of policies aimed at undermining markets. The recent currency reform was meant to deliver another blow to the markets by annihilating the capital of private businesses. It backfired, though, and the economic situation worsened considerably.

However, the nemesis of the regime, the market vendors of North Korea, are by no means the kind of street toughs one might encounter in the black markets of other countries. North Korea’s “new capitalism” of dirty marketplaces, ancient charcoal trucks and badly dressed vendors has a distinctly female face. Women are overrepresented among the leaders of the growing post-Stalinist economy—at least at its grassroots level, among the market traders and small-time entrepreneurs.

This is partly due to a distinctive feature of North Korean society. Until around 1990, markets played a very slight role in the North Korean economy. Almost everything was rationed by the state. In those days, the North Korean state required every able-bodied male to be employed by some state enterprise. However, some 30% of married women of working age were allowed to stay at home as full-time housewives.

When in the early 1990s the old system began to fall apart, men continued to go to their jobs. At first glance this might appear irrational, since most state-run factories came to a standstill, subsidized rations were not delivered and an official monthly salary would barely buy one kilo of rice.

Nonetheless, North Koreans expected that sooner or later things would eventually return to what they thought of as “normal”—that is, to the old Stalinist system. They were not aware of any alternative. They also knew from experience that people who showed any disloyalty to the state—for instance those who cooperated with South Korean authorities during the Korean War—were discriminated against for the rest of their lives. Even the children of such “unreliable elements” faced many official restrictions. So men believed that it would be wise to keep their “official” jobs for the sake of the family’s future.

The situation of women was different. They had time, and their involvement with private trade was seen as less dangerous—precisely because of the patriarchal nature of a society where only males’ behavior really mattered. In some cases women began by selling household items they could do without or homemade food. Eventually, these activities developed into larger businesses, and today at least three-quarters of North Korean market vendors are women.

For many North Korean women, the social disaster of the 1990s has become an opportunity to display their strength and intelligence. In recent months those women have become the primary target of government policies designed to destroy private enterprises. But the experience of the last two decades suggests that the women are likely to continue wearing the pants.

Read the full article here:
Pyongyang’s Women Wear the Pants
Wall Street Journal
Andrei Lankov
4/16/2010

Wall Street Journal
Marcus Noland
4/12/2010

North Korea likes to project an image of strength to the world. But back home, there is a serious economic crisis playing out that could have long-term repercussions. Historians may look back and see this as a tipping point.

The crisis originated in November, when the government sprang upon the public a confiscatory currency reform that wiped out household saving and the working capital of traders and entrepreneurs. The value of the North Korean won predictably plunged as people abandoned it for foreign currencies and even physical goods—anything that could preserve value. The second shoe dropped a month later when the state extended its war on privately held capital, banning the use of foreign currencies.

The government’s intent was to reconstitute orthodox communism. Earlier in August, North Korean leader Kim Jong-il’s sister, Kim Kyong Hui, telegraphed the move in an essay extolling the superiority of central planning over the decentralized market—even trashing the notion of giving enterprise managers greater autonomy in the context of a socialist economy. The regime’s basic motive—to crush the market and strengthen direct state control—was confirmed by central bank statements immediately after the reform.

But the policy, which was supposed to constitute the political coming out of expected heir Kim Jong-un, Kim Jong-il’s third and youngest son, unleashed extraordinary, though sporadic, protests. The government backtracked, allowed markets to reopen and in February issued an unprecedented apology. Park Nam-ki, a 77-year-old technocrat who upon becoming the Party’s economics chief allegedly vowed to end the “capitalist fantasy,” was scapegoated and reportedly executed.

Once broken, the economy may prove difficult to repair. Prices for goods such as rice, corn, and the dollar rose 6,000 percent or more after the reform. And while prices have come down from their peak as the government has relaxed some of its strictures, they are currently still 600 percent or more above their prereform levels—in spite of the money-supply contraction.

The United Nations’ Food and Agriculture Organization reports that the country is more than one million metric tons short of grain. This estimate is likely exaggerated due to faulty methodology, but anecdotal reports of hunger are emerging from returning visitors and refugee networks. It appears the government persuaded farmers in cooperatives to accept cash in lieu of half of their annual in-kind grain allotment—then rendered the bonus worthless via the currency reform. Farmers are now hoarding grain however they can: The United Nations Development Program reports that post-harvest losses amount to 30 percent. The farm economy has been severely disrupted. But unlike the 1990s famine, which was largely an urban phenomenon and killed perhaps a million people, hunger is now reported in the countryside.

