Archive for the ‘May 30 Measures (5.30)’ Category

Kim Jong-un’s 2018 new year address

Monday, January 1st, 2018

Below I have posted the economic section of Kim Jong-un’s 2018 new year speech in English and Korean:

Comrades,

동지들!

This year we will mark the 70th anniversary of the founding of the glorious Democratic People’s Republic of Korea. To mark the 70th anniversary of their state with splendour is of real significance for the great people, who have raised with dignity the status of their socialist country, the greatest patriotic legacy of the great Comrades Kim Il Sung and Kim Jong Il, to that of a strategic state recognized by the world. [Translation note: In the Korean version below, Kim Il-sung and Kim Jong-il are not mentioned by name, only by title]

올해에 우리는 영광스러운 조선민주주의인민공화국창건 일흔돐을 맞이하게 됩니다.위대한 수령님과 위대한 장군님의 최대의 애국유산인 사회주의 우리 국가를 세계가 공인하는 전략국가의 지위에 당당히 올려세운 위대한 인민이 자기 국가의 창건 일흔돐을 성대히 기념하게 되는것은 참으로 의의깊은 일입니다.

We should make constant innovations and continued progress until we win the final victory of the revolution by carrying on the tradition of heroic struggle and collective innovation which adorned the founding and course of development of Juche Korea. A revolutionary general offensive should be launched to achieve fresh victory on all fronts of building a powerful socialist country by taking the historic victory in the building of the DPRK’s nuclear forces as a springboard for fresh progress.

우리는 주체조선의 건국과 발전행로에 빛나는 영웅적투쟁과 집단적혁신의 전통을 이어 혁명의 최후승리를 이룩할 때까지 계속혁신,계속전진해나가야 합니다.공화국핵무력건설에서 이룩한 력사적승리를 새로운 발전의 도약대로 삼고 사회주의강국건설의 모든 전선에서 새로운 승리를 쟁취하기 위한 혁명적인 총공세를 벌려나가야 합니다.

“Let us launch a revolutionary general offensive to achieve fresh victory on all fronts of building a powerful socialist country!” This is the revolutionary slogan we should uphold. All officials, Party members and other working people should launch an all-people general offensive to frustrate the challenges of the hostile forces who are making last-ditch efforts and raise the overall strength of our Republic to a new stage of development as they brought about a great upsurge in socialist construction overcoming all difficulties through the great Chollima upswing after the war.

《혁명적인 총공세로 사회주의강국건설의 모든 전선에서 새로운 승리를 쟁취하자!》 이것이 우리가 들고나가야 할 혁명적구호입니다.모든 일군들과 당원들과 근로자들은 전후 천리마대고조로 난국을 뚫고 사회주의건설에서 일대 앙양을 일으킨것처럼 전인민적인 총공세를 벌려 최후발악하는 적대세력들의 도전을 짓부시고 공화국의 전반적국력을 새로운 발전단계에 올려세워야 합니다.

A breakthrough should be made in reenergizing the overall economic front this year, the third year of implementing the five-year strategy for national economic development.

국가경제발전 5개년전략수행의 세번째 해인 올해에 경제전선전반에서 활성화의 돌파구를 열어제껴야 하겠습니다.

The central task facing socialist economic construction this year is to enhance the independence and Juche character of the national economy and improve the people’s standard of living as required by the revolutionary counter-strategy put forward by the Second Plenary Meeting of the Seventh Central Committee of the Party.

올해 사회주의경제건설에서 나서는 중심과업은 당중앙위원회 제7기 제2차전원회의가 제시한 혁명적대응전략의 요구대로 인민경제의 자립성과 주체성을 강화하고 인민생활을 개선향상시키는것입니다.

We should concentrate all efforts on consolidating the independence and Juche character of the national economy.

인민경제의 자립성과 주체성을 강화하는데 총력을 집중하여야 합니다.

