North Korean Economy Watch

In the article below, Dr. Lankov makes a compelling argument that the North Korean government is now attempting to to re-stalinize the economy because the system cannot survive liberal economic reforms.

Altough the trend seems depressing, optimists should take note that Pyongyang’s efforts to reassert control over the economy parallel a decline in belief in the official ideology.  With a deterioration of this ideology, people’s acquiescence to the DPRK’s political leaders declines, and power dynamics are all that hold the system together.  Efforts to control the general population are increasingly seen by the people as self-interested behavior on the part of their leaders, calling their legitimacy into question.

Additionally, efforts to reassert control over the economy are bound to fail because the system has already collapsed, their capital has been stripped, and there are insufficient funds to rescue the system.

In other words, efforts to re-stalinize the economy are bound to fail from both an economic and ideological perspective.

North Korea dragged back to the past
Asia Times
Andrei Lankov
1/24/2008

When people talk about North Korea these days, they tend to focus on the never-ending saga of the six-party talks and the country’s supposed de-nuclearization. Domestic changes in the North, often ignored or overlooked, should attract more attention.

These changes are considerable and should not encourage those optimists who spent years predicting that given favorable circumstances the North Korean regime would mend its ways and follow the beneficial development line of China and Vietnam. Alas, the recent trend is clear: the North Korean regime is maintaining its counter-offensive against market forces.

Merely five years ago things looked differently. The decade that followed Kim Il-sung’s death in 1994 was the time of unprecedented social disruption and economic disaster culminating in the Great Famine of 1996-99, with its 1 million dead. The old Stalinist economy of steel mills and coal mines collapsed once the Soviets discontinued the aid that alone kept it afloat in earlier decades.

All meaningful economic activity moved to the booming private markets. The food rationing system, once unique in its thoroughness and ubiquity, collapsed, and populace survived through market activities as well as the “second”, or non-official, economy. The explosive growth of official corruption meant that many old restrictions, including a ban on unauthorized domestic travel, were not enforced any more. Border control collapsed and a few hundred thousand refugees fled to China. In other words, the old Stalinist system imploded, and a new grassroots capitalism took over.

The regime, however, did not approve the changes - obviously on assumption that these trends would eventually undermine the government’s control. Authorities staged occasional crackdowns on market activities, though those crackdowns seldom had any lasting impact: people had to survive somehow, and officials were only too willing to ignore the deviations if they were paid sufficient bribes.

By 2002 it seemed as if the government itself decided to bow to the pressure. In July that year, the Industrial Management Improvement Measures (never called “reforms”, since the word has always been a term of abuse in Pyongyang’s official vocabulary) decriminalized much market activity and introduced some changes in the industrial management system - very moderate and somewhat akin to the half-hearted Soviet “reforms” of the 1960s and 1970s.

The 2002 measures were widely hailed overseas as a sign of welcome changes: many Pyongyang sympathizers, especially from among the South Korean Left, still believe that only pressure from the “US imperialists” prevents Kim Jong-il and his entourage from embracing Chinese-style reforms. In fact, the 2002 measures were not that revolutionary: with few exceptions, the government simply gave belated approval to activities that had been going on for years and which the regime could not eradicate (even though it had tried a number of times). Nonetheless, this was clearly a sign of government’s willingness to accept what it could not redo.

However, around 2004 observers began to notice signs of policy reversal: the regime began to crack down on the new, dangerously liberal, activities of its subjects. By 2005, it became clear: the government wanted to turn the clock back, restoring the system that existed before the collapse of the 1990s. In other words, Kim Jong-il’s government spent the recent three of four years attempting to re-Stalinize the country.

This policy might be ruinous economically, but politically it makes perfect sense. It seems that North Korean leaders believe that their system cannot survive major liberalization. They might be correct in their pessimism. The country faces a choice that is unknown to China or Vietnam, two model nations of the post-Communist reform. It is the existence of South Korea that creates the major difference.

Unlike China or Vietnam, North Korea borders a rich and free country that speaks the same language and shares the same culture. The people of China and Vietnam, though well aware of the West’s affluence, do not see it as directly relevant to their problems: the United States and Japan surely are rich, but they are also foreign so their experiences are not directly relevant. But for the North Koreans, the comparison with South Korea hurts. Even according conservative estimates, per capita gross national income in the South is 17 times the level it is in the North; to put things in comparison, just before the Germany’s unification, per capita GNI in West Germany was roughly double that in East Germany.

