North Korean Economy Watch

According to Yonhap:

North Korea’s trade volume with China jumped nearly 20 percent in January, compared to the same period last year [January 2011], a report said Friday, indicating sustained bilateral economic relations.

Citing data released by China’s Ministry of Commerce, U.S. broadcaster Voice of America said trade between China and North Korea reached US$418 million in the cited month, up 18 percent from a year ago.

The North’s January exports to China reached $139 million, an on-year increase of 7 percent, while imports expanded 24 percent to $278 million, according to the report.

Coal was the North’s biggest export item for the Chinese market, totaling $70 million, it added.

Here is a link to the original VOA article.  Hat tip to a friend.

Read the full story here:
N. Korea-China trade jumps 18 pct in Jan.: report
Yonhap
2012-3-2

According to the Daily NK:

The North Korean authorities are expediting the issuance of exit permits for people wishing to visit relatives in China but who agree to return to the country with one ton of food within 40 days. A considerable number of people have obtained permits on this basis in the last week, according to a source who spoke with Daily NK yesterday.

The source, from North Hamkyung Province, told Daily NK, “At the start of last week, my people’s unit head advised us, ‘Anyone able to return to the country with a ton of rice before April 5th should apply for a short-term exit permit to the National Security Agency now.’”

The source added, “More than 20 people per day are crossing over into China via Namyang Customs House after getting prior approval this way in Chongjin, Myongchon and Kilju. Others are finding lodgings in Onsung to wait their turn.”

The permit issuance policy is being implemented nationwide, according to information received by Daily NK. Many people are said to be departing via customs facilities both in Hyesan and further west in Shinuiju under the same deal.

Provincial branches of the Party are keen to issue the permits because they are under pressure to provide special food distribution for the 100th anniversary of Kim Il Sung’s birthday on April 15th, a responsibility Pyongyang is said to have passed on to the provinces in its entirety.

According to the source, the NSA’s provincial anti-espionage head has been telling travelers attending a briefing at the border control office there that their trips “have been made possible by the compassion of Kim Jong Eun,” and threatening that anybody minded to overstay their permit or who is unable to meet their food quota upon their return will be barred from leaving the country indefinitely.

Usually, exit permits are granted on the following basis: ▲ a maximum of 5 degrees of separation between inviter and applicant; ▲ a maximum stay of 3 months; ▲ a minimum of one year between permits. However, this time the authorities are reportedly allowing travelers who have already visited China within the last year to reapply.

Though rare, the policy shift is not unprecedented. For example, a similar pact with would-be permit recipients was offered by the authorities immediately after Kim Jong Il’s trip to China in May, 2011.

Such a loosening of border controls comes with a number of side-effects, not least that it brings down prices in the jangmadang, offering a valuable boost to individual purchasing power.

As such, kilo of decent rice was selling for 3,200 North Korean won early last week in Chongjin, a source from the city told Daily NK yesterday, but as of Monday this had fallen to 3,000 won, with 1 Chinese Yuan dropping from 605 to 600 North Korean Won.

“Given the situation, ordinary people are happy that the price of rice has fallen,” the source commented. However, he added, there is a high degree of skepticism in the market about how many of the travelers will actually return when the time comes.

Read the full story here:
NK Trading Exit Permits for Rice
Daily NK
Lee Seok Young
2012-2-28

UPDATE 1 (2012-2-28): The Japanese police have raided the heaquarters of Chongryun (Chosen Soren), the Pro-DPRK General Association of Korean Residents in Japan, over its alleged ties to the computer smuggling ring. According to the BBC:

Japanese police have raided the offices of a pro-North Korean organisation suspected of a role in the illegal shipment of computers to North Korea.

Japan maintains a total ban on exports to North Korea.

It is part of a range of sanctions over North Korea’s nuclear programme and its abduction of Japanese nationals in the 1970s and 80s.

Earlier this month police arrested a businessman accused of exporting PCs to North Korea through China.

On Tuesday, about 100 riot police entered the Tokyo offices of an organisation connected to the Pyongyang-affiliated General Association of Korean Residents in Japan, officials say.

Because there are no diplomatic relations between the two countries, the association has functioned as North Korea’s de facto embassy in Japan.[

The raid came after prosecutors last week indicted Lee Soon-Gi, 49, who is accused of illegally exporting 100 second-hand personal computers to North Korea through China, officials said.