The state’s response to these developments has not been reassuring. After Mr. Park was executed, he was replaced by an octogenarian, Yun Gi Jeong, known primarily as a confidante of North Korea’s founder, Kim Il-sung. The political police have been bureaucratically elevated and placed directly under the National Defense Commission, from where Kim Jong-il runs the state. This is not the behavior of a confident or competent government.

The recent missteps are particularly damaging because they are so obviously self-inflicted and nakedly incompatible with the regime’s narrative that ascribes all the nation’s challenges to hostile foreign forces. A survey of 300 North Korean refugees conducted in November 2008 by Stephan Haggard of the University of California San Diego found that respondents were increasingly accessing foreign sources of news and disinclined to accept the government’s explanations, instead holding it responsible for their plight. The currency fiasco will accelerate these trends.

Widespread disillusion, even dissent, does not guarantee mobilization, however. The same survey found that the population remains atomized and mostly fearful of communicating these views, even to friends and family. But the state can justify its hatred of the market in one respect: People participating in market activities are significantly more likely to communicate their dissent to their peers.

There is no reason to expect that this attempt to revive orthodox communism will succeed. But an influx of aid, which would allow the state to keep goods on the shelves and satisfy key constituencies, would make it easier. It is rumored that Kim Jong-il will visit China later this month and that the Chinese will extract a commitment by the North Koreans to rejoin the stalled Six Party Talks over its nuclear program.

If North Korea does agree, economic distress and the opportunity to wheedle more aid out of China and the United States may explain this change of heart. China has effectively taken up the mantle of the previous South Korean government’s “sunshine policy,” and within the US government there are already discussions of another “food for talks” swap to bring the North Koreans back to the table.

North Korea’s retrograde moves are wrecking its economy and propagating discontent among the masses. But the country is bereft of civil society institutions capable of channeling that discontent into constructive political action. Aid and repression may permit the regime to pursue anachronistic communism for some time, but the next leader will inherit an ultimately untenable situation.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-12-1
4/12/2010

As inflation and food worries continue to grow in North Korea, social unrest is palpable. According to the group ‘Good Friends’, North Korean officials slashed prices on all goods to 1/100th of their going rate in an effort to ease the public. Considering the fact that North Korea revalued its currency by the same ratio on November 30, it appears that Pyongyang is effectively acknowledging the reform’s failure.

The Good Friends newsletter reports that the Korean Workers’ Party cabinet had handed down an order to reduce the price of all goods by a factor of 100:1, while the people of North Korea were told during local meetings that currency was revalued at 100 to 1, but not in order to reduce the sale of goods by 100 to 1, as well.

It also stated that at the first cabinet meeting in March, there was discussion on the fact that it was rumored that prices had climbed several times higher than official prices, and would continue to rise. It was decided that, at first, people thought of the currency reform as a 100-fold increase in prices, and that the same was true of management in state-run organizations. Later, at the second meeting of the cabinet, it was decided that a ‘100 to 1 Price Plan’ would be distributed to each city and town.

Now, People’s Committees and security forces in each city and town are enforcing the ‘100 to 1 Price Plan’ while the central Party’s 100:1 commerce committee has distributed a class syllabus in support of the price modifications, which was lectured on throughout the country from March 16-18. This indicates that the government is again controlling all prices throughout the country.

With no goods or aid flowing in from outside, it is likely that the price and exchange rates will continue to climb. On December 9, rice sold for 23 won, but the value of the new currency falls daily, and starvation is striking people in several areas throughout the country. Anger over government policies and general feelings angst are not hard to find in families and labor groups. The government is trying to control the prices of daily necessities, but if it is unable to do so, this situation cannot avoid becoming explosive. The central government has also sent officials out to different areas of the country to enforce a rice price of 25 won/Kg. This is the highest rice sold for in markets prior to the currency reform. Enforcing the same price throughout the country is an attempt to stabilize markets, and is a temporary measure to try to keep residents’ tempers from flaring.

The November currency reform was the first currency revaluation in 17 years, and was part of a set of strong measures to restrict markets, along with market closures and bans on foreign currency. However, since last February, the inflation sparked by the currency revaluation has grown severe and internal unrest has increased, leading authorities to reopen markets and set price caps. Now, the price of rice in North Korean markets appears to have stabilized at 400 won per kilogram, but due to the unrest over the last 100 days, many middle-class residents have fallen into poverty.