Were North Korea to reform, the disparities with South Korea would become only starker to its population. This might produce a grave political crisis, so the North Korean government seemingly believes that in order to stay in control it should avoid any tampering with the system. Maintaining the information blockade is of special importance, since access to the overseas information might easily show the North Koreans both the backwardness of their country and the ineptitude of their government.

At the same time, from around 2002 the amount of foreign aid began to increase. The South Korean government, following the so-called Sunshine policy, began to provide generous and essentially unmonitored aid to Pyongyang. China did this as well. Both countries cited humanitarian concerns, even though it seems that the major driving force was the desire to avoid a dramatic and perhaps violent collapse of the North Korean state.

Whatever the reasons, North Korea’s leaders came to assume that their neighbors’ aid would save the country from the worst of famine. They also assumed that this aid, being delivered more or less unconditionally, could be quietly diverted for distribution among the politically valuable parts of the population - such as the military or the police, and this would further increase regime’s internal security.

So, backward movement began. In October 2005, Pyongyang stated that the Public Distribution System would be fully re-started, and it outlawed the sale of grain on the market (the ban has not been thoroughly enforced, thanks to endemic police corruption). Soon afterwards, came regulations prohibited males from trading at markets: the activities should be left only to the women or handicapped. The message was clear: able-bodied people should now go back to where they belong, to the factories of the old-style Stalinist economy.

There have been crackdowns on mobiles phones, and the border control was stepped up. There have been efforts to re-enforce the old prohibition of unauthorized travel. In short, using newly available resources, North Korea’s leaders do not rush to reform themselves, but rather try to turn clock back, restoring the social structure of the 1980s.

The recent changes indicate that this policy continues. From December only sufficiently old ladies are allowed to trade: in order to sell goods at the market a woman has to be at least 50 years old. This means that young and middle-aged women are pushed back to the government factories. Unlike earlier ban on commercial activity on men, this might have grave social consequences: since the revival of the markets in the mid-1990s, women constituted the vast number of vendors, and in most cases it was their earnings that made a family’s survival possible while men still chose to attend the idle factories and other official workplaces.

Other measures aim at reducing opportunities for market trade. In December, the amount of grain that can be moved by an individual was limited to ten kilograms. To facilitate control, some markets were ordered to close all but one gate and make sure that fences are high enough to prevent scaling.

Vendors do what they can to counter these measures. One trick is to use a sufficiently old woman as a figurehead for a family business. The real work is done by a younger woman, usually daughter or daughter-in-law of the nominal vendor, but in case of a police check the actual vendor can always argue that she is merely helping her old mother. Another trick is to trade outside the marketplace, on the streets. This uncontrolled trade often attracts police crackdowns, so vendors avoid times when they can be seen by officials going to their offices.

This autumn in Pyongyang there was an attempt, the first of this kind in years, to prescribe maximum prices of items sold in markets. Large price tables were displayed, and vendors were forbidden to sell goods (largely fish) at an “excessive price”. It was also reported that new regulations limit to 15 the number of items to be sold at one stall.

The government does not forget about other kinds of commercial activities. In recent years, private inns, eateries, and even bus companies began to appear in large numbers. In many cases these companies are thinly disguised as “government enterprises” or, more frequently, as “joint ventures” (many North Korean entrepreneurs have relatives in China and can easily persuade them to pose as investors and sign necessary papers).

Recently a number of such businesses were closed down by police. People were told that the roots of evil capitalism had to be destroyed, so every North Korean can enjoy a happy life working at a proper factory for the common good.

Yet even as the government pushes people back to the state sector of the economy, These new restrictions have little to do with attempts to revive production. A majority of North Korean factories have effectively died and in many cases cannot be re-started without massive investment - which is unlikely to arrive; investors are not much interested in factories where technology and equipment has sometimes remained unchanged since the 1930s.