The electric-power industry should maintain and reinforce the self-supporting power generation bases, and direct a great deal of efforts to developing new power sources. A dynamic campaign should be conducted to drastically increase thermal power generation, and lower the loss of electric power and increase its production as much as possible by maintaining and reinforcing imperfect generating facilitates. Provinces should build power generation bases to suit their local features and put power generation at the existing medium and small-sized power stations on a normal footing to satisfy the needs of electric power for local industry by themselves. Alternated production should be organized scrupulously throughout the country, and a vigorous struggle waged against the practices of wasting electric power to make effective use of generated electric power.

전력공업부문에서는 자립적동력기지들을 정비보강하고 새로운 동력자원개발에 큰 힘을 넣어야 합니다.화력에 의한 전력생산을 결정적으로 늘이며 불비한 발전설비들을 정비보강하여 전력손실을 줄이고 최대한 증산하기 위한 투쟁을 힘있게 벌려야 합니다.도들에서 자기 지방의 특성에 맞는 전력생산기지들을 일떠세우며 이미 건설된 중소형수력발전소들에서 전력생산을 정상화하여 지방공업부문의 전력을 자체로 보장하도록 하여야 합니다.전국가적인 교차생산조직을 짜고들며 전력랑비현상과의 투쟁을 힘있게 벌려 생산된 전력을 효과적으로 리용하기 위한 된바람을 일으키도록 하여야 합니다.

The metallurgical industry should further improve the Juche-oriented iron- and steel-making technologies, increase the iron production capacity and drastically raise the quality of metallic materials in order to satisfy the needs of the national economy for iron and steel. It is necessary to ensure a preferential, planned and timely supply of electricity, concentrated iron ore, anthracite, lignite, freight wagons, locomotives and funds for the metallurgical industry. By doing so, we can fulfil next year’s iron and steel production plans and make the industry Juche-oriented without fail.

금속공업부문에서는 주체적인 제철,제강기술을 더욱 완성하고 철생산능력을 확장하며 금속재료의 질을 결정적으로 높여 인민경제의 철강재수요를 충족시켜야 합니다.금속공업부문에 필요한 전력,철정광,무연탄,갈탄,화차와 기관차,자금을 다른 부문에 앞세워 계획대로 어김없이 보장하여 다음해 철강재생산목표를 무조건 수행하며 금속공업의 주체화를 기어이 완성하도록 하여야 하겠습니다.

The chemical industry should step up the establishment of the C1 chemical industry, push the projects for catalyst production base and phosphatic fertilizer factory as scheduled, and renovate and perfect the sodium carbonate production line whose starting material is glauberite.

화학공업부문에서 탄소하나화학공업창설을 다그치고 촉매생산기지와 린비료공장건설을 계획대로 추진하며 회망초를 출발원료로 하는 탄산소다생산공정을 개건완비하여야 합니다.

The machine-building industry should modernize the Kumsong Tractor Factory, Sungri Motor Complex and other factories to develop and produce world-level machinery in our style.

기계공업부문에서는 금성뜨락또르공장과 승리자동차련합기업소를 비롯한 기계공장들을 현대화하고 세계적수준의 기계제품들을 우리 식으로 개발생산하여야 합니다.

The coal and mineral production and rail transport sectors should make concerted efforts to make the country’s self-reliant economic foundations prove their effectiveness.

나라의 자립적경제토대가 은을 낼수 있게 석탄과 광물생산,철도수송에서 련대적혁신을 일으켜야 합니다.

Notably, the rail transport sector should make the best use of the existing transport capacity by making transport organization and control more scientific and rational, and maintain discipline and order in the railways as rigid as in the army, so as to ensure an accident-free, on-schedule rail traffic.

특히 철도운수부문에서 수송조직과 지휘를 과학화,합리화하여 현존수송능력을 최대한 효과있게 리용하며 철도에 군대와 같은 강한 규률과 질서를 세워 렬차의 무사고정시운행을 보장하도록 하여야 합니다.