Institute for Far Eastern Studies
NK Brief No. 10-04-05-1
4/5/2010

It has recently been verified that following the currency reforms at the end of last year, North Korea passed 11 laws revising and reforming the system of government control over the economy. Among these measures is a law banning the black market sales of grain.

The North’s food administration law, revised last November 3, clearly bans the black market trade and smuggling of grains, and sets the punishment for such activities as the confiscation of the grains in question. In addition, an order was passed down stating that when food supplies are rationed to a labor management office, they are to be distributed in accordance with a worker’s efforts, position, and productivity. On the same day, a new agricultural law was passed that stated if organizations and groups that were granted land for private plots failed to meet state-set harvest quotas, the plots could be confiscated.

In November and December of last year, North Korea also enacted the Real Estate Management Law, Goods Consumption Standard Law, Construction Materials Import Law, Import/Export Country of Origin Law, Waterworks Law, Labor Quantity Law, Farm Law, Sewer System Law, and the Mariner Law. Among these, the Labor Quantity Law sets the number of laborers per hourly production demands, stipulates labor contracts, and determines remuneration in accordance with worker performance. This law is unprecedented in that it allows the responsible organization or business managers or supervisors administrative and even penal authority by giving them power over labor evaluations and payment.

The Farm Law allows each farm to retain some of its harvest, and making it responsible for selling its goods to the state, while on the other hand, forbidding illegal agricultural production. This law, by strengthening state control over agricultural goods, appears to be an effort to restart the Public Distribution System.

The Real Estate Law, a mechanism to collect user fees, stipulates, “Real estate cannot be lent or left to different individuals, groups, organizations or enterprises without the permission of the applicable authority.” Along with this, the law on consumption includes a clause that links consumption of particular goods with those goods’ production in order to prevent waste, as well as a clause designed to reduce or eliminate the use of imported goods.

The law on the import of construction materials gives the government leverage in all aspects of such activity, including planning, processing, transfer, inspection, construction and testing. In addition, if someone from an enterprise or organization imports construction goods without government authorization, changes an import plan, distributes, transports, or wastes construction wares, he or she is subject to administrative punishment.

Ultimately, economic legislation enacted or revised after the currency reform appears to be aimed at strengthening the planned economic system while increasing government control over public revenue and encouraging efforts to recover without outside assistance.

Daily NK
Yoo Gwan Hee
4/5/2010

In North Korea, April 1st is commemorated as “Tax Abolition Day.” Ever since the law, “On Completely Abolishing Taxes,” was ratified through the Supreme People’s Assembly on March 21, 1974, North Korea has claimed both within and without to be the only country in the world that does not collect taxes. However, their claim is only for propaganda purposes, for North Koreans labor under a list of state-imposed taxes and duties which grows longer day by day.

Take the example of electricity. Power distribution center members in every city and town visit households in their region alongside the chairperson of the local People’s Unit, whereupon they collect electricity payments according to the number of electric bulbs and electronic equipment therein. This process is done quarterly. In the late 1990s, the quarterly electricity bill per household in Pyongyang was about 20 won. To reduce costs, of course there were people who removed electric bulbs and hid electronic equipment such as irons whenever the power distribution center had workers in their neighborhood.

Since the 2002 economic management reforms were announced on July 1, however, electricity bills have increased greatly. For families living in luxurious apartments in the Jung-district of Pyongyang with televisions, refrigerators and electric fans, households pay as much as 800 or 900 won per quarter.

After the so-called July 1 Reform Measure, troubles between the power distribution center and the people increased. The North Korean people were understandably displeased with the power distribution center, for it was trying to collect money for a utility whose availability was and remains far from regular.

Next, let’s look at reserve food and organizational expenses. North Korea has nine levels of food distribution. From 100g to 900g is supposed to be distributed per day depending on the level, but for the purpose of stocking up reserves, up to 100g is collected from the people instead. Additionally, people are forced to submit approximately two percent of their salary for organizational expenses.

Next, to support for the construction of historical sites. North Korea emphasizes the “voluntary participation” of the North Korean people under the Party apparatus and workers’ organizations. Construction of historical sites for the idolization of Kim Il Sung and Kim Jong Il is frequently organized. Also, officials often collect money from people in order to support those construction projects of which the cabinet is in charge.

Then there is free education. It is officially called “free education,” but school administration expenses are all covered by students and parents. Students have to collect waste paper, waste iron and waste rubber, or raise rabbits and submit the pelts to school. After 2000, there have even been students engaging in business around markets in order to provide supplies for submission to the school.