However, in North Korea the surveillance and indoctrination system has always been centered around work units. Society used to operate on the assumption that every adult Korean male (and most females as well) had a “proper” job with some state-run facility. So, people are now sent back not so much to the production lines than to indoctrination sessions and the watchful eyes of police informers, and away from subversive rumors and dangerous temptations of the marketplace.

At the same time, border security has been stepped up. This has led to a dramatic decline in numbers of North Korean refugees crossing to China (from some 200,000 in 2000 to merely 30,000-40,000 at present). The authorities have said they will treat the border-crossers with greater severity, reviving the harsh approach that was quietly abandoned around 1996. In the 1970s and 1980s under Kim Il-sung, any North Korean trying to cross to China or who was extradited by the Chinese police would be sent to prison for few years.

More recently, the majority of caught border-crossers spent only few weeks in detention. The government says such leniency will soon end. Obviously, this combination of threats, improved surveillance and tighter border control has been effective.

The government is also trying to restore its control of information. Police recently raided and closed a number of video shops and karaoke clubs. Authorities are worried that these outlets can be used to propagate foreign (especially South Korean) pop culture. Selling, copying and watching South Korean video tapes or DVDs remain a serious crime, even though such “subversive materials” still can be obtained easily.

It is clear that North Korean leaders, seeking to resume control that slipped from them in the 1990s and early 2000s, are not concerned if the new measures damage the economy or people’s living standards when set against the threat to their own political domination and perhaps even their own physical survival.

Manifold obstacles nevertheless stand in the way of a revival of North Korean Stalinism.

First, large investment is needed to restart the economy and also - an important if underestimated factor - a sufficient number of true believers ready to make a sacrifice for the ideal. When the North Korean regime was developed in the 1940s and 1950s it had Soviet grants, an economic base left from the days of Japanese investment and a number of devoted zealots. The regime now has none of these. Foreign aid is barely enough to feed the population, and the country’s bureaucrats are extremely cynical about the official ideology.

Second, North Korea society is much changed. Common people have learned that they can survive without relying on rations and giveaways from the government. It will be a gross oversimplification to believe that all North Koreans prefer the relative freedoms of recent years to the grotesquely regimented but stable and predictable existence of the bygone era, but it seems that socially active people do feel that way and do not want to go back. Endemic corruption also constitutes a major obstacle: officials will be willing to ignore all regulations if they see a chance to enrich themselves.

It is telling that government could not carry out its 2005 promise to fully restart the public distribution (rationing) system. Now full rations are given only to residents of major cities while others receive reduced rations that are below the survival level. A related attempt to ban trade in grain at markets also failed: both popular pressure and police inclination to take bribes undermined the policy, so that grain is still traded openly at markets.

Even so, whether the government will succeed in re-Stalinizing society, its true intent remains the revival of the old system. North Korean leaders do not want reforms, assuming that these reforms will undermine their power. They are probably correct in this assumption.

Daily NK
Yang Jung A
1/25/2008
 
A job in a factory at the Kaesong Industrial Complex is fast becoming the ideal job for North Korean citizens, and positive feelings toward the South are continuing to grow.

Good Friends reported on the 23rd that most North Koreans are aware that economic cooperation at Kaesong is thriving as South Korean enterprises supply advanced materials and management, and North Korea supplies labor.

“South Korean advisory managers supervise workers. If workers do not come to work on time in the morning or they do not work diligently, the managers simply say, ‘You don’t need to come here tomorrow’” reported one North Korean citizen through Good Friends.

The citizen added, “Workers try to complete their appointed tasks under all conditions, while monitoring the South Korean supervisors’ attitudes.”

As the Kaesong Complex grows, the internal customs procedures into Kaesong become more complicated.

Good Friends reported, “Kaesong was originally a strictly controlled zone because of its location just north of the 38th parallel. If a North Korean wanted to visit Kaesong, they had to register, undergo an investigation and get a pass. Now, If they try to go to Kaesong, the process is much more complicated.”

A cadre working at the Kaesong Complex said that this is because people have growing positive feelings toward South Korea. The authorities worry about the great gap between the North and the South and worry about growing public disillusionment.”

He added, “The only place people can talk about South Korea is at Kaesong. They have a yearning for South Korea, especially after they’ve encountered South Korean products.” 