The affiliate organisation may be involved in the shipments, police say.

But the association has strongly criticised the raid which it described as an “unjustified and illegal investigation”.

ORIGINAL POST (2012-2-19): According to the Yomuri Shimbun:

The president of a Tokyo-based dealer in secondhand personal computers exported more than 4,000 items to North Korea, according to investigation sources.

Many of the items are believed to have been sold on the black market to senior members of the ruling Workers’ Party of Korea, the sources said.

Lee Sungi, president of Popura-Tec, was arrested earlier this month by the Metropolitan Police Department’s Public Safety Department on suspicion of violating the Foreign Exchange and Foreign Trade Law.

The 49-year-old has been arrested on suspicion of exporting 100 notebook computers to North Korea. In addition, Lee has told police that he shipped more than 4,000 personal computers and liquid-crystal displays to that country on four occasions from 2008 to 2009.

A North Korean trading company based in Dalian, China, brokered the deals, selling the products to a computer shop in Pyongyang, the sources said.

The shop was run by a North Korean computer engineer who once worked at a Chinese company as a software developer. He reportedly contacted Lee in March 2007, saying: “There’s demand for about 1,000 personal computers a month [in North Korea]. I’m interested in buying Japanese products,” according to the sources.

E-mails he sent to Lee suggested there were hundreds of computer shops throughout North Korea, of which 20 were in the capital. However, most of the country’s computer users do not use these shops because they cannot afford to buy their products.

Instead, they usually buy their computers through the black market, the sources said.

Most of the personal computers Lee exported from Japan were secondhand products, including some that had been leased to central and local government offices, according to the sources.

The North Korean computer engineer reportedly sold about 500 products per month to the black market, setting prices at 200 dollars or less for a desktop computer, and a maximum of 300 dollars for a notebook computer, the sources said.

This was still expensive for North Korea, which meant only senior members of North Korea’s ruling party and other wealthy individuals could purchase them, according to the sources.

It is reportedly common for North Korean computer users to buy new products when their items break down because there are almost no after-sales services in the country, according to the sources.

On February 2, 2012 we learned about a separate PC smuggling ring which moved computers from Japan to the DPRK.

Read the full story here:
4,000 PCs, displays said exported to North Korea
Yomuri Shimbun
2012-2-19

According to the Daily NK:

The largest of a collection of overseas restaurants run by the North Korean authorities,‘Pyongyang Koryogwan’ opened for business in Dandong, China on Thursday. An opening ceremony was held in front of the restaurant, which is located at the entrance to Dandong’s development zone.

The ribbon-cutting, which lasted for 30 minutes beginning at 9:30AM, included North Korean and local Chinese government officials, the restaurant management team and more than 50 female staff members, over 100 people in total. Staff must have been freezing after spending the whole time in Korean traditional dress despite sub-zero temperatures.

The restaurant is staffed by more than 200 workers from North Korea, 120 of whom are general staff, with the remainder working in the kitchens or on administrative tasks. The menu is mostly a collection of different sets, with the cheapest item being cold noodles at around USD$4.75.

Read the full story here:
Dandong Opening for New NK Restaurant
Daily NK
Choi Cheong Ho
2012-02-17

In February 2011 I posted reports that the DPRK’s west coast was experiencing record-low temperatures and the ports were frozen. Unfortunately for the North Korean people, history is repeating itself.

Pictured above (Yonhap): two satellite images of the DPRK’s west coast

According to the Donga Ilbo:

North Korea`s fisheries and shipping industries, two key earners of foreign currency for Pyongyang, have effectively been shackled due to a prolonged cold wave that has frozen waters in the Yellow Sea.
With the temperature reaching minus 10 degrees Celsius for more than a month, more than 40 kilometers of sea water in the Yellow Sea off the North`s coast have been frozen. This is the first time in decades that about 200 kilometers of the North`s coastline from the mouth of the Yalu River to the North`s Hwanghae provinces have been frozen.

Experts say the frozen water will not only affect the North’s fisheries and shipping industries, both of which are major earners of U.S. dollars, but also the Stalinist country`s economy and newly launched Kim Jong Un administration.