A turn should be brought about this year in improving the people’s standard of living.

올해에 인민생활향상에서 전환을 가져와야 합니다.

Light-industry factories need to transform their equipment and production lines into labour- and electricity-saving ones and produce and supply more diversified and quality consumer goods with domestic raw and other materials, and provinces, cities and counties should develop the local economy in a characteristic way by relying on their own raw material resources.

경공업공장들의 설비와 생산공정을 로력절약형,전기절약형으로 개조하고 국내원료와 자재로 다양하고 질좋은 소비품들을 더 많이 생산공급하며 도,시,군들에서 자체의 원료원천에 의거하여 지방경제를 특색있게 발전시켜야 합니다.

The agricultural and fishing fronts should effect an upswing. We should introduce seeds of superior strains, high-yield farming methods and high-performance farm machines on an extensive scale, do farming scientifically and technologically so as to fulfil the cereals production plan without fail, and boost the production of livestock products, fruits, greenhouse vegetables and mushrooms. We should enhance our ship building and repair capacities, launch scientific fishing campaigns, and reenergize aquatic farming.

농업과 수산전선에서 앙양을 일으켜야 하겠습니다.우량종자와 다수확농법,능률적인 농기계들을 대대적으로 받아들이고 농사를 과학기술적으로 지어 알곡생산목표를 반드시 점령하며 축산물과 과일,온실남새와 버섯생산을 늘여야 합니다.배무이와 배수리능력을 높이고 과학적인 어로전을 전개하며 양어와 양식을 활성화하여야 하겠습니다.

This year the service personnel and people should join efforts to complete the construction of the Wonsan-Kalma coastal tourist area in the shortest period of time, push ahead with major construction projects including the renovation of Samjiyon County, the construction of the Tanchon Power Station and the second-stage waterway project of South Hwanghae Province, and channel steady efforts into the construction of houses.

올해에 군민이 힘을 합쳐 원산갈마해안관광지구건설을 최단기간내에 완공하고 삼지연군꾸리기와 단천발전소건설,황해남도물길 2단계 공사를 비롯한 중요대상건설을 다그치며 살림집건설에 계속 힘을 넣어야 합니다.

Building on the success we achieved in the forest restoration campaign, we should properly protect and manage the forests that have already been created, improve the technical conditions of roads, conduct river improvement on a regular basis, and protect environment in a scientific and responsible manner.

산림복구전투성과를 더욱 확대하면서 이미 조성된 산림에 대한 보호관리를 잘하는것과 함께 도로의 기술상태를 개선하고 강하천정리를 정상화하며 환경보호사업을 과학적으로,책임적으로 하여야 합니다.

Every sector and every unit of the national economy should enlist their own technical forces and economic potential to the maximum and launch a dynamic struggle to increase production and practise economy, so as to create a greater amount of material wealth.

인민경제 모든 부문과 단위들에서 자체의 기술력량과 경제적잠재력을 총동원하고 증산절약투쟁을 힘있게 벌려 더 많은 물질적재부를 창조하여야 합니다.

A shortcut to developing the self-sufficient economy is to give precedence to science and technology and make innovations in economic planning and guidance.

자립경제발전의 지름길은 과학기술을 앞세우고 경제작전과 지휘를 혁신하는데 있습니다.

The scientific research sector should solve on a preferential basis the scientific and technological problems arising in establishing Juche-oriented production lines of our own style, ensuring domestic production of raw and other materials and equipment, and perfecting the structure of the self-supporting economy. Every sector and every unit of the national economy should make a contribution to achieving production growth by intensifying the dissemination of science and technology and waging a brisk technological innovation drive.

과학연구부문에서는 우리 식의 주체적인 생산공정들을 확립하고 원료와 자재,설비를 국산화하며 자립적경제구조를 완비하는데서 제기되는 과학기술적문제들을 우선적으로 풀어나가야 합니다.인민경제 모든 부문과 단위들에서 과학기술보급사업을 강화하며 기술혁신운동을 활발히 벌려 생산장성에 이바지하여야 하겠습니다.