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-1-10-1
1/10/2008

The net worth of inter-Korean exchanges totaled 1,797,890,000 USD in 2007, up 33% from the 1.35 billion USD in the previous year. Exchanges between the two Koreas began in 1989, and topped one billion dollars for the first time in 2005. The almost 1.8 billion dollars in trade recorded in 2007 is the highest to date, and is equal to 65 percent of North Korea’s non-Korean trade volume of 2.996 billion USD in 2006.

Inter-Korean commercial trade was worth 1,431,170,000 USD, 54 percent higher than the 928 million USD in 2006, while non-commercial trade fell 13 percent, from 421,660,000 dollars in 2006 to only 366,720,000 dollars last year. Overall, commercial trade made up over 80 percent of cross-border exchanges, proving that inter-Korean exchanges continue to grow based on commercial transactions. Commercial trade growth was centered around the mining and fishery sectors (52 percent) and increased production in the Kaesong Industrial Complex (48 percent). Textiles and other goods processed on commission also grew by 30 percent.

Additional manufacturing by companies entering the KIC, as well as the installment of equipment used to increase output by those manufacturers already established in the first phase of the complex, saw a great jump last year. Additionally, South Korea loaned the North 80 million USD for equipment, cloth, soap, polyester fibers, synthetic leather, and other materials to be used in light industry, while the North repayed 2.4 million USD (3 percent) of the loan by delivering 1,000 tons of zinc. This was the first example of the North repaying funds to the South, and shows opportunities for the two Koreas to fulfill each other’s needs and carry out friendly economic cooperation in the future.

With increases in domestic use and export of Bukhan Mountain’s minerals and timber, improvements in communications, customs, and transport issues at the KIC and a growing number of companies moving into the complex leading to an increase in production and manufacturing activity, inter-Korean exchanges are expected to continue to grow in the future.

Good Friends claims that a prestigious local politician has been executed for his bourgeois lifestyle…

(excerpt)  A cooperative farm chief who was once honoured by North Korea’s founding president has been publicly executed for starting a private farm to support his luxurious lifestyle, a South Korean aid group said Thursday.

The unidentified man — said to be a member of the national legislature — and two colleagues were put to death by firing squad on December 5 in Pyongsong City, 30 kilometres (20 miles) north of Pyongyang, the Good Friends group quoted sources as saying.

The farm chief, his accountant and the local county’s party secretary were accused of selling produce from an unauthorised farming operation to lead a luxurious lifestyle, said a newsletter from the group which provides aid to the hardline communist state.

The farm chief was accused of failing to register 196 acres (79 hectares) of farmland that had been cultivated over the past decade. He allegedly fed retired soldiers with the produce and used them as his private bodyguards.

The man “acted like a king” in Mundok County and had been deemed untouchable because of his status and the gang of retired soldiers who followed him everywhere, Good Friends said.

All those put to death were said to have lived in upmarket two-storey homes and driven illicit cars.

Read the whole story in the AFP here
1/3/2008

Korea Herald
12/19/2007

Czech authorities have stopped extending visas of North Korean laborers in conformity with U.N. sanctions against Pyongyang and all will probably leave by year’s end, officials were quoted as saying by Associated Press.

Czech authorities stopped renewing residency permits for North Korean workers on Jan. 25 in line with U.N. Security Council Resolution 1718 adopted in October 2006 and laborers have gradually left since then, the Interior Ministry said in a statement.

The sanctions are aimed at punishing North Korea for carrying out its first nuclear test, on Oct. 9, 2006 _ a test that prompted international condemnation.

Among other things, the resolution allows cargo to and from North Korea to be stopped and inspected for prohibited goods, bans the import and export of certain military material, and freezes the assets of, and bans travel by, individuals and companies involved in the country’s programs to produce weapons of mass destruction.

On average, several hundred North Korean laborers have been working in various clothing and shoe factories in the Czech Republic since 2001, the ministry said.

The laborers have been leaving the country as their visas expired and all were expected to be gone by the end of the year, said Katerina Jirgesova, a spokeswoman for the Czech foreign police.

While 331 North Korean workers were still in the country in May, only 134 remained on Nov. 27, she said. Police have investigated allegations that the workers were used as a source of revenue for the North Korean government, she said, but she added adding that no wrongdoing could be determined. The allegations reportedly were made by a former North Korean diplomat and a major Czech labor organization.