Massive ice blocks cover 200 kilometers of N. Korean coastline

In Seoul, the Korea Center for Atmospheric Environment Research and the Korea Meteorological Administration said Thursday that based on analysis of satellite images, massive ice 40 kilometers wide was detected in North Korean coastlines spanning 40 kilometers from the mouth of the Yalu River to coastal waters off Pyongyang.

According to the analysis, Korea Bay located in between the North’s Cholsan and Changyon peninsulas has remained frozen since Jan. 10 due to the cold wave. Coastal waters of Unryul County in South Hwanghae Province, the Chongchon River flowing into Korea Bay, and the port of Nampo at the mouth of the Daedong River running through Pyongyang are also covered with ice.

Chung Yong-seung, director of the environmental think tank, said, “In the past, waters off the North Korean coast used to be frozen. But the formation of such large-scale ice is unprecedented.”

Experts blame arctic ice moving south due to global warming for the ice formation.

North Korea has been hit by a severe cold snap this winter. According to the South Korean weather agency, the North’s average temperature last month was minus 8.4 degrees, 0.7 degrees lower than in an average year.

The Chosun Shinbo, the official newspaper of the pro-Pyongyang Federation of Korean Residents in Japan, recently said, “Temperatures in Pyongyang remained below zero from Dec. 23 last year through Jan. 31, the most extreme cold since 1945,” adding, “North Koreans can even walk on the Daedong River.”

Temperatures in the North fell further this month to minus 11.1 degrees on average, down 4.6 degrees from an average year.

Big burden on N. Korean gov

The ice formation in North Korean waters is pressuring the Kim Jong Un administration economically, experts said. The combined share of fisheries and agriculture in the North`s GDP is 20.8 percent, eight times higher than for South Korea (2.6 percent). Fisheries also play a key role in sustaining the North`s economy with catch volume reaching 630,000 tons a year.

Pyongyang`s dollar earnings have also been hit hard due to the frozen sea that has prevented fishing boats from leaving ports. Goh Yoo-hwan, head of the (South)Korean Association of North Korean Studies, said, “The North should export primary products such as fisheries goods, but no fishing operations due to the frozen water will take a huge toll on the North`s dollar earrings.”

Waters near China’s Liaodong Bay and Russia’s Vladivostok have also been frozen, causing the North’s maritime transportation to go awry. Due to soured inter-Korean relations, the North`s trade with the South and Japan has declined and raised the Stalinist country’s dependence on China to 56.9 percent.

Kim Yong-hyeong, a professor of North Korean studies at Dongguk University in Seoul, said, “If the ice formation in waters wreaks havoc on the North’s maritime transportation, this will destabilize the North Korean economy.”

The problem is that ice at sea is growing thicker. The National Meteorological Satellite Center in Seoul said the boundaries between ice blocks and waters in the North’s section of the Yellow Sea were vague last month, but grew clear this month with ice getting thicker.

Director Chung of the environmental think tank said, “Given North Korea’s weather conditions, the ice in the sea will grow thicker through early next month,” adding, “North Korean society will be hit hard if its fisheries and shipping industries are grounded for more than two months.”

And just how productive is the DPRK’s fishing sector?  According to Yonhap:

Chung Yong-seung, head of the research institute, said it is rare for the port to freeze two winters in a row, a development he said could have a negative impact on the North’s fishing industry.

North Korea’s catch reached 663,000 metric tons in 2009, the latest year for which statistics are available, according to the South Korean government data.

Read the full reports here:
N. Korea’s largest port frozen for 2 straight winters
Yonhap
2012-2-10

Extended cold wave freezes key NK sectors of fisheries, shipping
Donga Ilbo
2012-2-10

According to the Choson Ilbo, China-N.Korea trade has reached a historically high level (as it does nearly every quarter).

China’s trade with North Korea has tripled since 2005. According to the Korea Trade-Investment Promotion Agency (KOTRA), Chinese customs statistics show that China has been bumping up its trade with the North by US$1 billion every three years since the middle of the last decade.

After first breaking past the $1-billion trade barrier in 2005, China posted $2 billion in 2008 and over $3 billion last year. Minerals, machinery and cars topped the list of exports, and two-way trade last year reached its all-time peak of $5 billion.