The Cabinet and other economic guidance organs should work out a realistic operational plan to carry out the national economic plan for this year and push forward the work for its implementation responsibly and persistently. Positive measures should be taken by the state to ensure that the socialist system of responsible business operation proves its worth in factories, enterprises and cooperative organizations.

내각을 비롯한 경제지도기관들은 올해 인민경제계획을 수행하기 위한 작전안을 현실성있게 세우며 그 집행을 위한 사업을 책임적으로 완강하게 내밀어야 합니다.국가적으로 사회주의기업책임관리제가 공장,기업소,협동단체들에서 실지 은을 낼수 있도록 적극적인 대책을 세워야 합니다.

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N. Korea emphasizes corporate profits in economic policies

Tuesday, April 4th, 2017

According to Yonhap:

North Korea appears to stress the importance of increasing corporate profits, an indication of a shift in its economic policies from centralized planning, according to a North Korean university’s newspaper obtained Tuesday by Yonhap News Agency.

The newspaper, published by Kim Il-sung University, North Korea’s top university, on March 5, 2017, carried an article saying, “Net profits gained by individual corporations are fundamental to the establishment of a powerful economy.”

The article, titled “Establishing Way of Economic Management in Our Own Style Leads to Basis of Economic Powerhouse,” apparently lays emphasis on individual corporations’ profits becoming the financial basis for economic development, encouraging the corporate sector to make more profits.

“All corporations should set up scientific strategies and management strategies of their own and ensure they have the maximum effect in their production and management activities so that they could fulfill their duties to provide the state with more profits,” the article said.

This is interpreted as the North Korean economic authorities’ request that corporations focus their management activities on seeking effect and profits rather than relying on centralized planning and guided management.

Since the North’s current leader Kim Jong-un came to power in 2012, the North has taken measures to achieve economic reforms aimed at expanding elements of the market economy, including the country’s new economic management system announced in June 2012.

The university’s newspaper also indicated that the North has introduced a set of measures to strengthen corporations’ autonomy to its economy. Under the implementation of the measures, called “the socialist corporate responsible management system,” companies are given more autonomy than ever in their management and take care of economic problems arising from their production and management processes on their own, according to the article.

But the article made sure that the ruling party will not depart from its control on the economy, saying, “In our country’s socialist system, corporations’ independent management activities are to be carried out under the guidance of the party right down the line.

“I understand North Korean corporations currently pay 30 to 40 percent of their profits to the authorities,” said Cho Bong-hyun, a senior analyst at IBK Economic Research Institute. “The more profits corporations earn, the more national finance increases.”

Cho said the North appears to support its finance by spurring corporations into increasing profits amid the implementation of U.N. sanctions aimed at halting Pyongyang’s nuclear and missile development.

Read the full story here:
N. Korea emphasizes corporate profits in economic policies
Yonhap
2017-4-4

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Lankov issues warning on North Korea’s economic reforms

Thursday, August 13th, 2015

According to Yonhap:

North Korean leader Kim Jong-un’s reformatory policy is highly likely to spark political instability in the country, a Russian professor said Thursday, stressing the need to prepare for a potential volatile situation there.

“Kim Jong-un’s policy has a high possibility to destabilize North Korea’s local situation, therefore preparations are necessary for a sudden change there,” Andrei Lankov, a professor at Kookmin University, said during a forum co-hosted by Yonhap News Agency and the Presidential Committee for Unification Preparation.

Under the reform-seeking young leader, North Korea is less secure than under the previous Kim Jong-il era when the country had experienced no changes, the professor said.

Under the new leadership, North Korea has shown signs of adopting a developmental dictatorship, the professor noted.

Kim is aware that he cannot hold on to his power for the next several decades without a reform.