None of the workers applied for asylum in the Czech Republic, she said.

There do not appear to be many North Korean laborers in other parts of Europe. The Italian labor ministry said it did not have a program of this nature. Officials in Portugal and the Netherlands said there were no North Koreans employed in their countries.

Daily NK
Jung Kwon Ho
12/11/2007

Several sources in China have relayed that it is rumored North Korean authorities are planning to take extreme measures to prevent the sale of industrial products at the jangmadang (markets) next year.

One Chinese merchant, whom DailyNK met in Dandong, China on the 6th, said, “Rumors are circulating that a measure preventing all kinds of Industrial products from being sold in the jangmadang will be implemented next year, making Chinese merchants involved in trade between North Korea and China nervous.”

He informed that “In place of industrial products, only farm produce from the fields of homeowners will be allowed to sell in the jangmadang. Marine products that up to now have been selling in the jangmadang will only be made available at appointed marine shops, meat products at food shops, and industrial products at state operated stores.”

The Chinese source also maintained that, “There are quite a few overseas Chinese who, not knowing what will happen, have bought loads of industrial products with the idea that this might be their last chance, and they have brought them into the North.”

The North Korean authorities began unfolding a series of market regulations immediately following the Inter-Korea Summit in October. These included such policies as limiting the types of items for sale and imposing a minimum age limit on female merchants. However, limiting the sale of industrial products themselves, after having abolished permanent markets, can be seen as a means of returning to “agricultural markets,” where farmers traded only vegetables and a surplus of produce.

According to other Chinese merchants with whom DailyNK met in Dandong on the 3rd, “Under the name of the North Pyongan Party Committee in Shinuiju, a three-day meeting was held between the Secretaries of the Party and of the Army and enterprise managers, from November 20th to the 22nd.”

They informed that “The meeting was held to discuss whether to prohibit jangmadang operations and put people who have been trading in the market to work at enterprises or factories, since regular provisions will resume starting next year.”

The recent efforts to regulate the markets have been analyzed as means to revert the standard of societal regulation to that of the pre-90s by restoring the provision system and normalizing factory operations. However, such an extreme measure is likely to give rise to serious civilian opposition, so there are doubts as to whether or not it can be realized.

The North Korean civilians, before the mid-90s, relied on a complete provision system supplied by the State, which included the provision of goods such as soap, clothes and other necessities. However, after the food shortage, the national provision system completely collapsed. As a result, civilians began acquiring most necessities, goods and food items through the jangmadang.

However, agricultural markets, where miscellaneous cereals, vegetables and other agricultural items raised in home gardens were traded, existed around the time when North Korea’s provision system was in normal operation.

Following the execution of the “July 1st Economic Management Improvement Measure” of 2002, the North Korean government established general markets which brought simple agricultural markets out in the open in February 2003. Since then, individuals leasing stands from the city mercantile department have been able to sell all kinds of industrial products as well.

One source in Chongjin stated in a phone conversation on the 6th regarding the recent rumors, “If the sources are Chinese merchants, than the rumor is not likely groundless. A majority of citizens sustain their livelihoods through the jangmadang.”

He agreed that “It is highly feasible that measures to toughen the regulation of industrial products in the market will be executed.”

Daily NK
Lee Sung Jin
12/11/2007

The number of day labor jobs offered by private parties is gradually increasing in the North. Unlike those with full time jobs at State-run factories, individuals with day labor jobs work by the day.

According to inside sources and many defectors who came to the South earlier this year, individuals looking for day labor jobs normally work as gold miners, construction workers in cities, as luggage carriers for train passengers and maids.

In North Korea, these day laborers are called “Bulbulee (which means a person sweats for labor),” “Sakbari (which means a person waiting for wages)” or “Ilkkun (workers).” It is reported that there are day labor hiring centers in big cities and around the closed mining areas.

Daily laborers’ wages vary based on the type of work. Laborers working at gold mines are provided with housing and food and get paid 1,500 North Korean won per day. In the city construction sites, skilled laborers such as plasterers earn 2,000 won daily whereas unskilled laborers make less than 1,000 won. Daily laborers are making good money compared to factory workers whose average monthly wages fall between 3,000 and 5,000 won.