Additional Information:
Read the full story here:
China-N.Korea Trade Reaches All-time High
Choson Ilbo
2012-2-9

According ot the Donga Ilbo:

About 10,000 tons of fruit have been exported every year to North Korea via the Chinese city of Dandong in Liaoning Province, which borders the North at the estuary of the Yalu River.

Fruit imports for the North`s elite have reportedly posted double-digit growth over the past five years despite severe food shortages in the Stalinist country.

An informed source in Dandong said Monday, “About 10,000 tons of fruit were exported to North Korea via Dandong Marine Center last year,” adding, “They were worth 100 million yuan (16 million dollars).”

Shipments to North Korea have grown about 15 percent per year on average over the past five years, the source said.

Fruits exported to the North include the different varieties available in China, including subtropical and tropical types such as bananas, pineapples, litchis, dragon fruit and durians as well as apples, tangerines and watermelons.

The source said fruit exports surge just before major North Korean holidays, including Feb. 16 (the birthday of the late North Korean leader Kim Jong Il) and April 15 (the birthday of North Korea founder Kim Il Sung).

“Fruit exports significantly increased ahead of Christmas Day in the past, but there was no notable change in exports last year due to the death of Kim Jong Il,“ the source said.

North Korea does not celebrate Christmas but fruit exports usually increased because Dec. 24 marks the birthday of Kim Jong Il’s biological mother Kim Jong Suk. The shipments are sent to Pyongyang for use at events or consumed by the power elite. Payment is made mostly with U.S. dollars, but the yuan is often used to settle accounts.

The Dandong city government also established an agency in charge of fruit exports to the North. Liaoning Province announced on its website Thursday that a center for market purchase of exported fruits for border area trading was set up in Dandong.

The purpose of the market is for Dandong to supply fruit to meet growing demand in North Korea, and assure the quality and safety of them.

Furthermore, the agency aims to manage chaotic fruit export markets for North Korea. In Dandong, a number of fruit stores targeting trade with the North rather than sale to residents are reportedly operating.

One fruit vendor said, “We`re shipping fruit via vehicles that regularly travel back and forth to and from Shinuiju and Dandong.”

The center is designed to control and manage the overall fruit export market to the North, including fruit exports by such small merchants. From now on, all fruit exports to North Korea will be reportedly be sent through this center.

The center is a subsidiary of Dandong Guopin Co. Ltd., a state-run company established by Dandong. It has a system worth 10 million yuan (16.4 million dollars) designed to enhance capacity in sorting, refrigeration, packaging, inspection and transport of fruits.

The center has taken charge of about half of fruit shipments from Dandong to North Korea every year, and its office is in Dandung Marine Center.

Read the full story here:
Chinese city exports $16 mln worth of fruit to N.Korea yearly
Donga Ilbo
2012-2-6

According to the Donga Ilbo:

About 10,000 tons of fruit have been exported every year to North Korea via the Chinese city of Dandong in Liaoning Province, which borders the North at the estuary of the Yalu River.
Fruit imports for the North`s elite have reportedly posted double-digit growth over the past five years despite severe food shortages in the Stalinist country.

An informed source in Dandong said Monday, “About 10,000 tons of fruit were exported to North Korea via Dandong Marine Center last year,” adding, “They were worth 100 million yuan (16 million dollars).”

Shipments to North Korea have grown about 15 percent per year on average over the past five years, the source said.

Fruits exported to the North include the different varieties available in China, including subtropical and tropical types such as bananas, pineapples, litchis, dragon fruit and durians as well as apples, tangerines and watermelons.

The source said fruit exports surge just before major North Korean holidays, including Feb. 16 (the birthday of the late North Korean leader Kim Jong Il) and April 15 (the birthday of North Korea founder Kim Il Sung).

“Fruit exports significantly increased ahead of Christmas Day in the past, but there was no notable change in exports last year due to the death of Kim Jong Il,“ the source said.

North Korea does not celebrate Christmas but fruit exports usually increased because Dec. 24 marks the birthday of Kim Jong Il’s biological mother Kim Jong Suk. The shipments are sent to Pyongyang for use at events or consumed by the power elite. Payment is made mostly with U.S. dollars, but the yuan is often used to settle accounts.

The Dandong city government also established an agency in charge of fruit exports to the North. Liaoning Province announced on its website Thursday that a center for market purchase of exported fruits for border area trading was set up in Dandong.