Kim’s predecessor and father Kim Jong-il was different. In his 60s, he knew that even without the reform, which has the potential of thwarting the regime, his power grip could be sustained until his death, Lankov added.

Even though the North chooses to follow the footsteps of the Chinese economic reform, the reclusive country may have to be careful about opening up the country to the outside world, because after seeing South Korea’s incomparable affluence, North Koreans may become very discontented with the North Korean system, the professor said.

“It will be something tantamount to an act of political suicide,” he noted.

If North Korea happens to succeed in the reform drive, the result will better help the two Koreas peacefully coexist over the long term, he said, adding that it will cut down the costs of unification.

Touching on North Korea’s nuclear ambition, he said the communist country will never even dream of giving up its nuclear arsenal.

“Any reward, any pressure will be of no avail,” because nuclear weapons are irreplaceable means of deterrence and threats for the Kim regime.

The North Korean government knows that Gaddafi is the only leader who gave up nuclear arms in international political history and he was killed, according to the professor.

Read the full story here:
Preparations needed for potential volatile situation in N. Korea: Lankov
Yonhap
2015-8-13

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May 30 Measures (5.30 Measures) [UPDATED]

Monday, June 1st, 2015

UPDATE 13 (2015-7-16): A new report by the Institute for Far Eastern Studies (IFES) indicated that the DPRK has made progress in reducing sub-workteam units, however it is experiencing secondary problems related to the transition.

North Korea Seeks Supplementary Measures for the Field Responsibility System

North Korea has been promoting the “field management system” as a part of its agricultural reform. Nevertheless, drawbacks exist, and it is trying to overcome shortcomings in the process by blending the new system with the advantages of collectivism.

In the past, farmers were able to follow the technical guidance of skilled workers. But since the implementation of the “field management system,” many are struggling to keep up with the advanced modern technology and agricultural methods.

As a result, North Korea is engaging in training and education programs for farmers to raise their skill level to that of skilled workers by encouraging the collective farming method of communal sharing of labor.

North Korea’s Rodong Sinmun reported on July 10 that, “in the current reality with the implementation of the ‘field management system’, it is impossible to farm with limited technical capabilities.”

The field management system under the bunjo management system (or the subworkteam management system) divides the work unit consisting of 10–25 people into smaller units of 3–5 people, responsible for farming a smaller field. This is virtually a preliminary stage which could lead toward private farm ownership.

The field management system expanded countrywide after Kim Jong Un’s rise to power. It is considered to have contributed in part to the increase of agricultural production.

The newspaper cited pesticide as one example of the problem. In the past, spraying pesticides were for skilled workers; but in recent years, ordinary farmers are responsible for spraying pesticides on their own. However, from lack of experience, many farmers struggled with proper handling of pesticides and ended up wasting them or damaging their crops.

The newspaper, however, also introduced the story of jujube cooperative farms in Anak County of Hwanghae Province, praising one farm’s success in planting rice seven days earlier than planned, despite the adverse weather conditions.

Reportedly, the farmers at this cooperative farm underwent training in modern agricultural technology for 30 minutes every morning.

Another problem pointed out is that because the skill level of every farmer differs, some farmers may mistime rice planting during the planting season. In the past, task teams were formed based on skill level and could eliminate the discrepancies between farms; under the new system, problems are inevitable. Accordingly, it is reported that Anak County jujube cooperative farms are collectively helping each other to overcome this shortcoming.

The newspaper stressed that “when all farmers claim ownership of their field and subworkteam, one can create innovation in the farming operations.” Thus, the North Korean authorities are encouraging “collectivism” to overcome the limitations of the “field management system.”

UPDATE 12 (2015-7-10): The Institute for Far Eastern Studies (IFES) reports on the DPRK’s effort’s to reduce sub-workteam units and increase food production:

Despite Drought Last Year, Food Production Increased Due to Field Responsibility System

North Korea experienced its biggest drought in 100 years last year. However, North Korea claims that this did not affect its food production. North Korean authorities are claiming the main factor behind the increased food production is the will of farmers to produce more after the expansion of the “field management system,” or pojon tamdangje.