Kim Yong Chul (pseudonym), a defector who used to work as a day laborer at a mine in Hoichang of South Pyongan Province said, “Since 2004, day labor hiring centers started to appear in the jangmadang (market) of Hoichang. Employers hired young men and women in good health on the spot and took them to workplaces.” He used to work at a mine well-known across the country since the Japanese colonial period. Mr. Kim said, “Day laborers not only dug for gold but were also mobilized to build or fix houses for their employers.”

In Hoichang, there are some gold mines closed by the authorities that were thought to be tapped out. In the mid 1990s, some locals dug the mines again and made a great fortune. Years later, around 2003, these locals began looking out for workers and started hiring individuals from other provinces. Now the county has a great number of day laborers from various provinces working at mines.

Good Friends, the Seoul-based relief organization dedicated to North Korea, said in a recent report, “On October 23rd at around 10 A.M., a gold mine in Hoichang of South Pyongan Province collapsed, leaving three miners dead and two wounded.” In the North, private parties are banned from trading gold and pine mushrooms by law, and only the State can make these types of transactions. However, it is well known that many officials in charge of enforcing the ban frequently take bribes and allow those who pay them to dig for gold in closed mines.

Gold miners usually stay underground between 15 to 30 days each time they begin a mining operation. The miners dig up the ore, crush it using a machine called a Maguanggi (ore-polishing machine) and apply mercury to extract gold. The whole process is done in underground tunnels, and the processed gold is sold to gold dealers in Pyongsung and Sinuiju.

Individuals who run the crushing machine are laborers from other provinces, and most of them are females. With food and housing provided by their employer, they make 1,000 won daily. If they work year-round this way, they can earn decent money.

45-year-old Park Jong Moo (pseudonym) who came to the South this year said, “I earned 2,000 won per day when I worked as a plasterer, building a house for a man who made his money from trade in Chongjin City.”

Mr. Park’s son worked as a cargo porter at the Chongjin railway station. Since there were so many “Sakbari (referring to cargo porters working for daily wages)” at the station, competition among “Sakbari” was fierce. Normally, these porters made less than 1,000 won per day.

It is becoming popular among party cadres and the new wealth to have a maid who does housework and takes care of children. These people introduce the maid to their neighbors as a ‘distant relative’ because having a maid is unthinkable in the Socialist North. While performing maid services and getting paid for the work that she does, the maid pretends to be a family member and acts as if she is merely helping out with the housework.

A source inside the North said, “There was once a party official in Chongjin who employed a girl as a maid after having paid her parents. When the official was accused of having a maid, the official said she was a ‘relative.’”

Regarding the rise in day laborers, an expert on North Korea says, “Those North Koreans who made a fortune from mining or trade privately employ laborers to further expand their businesses…However, since the regime will never allow the rich to become too powerful, it will begin to regulate the employment activities of private parties at the proper time.”

Institute of Far Eastern Studies (IFES)
NK Brief No. 07-12-5-1
12/11/2007

North Korean authorities are increasing market regulation. Beginning December 1st, women under the age of 49 were prohibited from running businesses in Pyongyang. Age restrictions were placed on female merchants since the inter-Korean summit meeting in October, at first prohibiting those 39 years and under, but now includes anyone under the age of 49.

In North Korea, because males are officially required to be at their assigned workplace, women generally run the businesses. However, market regulations started being enforced in order to eradicate South Korean dramas, movies, and other so-called non-socialist elements from the marketplace.

According to the results from a Daily NK survey on the present state of the North Korean marketplace, although market activity has slowed, these new regulations are not being enforced aggressively outside of the cities, and businesses still continue to operate because the regulation officers are receptive to bribes.

Also, because of the direct link between business regulations and the issue of making a living, citizens’ voices of opposition are getting louder than ever. Let us explore the present state of the North Korean marketplace.

Although not an exact statistic, it seems that there are roughly two to four marketplaces within a city. In the case of the most-populated city, Pyongyang (19 districts), there is a marketplace in every district. Tongil-geori has two because of its large population. In Sinuiju, the bridgehead of trade between North Korea and China, there is one in South Sinuiju, and three in Sinuiju itself (Chaeha, Namjung, and Dongseo [The Peace Market]). In North Korea’s second largest city after Pyongyang, Chungjin, there are two marketplaces in the larger districts. In the case of counties, there is a town marketplace, and one to two smaller farmers’ markets.