The purpose of the market is for Dandong to supply fruit to meet growing demand in North Korea, and assure the quality and safety of them.

Furthermore, the agency aims to manage chaotic fruit export markets for North Korea. In Dandong, a number of fruit stores targeting trade with the North rather than sale to residents are reportedly operating.

One fruit vendor said, “We`re shipping fruit via vehicles that regularly travel back and forth to and from Shinuiju and Dandong.”

The center is designed to control and manage the overall fruit export market to the North, including fruit exports by such small merchants. From now on, all fruit exports to North Korea will be reportedly be sent through this center.

The center is a subsidiary of Dandong Guopin Co. Ltd., a state-run company established by Dandong. It has a system worth 10 million yuan (16.4 million dollars) designed to enhance capacity in sorting, refrigeration, packaging, inspection and transport of fruits.

The center has taken charge of about half of fruit shipments from Dandong to North Korea every year, and its office is in Dandung Marine Center.

Read the full story here:
Chinese city exports $16 mln worth of fruit to N.Korea yearly
Donga Ilbo
2012-2-6

According to Yonhap:

…

A North Korean economic quarterly has stressed the importance of commercials to help promote the country’s exports, which rely heavily on China.

…

“We should promote our economic prowess abroad and decisively increase exports of products by taking advantage of commercials in foreign trade,” North Korean quarterly magazine, Economic Research, reported in its October edition, a copy of which was obtained by Yonhap News Agency.

The publication, which mostly deals with the North’s economic policies, said exports should contribute to achieving the country’s stated goal of ushering in a prosperous nation by this year.

The year 2012 has political significance to North Korea as it marks the centennial of the birth of the country’s founder Kim Il-sung, grandfather of current leader Kim Jong-un.

…

The quarterly also called for high quality commercials to penetrate capitalist markets and increase exports of its products.

The North’s move came more than two years after an earlier short-lived experiment with commercial advertising.

In July 2009, the North’s television aired commercials that showed young women in traditional clothes serving frothy mugs of Taedonggang beer, billed as the “Pride of Pyongyang.”

Other products, including ginseng and quail, soon appeared in television advertisements, fueling speculation the isolated country may start to embrace a capitalist mode of life.

However, the commercials disappeared a month later when then-leader Kim Jong-il sacked his television point man in anger over what he described as aping China’s early reforms.

China has repeatedly pressed the North to follow in its footsteps in embracing reform similar to that which lifted millions of Chinese out of poverty and helped Beijing’s rise to become the world’s second-largest economy.

Additional Information:

1. Here is a link to the infamous Taedonggang Beer Commercial and a longer ten-minute infomercial. Here is the ginseng advert. Here is the quail advert. Yonhap reported that Kim Jong-il was unhappy with these ads.

2. The only commercial billboards that appear in Pyongyang are those for the Phyonghwa Motors vehicles produced domestically by a joint venture deal with the Unification Church.  See one of these billboards here.

3. There is apparently a Korea Advertising Company.

Read the full story here:
N. Korea calls for high quality commercials to boost exports
Yonhap
2012-2-3

Pictured above: Korea Computer Center, Pyongyang (Google Earth)

According to Mainichi Daily News:

Prosecutors indicted two executives of small trading houses in Nagoya and Tokyo on Wednesday on charges of exporting used personal computers to North Korea in violation of Japanese government trade sanctions.

Lee Mun Ryang, 61, in Nagoya, and Kaoru Morino, 44, in Tokyo, allegedly exported used PCs and other items worth a total of 8.2 million yen to North Korea in June and December 2010, according to the Osaka District Public Prosecutors Office.

The exported goods are believed to have been delivered to the Korea Computer Center, North Korea’s governmental information technology research center set up by late North Korean leader Kim Jong Il.

Both Lee and Morino were quoted by prosecutors as saying they knew that the goods would be delivered to the KCC.

Japan has imposed a total ban on exports to North Korea since June 2009 in protest at its nuclear program.

Lee and Morino began exporting daily necessities to North Korea in 2006, according to investigative sources.

Additional Information:

1. Martyn Williams also wrote about this.

2. In 2010 The Japanese also arrested an individual for exporting pianos to the DPRK.

3. The North Koreans just released several Japanese they were holding.

Read the full story here:
2 executives indicted over PC exports to N. Korea
Mainichi Daily News
2012-2-2