Onwards, then, to market stands rental fees. After the July 1 Reform Measure, the amount of tax collected at markets suddenly increased. Market stand rental fees already existed before the July 1 Reform Measure but, after 2002, market management centers started collecting market management tax as well, basing it on each product sold. Noodle sellers paid ten won per day, while soybean curd sellers paid three won.

Market stand rental fees became more systematic as well after general markets opened in late 2003. According to the product being sold and daily sales figures, market management centers charged rental fees. In present-day Nammun Market, Hoiryeong, the stand rental fee is said to have been fixed at 100 won per month.

Separate from the stand rental fee, monthly tax is charged on products for sale in the markets. For example, Nammun merchants pay additional taxes of 300 won for industrial goods, 180 won for pork, 150 for cigarettes, alcoholic drinks and fish, 120 won for food and 100 won for general merchandise.

So, while the North Korean media deliver their diet of propaganda promoting North Korea as the world’s only taxless country, be wise to the reality of the North Korean people suffering under an increasing tax burden.

Ugh…I really don’t know what to say at this point.  Depressing.

According to the Associated Press (via Forbes):

“In the early days immediately after the currency change, market prices were not fixed, so markets were closed for some days,” Ri Ki Song, a professor at the Institute of Economy at North Korea’s Academy of Social Sciences, told APTN. “But now all markets are open, and people are buying daily necessities in the markets.”

Ri was provided by the North’s government in response to a request to talk to an official who could explain its economic situation. It is very rare for North Korean officials to discuss such policies with foreign media.

Impoverished yet nuclear-armed North Korea has in recent years allowed some free markets for food and consumer items, while others not sanctioned by the state have also sprung up as the public copes with declining living standards and food shortages.

“Outside Korea, many people have been talking loudly about problems that occurred during the change of currency in our country, but there wasn’t any of the social disorder that they have been talking about,” Ri said. “Now the situation is being stabilized overall, and the economy is functioning well, thanks to some of the measures that have been taken.”

Ri insisted the government’s objective is to phase out markets completely and rely on a state-controlled network of outlets to supply its citizens.

Read the full article here.

There is no shortage of posts on the DPRK government’s growing antagonism towards markets in the last several years. 

The Heritage Foundation reminds us all that the DPRK has languished at the bottom of the international Index of Economic Freedom for years and asks, “how low can you go?”

The Daily NK tells us that times are pretty tough for many in the DPRK right now:

A source from North Hamkyung Province confirmed as much yesterday in a telephone interview with The Daily NK, saying, “Lower class people, who live from hand to mouth through the markets, have been suffering from the most serious difficulties since the redenomination.”

This is because for around two months the markets were shut down completely, and even after the markets reopened market price ceilings were adopted, so small traders and those who lived by relying on the markets were among those hit hardest, according to the source.

“Those running street-stands, alley market traders, porters and others who live by clinging to the markets mostly lost their money in the redenomination. Although markets have started to get animated again, these people are still facing difficulties due to a lack of seed money.”

The source added, “The food situation is actually dire. Despite the authorities’ program of releasing relief rice to poor households, in reality real distribution for them is not that helpful.” This is because any such state relief program is temporary, and cannot address the poorer classes’ fundamental problems.

He emphasized, “Now, people have started worrying about spring poverty, which comes every year in around May or June. In Onsung, Hoiryeong and Musan in North Hamkyung Province, the rice price has dropped to around 400 won per kilogram, but there are still so many people who cannot even afford to eat corn.”

The source gave the example of one of his acquaintances, whom he called Mr. Lee. He used to live by trading secondhand products in Musan.

Pre-redenomination, Mr. Lee managed around 200,000~300,000 won (in old value) of assets, dealing parts and used bicycle tires with his wife. However, following the currency redenomination of November 30, 2009, he was left with 1,900 won of new currency.

To make matters worse, he had only 100 kilograms of corn, which he had obtained in October. His family has been eking out that corn over the last few months.

Since February, the Musan Market resumed operations, but since prices have been unstable, not many people have wanted to buy. Recently Mr. Lee was forced to sell his one-room house to realize some capital.

As the source concluded, “The most terrible victims of the currency redenomination, market closures and inflation are lower class people in the cities. Nowadays, city residents feel lucky when they have just coarse corn.”

“In May or June, when the spring poverty period begins, the situation of the urban poor class will become even more terrible.”

Here is a satellite image of the Musan Market.