In an interview with the weekly newspaper, Tongil Sinbo, Chi Myong Su, director of the Agricultural Research Institute of the Academy of Agricultural Sciences of the DPRK commented, “the effectiveness of field management system (pojon) from cooperative farm production unit system (bunjo) is noticeable and succeeded in increasing grain production despite the adverse weather conditions.”

The field management system under the bunjo management system or the subworkteam management system divides the work unit consisting of 10-25 people into smaller units of 3-5 people, responsible for farming a smaller unit of a field. This is a measure to increase the “responsibility and ownership of farmers.”

From the July 1st Economic Management Improvement Measures enforced in 2002, the autonomy of cooperative farms and enterprises expanded. The “field management system” was piloted from early 2004 in Suan, North Hwanghae Province and Hoeryong, North Hamgyong Province, but was suspended soon afterward. However, this system is reported to have been implemented widely after the first National Conference of Subworkteam Leaders in the Agricultural Sector was held in Pyongyang in February 2014.

Economic principles behind the field responsibility system are stated as, “under the sub-work team structure, a smaller subworkteam consisting of 2 to 3 families or 3 to 4 people depending on the scale and means of production, is responsible for a specific field or plot (pojon) from planting to harvest stage to inspire farmers with enthusiasm for production by distributing the shares of production in accordance with the output of production planning.”

The newspaper added, “Despite the adverse weather conditions last year, the high grain yield was possible due to implementation of scientific farming methods and field management system to increase enthusiasm of farmers,” and “based on this experience, many cooperative farms across the country will expand subworkteam management system to field management system.”

Director Chi stated, “Since the field management system was implemented, farmers’ labor capacity increased to 95 percent. The planting time for corn and rice that took 20 to 30 days in the past is shortened to 10 to 15 days. In the autumn season, grain threshing that took 50 days is now only taking 10 days. This is changing the farming landscape.”

In addition, the distribution shares for farmers increased as well as the state’s procurement last year. This is attributed to “socialist distribution principles that distributed grains produced to farmers in-kind based on their efforts after excluding a specified amount of grain procured by the state.”

He added, “There are quite a number of farming households that received several decades worth of distribution after a year of farming. There is an increasing number of families with growing patriotism to increase the amount of grain procurement to the state.”

UPDATE 11 (2015-6-1): Andrei Lankov reports in Radio Free Asia that the DPRK has slowed down recently announced economic adjustment measures:

If we are talking about the economy, the last two or three years have been a time when hitherto unheard of stories began coming out of North Korea with ever greater frequency. Indeed, from late 2012, the North Korean government began to quietly implement reform policies highly reminiscent of what China did back in the late 1970s. Such reformist policies largely centred around two important documents, namely, the so-called ‘June 28th Instructions’ of 2012 and the so-called ‘May 30th Measures’ of 2014.

The most important part of these sets of policies was a far reaching change to North Korea’s incentive mechanism in agriculture. The ‘June 28th Instructions’ envisioned that farmers would be permitted to work in family-based teams and allowed to retain 30% of the harvest. As economists often say, incentives work, and sometimes even work wonders. Working under the new system, North Korean farmers have produced more food than at any time in the last 25 years, bringing the country quite close to the goal of food self-sufficiency.

The ‘May 30th Measures’ were even more ambitious in their scope. The measures allowed factory managers to buy industrial supplies and produce at market, while also being permitted to sell what their factories were to produce to whomsoever they pleased. They were also given the right to hire and fire personnel at will, as well as setting wages at levels they choose. This system was first implemented in early 2013 in some experimental enterprises. Such enterprises were easy to spot because workers there were paid what can be described as exorbitant wages by North Korean standards. Musan Iron Mine, for instance, being one such experimental enterprise, pays its workers 300,000-400,000 won a month (roughly 100 times what workers would get paid under the old system).