The marketplace is generally active, except during the rice-planting and harvest period. However, it has become very stagnant recently due to the enforcement of restrictive measures like price regulations and age restrictions on merchants. For instance, in Pyongyang, there used to be around 50-60 merchants in one area, but now there are only 7 or 8. Now, It is that much more difficult to find good products at the market.

Stallholders’ daily earnings differ depending on their products. In the case of agricultural goods, merchants earn an average of 3,000 won per day, and around 5,000-6,000 won per day for marine products. Merchants who sell manufactured goods could make around 10,000 won.

In addition to the age restrictions, there are increasing measures regulating products sold at the marketplace. There are officers who patrol the marketplace enforcing regulations. Outside the marketplace, safety officers regulate the businesses. The level of control depends on the person, but if bribes are given, they tend to slack off.

With exception of large cities in North Hamkyong Province such as Hoeryeong, Musan, and Chungjin, market activity remains ‘business as usual’ in smaller cities and counties, despite the regulations.

Because everyone knows each other in small cities and counties, it is not possible for the regulations to be strictly enforced. Moreover, even in main cities, there are many merchants under the age of 40 who carry out their business, and if they are not able to in the marketplace, they are still able to sell products in alleys and other locations.

Daily NK
Yang Jung A
12/5/2007

After the Inter-Korean Summit held in October, the North began to place age limits for females who can do business in the market. The regime has risen the minimum age from 35 to 49 years old. Since most men are enrolled in workplaces, it is mostly women who engage themselves in business activities and are therefore being targeted by the age limit.

According to a study conducted by DailyNK on North Korean markets, business activities have slowed due to the regulation of the market. However, if a woman bribes the officers in charge of enforcing the regulations, she can continue to do business. In the rural areas, it is known that the regulations are not strictly enforced.

The complaints of the North Korean people regarding the regulations are growing ever more intense because their livelihoods depend on market activity. Below is an overview of the current market situation in the North..

◆ Market Conditions

Although detailed statistics are not available, it is reported that there are around three to four markets in each North Korean city.

In Pyongyang, the city with the largest population, there is one market for every district (19 in all). On densely populated “Tongil (unification) Road,” there are two markets. Kangdong, administratively located within Pyongyang, has three markets. Additionally, there are small-scale markets, such as the No.67 Munitions-Factory market and Hari Plaza market. The one in Kangdong is relatively large.

Shiniju, known as the center of trade between North Korea and China, has three markets: Chaeha, Namjoong and Dongseo (aka Pyonghwa). South Shiniju has only one. There are two markets for each of the larger districts in Chongjin, the second largest city after Pyongyang. Overall, each town in each county has at least one market and each county has one or two small-scale farmer’s markets.

◆ Average income

In the past, markets were always bustling with people except during the rice-planting and harvest seasons. However, since the State has begun controlling prices and enforcing an age limit on merchants, the markets have become stagnant.

Around 50 to 60 merchants used to engage in business in each block of each market in Pyongyang. Now, there are only seven or eight merchants on each block. Therefore, nowadays, shoppers are finding it hard to buy quality products in the market.

The average daily earning for merchants depends on the types of items sold. Merchants who sell agricultural products make about 3,000 won, and those who sell sea products earn between 5,000 and 6,000 won. Those who trade industrial products are reported to make as much as 10,000 won per day.

◆ Prohibited sales items

The North Korean authorities are now exercising control over the types of products that can be sold in the market and have increased the list of banned items.

The list of prohibited sales items in Hamkyung Province, centering on Hoiryeong, is as follows: electric rice cookers, electric frying pans, automobile tires and parts, diesel fuel, gasoline, beef, medicines, electric blankets, VCRs (Even home-manufactured VCRs cannot be traded in the market. They are only available at State-run shops.), rubber belts, bearings, welding rods, electric motors, electrical wirings, alcohol, foreign films, and so on.

It has been reported that market managers exercise control inside-market activities, whereas security agents patrol outside of the market. The level of regulation depends on the individuals charged with enforcing the regulations. Bribed officials do their job only perfunctorily.

◆ People’s responses to market regulation

Unlike markets in major cities such as Hoiryeong, Musan, and Chongjin in North Hamkyung Province, markets in small cities and towns of the province operate as usual regardless of the State’s market regulations.

In small cities and towns, people know each other, and market managers and safety agents do not strictly enforce the state’s regulation as their counterparts do in big cities. Even in major cities, however, many merchants under the age of 40 continue to do business. If they fail to get inside the market, they do business in alleys adjacent to the market.

Many merchants complain about the market regulations, and some even get into altercations with market managers.

For instance, they violently stand against and even swear at the mangers, saying, “You guys live in comfort because you receive food from the State and take bribes from us. However, we live from hand to mouth each day here in the market. How could you then regulate the market?”

◆ Some servicemen secretly engage in business

Some poverty-stricken soldiers and officials as well reportedly steal rice distributed to the army and sell it to merchants. Unlike commoners, servicemen are tightly watched, so they cannot readily involve themselves in money making activities.

Some destitute low ranking soldiers clandestinely take their emergency rations and sell them in the market. Canned beef manufactured at Ryongsung Meat Processing Plant is sold at 3,500 won and Canned mackerel at 2,500 won in the market.

However, heavy punishment awaits servicemen who are caught engaging in illegal market activities. So, they covertly sell military provisions to only personal aquaintences.

Daily NK
Kwon Jeong Hyun
12/3/2007

The North Korean authorities have toughened their regulation of the market.

An inside North Korean source relayed that “After releasing the policy of market regulations, the inspections of the railway police have become more extreme. They carelessly go through the citizens’ bags or even search women’s undergarments.”

The North Korean authorities have strengthened market regulations, such as prohibiting goods that can be sold in the market or fixing prices.

Also, they have adjusted the minimum age of women who can sell in the jangmadang (markets) to 45 from 35 years. If women who are under 45 sell in the market or sell prohibited goods, the safety agents in charge or the managers of the jangmadang confiscate the products by force or charge fines.

The source commented, “The security agents search their bodies because merchants hide cosmetics, medicine, or precious metals in thick clothing. After the decree from the authorities, the safety agents have come forward for aggressive regulations.”

The regulation of the market has spread to long-distance merchants who use rails. If young women are carrying a lot of possessions in trains, the safety agents steal the goods by force and search their bags without discretion.

Pyongyang has also made public announcements to prohibit women under 49 from trading at the market starting December 1st. Currently, women under 39 are prohibited. Further, they are only allowed to sell at permitted locations in the market.

North Korean rail safety agents ride in every car of North Korea’s rails. The basic duties of rail safety agents consist of checking travel certificate and citizen cards and regulating suspicious passengers, including crimes of theft. On top of this, their authority to inspect women who are engaging in long-distance trade has increased.

The rail safety agents force passengers who carry large loads suspected of being goods for sale to come to the inspection car. The safety agents search the luggage and make threats, such as reporting them. Recently, after the prohibition of sales by women under 45, if the owner of the luggage is a woman under 45, she been threatened to be reported. Long-distance merchants can only claim their goods if they give bribes such as cigarettes or cash to the rail security officer.

The source stated, “After the market regulation, the amount of bribes to the rail safety agent has risen. Due to this decree, the safety agents become well-off.”

Also, with the increase in new regulation authority by the rail safety agents, the phenomenon of sexually harassing young women who engage in long-distance trade or requesting wrongful sexual relations has been taking place.

The agents take the women to regulation cars by saying, “We have to investigate whether or not you are engaging in gold trade,” and force them to remove their undergarments under the pretext of investigations and engage in illicit conduct. If the women protest, their luggage is confiscated or their citizen cards and travel certificates are handed over to the discretion of the local safety agency office at the train station and the woman is forcibly removed from the train.”

The source said, “In North Korea, there are no laws regarding human rights and the consciousness of average civilians regarding human rights is very low, so recent occurrences which have been frequent can give rise to societal issues.” He also noted, “As a result of the recent market regulation decree, the tyrannies of safety agents and party leaders have become worse and the situation of indiscriminate human rights violations has become even more conspicuous.”