Slowdown but no reversal

The ‘May 30th Measures’ envisioned that the new system would be expanded to include all North Korean enterprises, but this is not what has happened. Reports emanating from North Korea in the last two months leave little doubt that the expected transformation has at best been postponed, at worst, cancelled entirely. Right now, only a minority of North Korean industrial enterprises have been allowed to implement the new model.

What happened? Frankly, it is unlikely we will receive a definite answer to this question any time soon. Of course, it is quite possible that Kim Jong Un suddenly changed his mind and decided to stop reformist activities that he found to be politically dangerous and ideologically suspicious. It is also possible that the reforms faced determined opposition from conservative members of the bureaucracy and military. Last, but not least, it is also possible that North Korean leaders have come to understand the problems that such reforms would face without prior and proper changes to the financial system.

Whatever the reasons, it is clear that the North Korean government has decided to slow down the reform process. At the same time, there has as yet been no reversal.

One can only hope that the North Korean government will not spend too much time in such oscillations between reformism and conservativism. Time is running out for Kim Jong Un, and this is largely because of popular political psychology.

Kim Jong Un, contrary to what many might believe, is quite popular in North Korea. According to many inside and outside the country, the ordinary North Koreans have pinned their hopes on Kim Jong Un for improving their lot. If he wants to succeed, he should not waste the potential that such popular support gives him. Many changes are potentially controversial and painful, and popularity can help smooth the process.

However, reservoirs of good will are depleted unless leaders live up to expectations. Painful reforms need to be implemented quickly, if he waits too long such reforms could prove to be dangerous.

Unlike his father and grandfather, Kim Jong Un cannot afford to ignore the popular will. His father and grandfather had a great deal of control over society and they could always count on the North Korean people’s docility and obedience. However, the surveillance network is not what it was twenty years ago. People are increasingly aware about how poor their country is and how prosperous China and South Korea are. They can also make a living outside government structures, making them potentially less easy to control.

Thus, in such circumstances, it is crucial that Kim Jong Un does not waste time. Let us hope that reforms will get back on track because they may otherwise be grave for Kim Jong Un and the North Korean people alike.

Lankov wrote in a follow-up piece in Al Jazeera on June 11:

The new management system was supposed to be implemented across the entire country starting in 2015, with nearly all industrial enterprises switching to the new model. But it did not happen.

The information emerging from North Korea through different and unconnected sources leave little doubt that the expected switch to the new managerial system has not happened.

As usual, official media is silent, but foreign investors and businessmen, as well as Chinese nationals who visited their relatives in North Korea, and some trusted North Korean contacts, all tell the same story: Reforms are not being implemented as expected.

The new rules

As was the case last year, there are a number of industrial enterprises which operate in accordance with the new rules. However, such enterprises are few and far between, and are still officially considered “experimental”. Most plants and factories still ostensibly follow the ossified rules of a Leninist command economy.

Simultaneously, foreign investors began to feel increasing pressure. They began to face arbitrary changes of rules, demand for additional payments, and other similar actions.

An acute observer described the current situation to the author: “For a couple of years, the North Korean economy resembled a car climbing a steep slope at a good speed. But a few months ago, they switched off the engine, and the car has just begun to slide down the slope.”

Given the highly secretive nature of the North Korean government, one can only guess what made Kim and his advisers change their minds. The decision to stop reforms might reflect some internal governmental turmoil, but also may be a result of a sudden change of Kim’s mind-set – indeed, the North Korean dictator is remarkably moody at times, and reforms are wrought with political risk.

It is even possible that the reforms were slowed down in order to better prepare the wider economic landscape for their full-scale implementation: This full switch to the new system could potentially trigger severe inflation, so some kind of preparatory “groundwork” is advisable and possibly even necessary.

Experimental enterprises

Whatever the reason, the reforms appear to have been stopped, albeit not rolled back. The farmers still receive their share of produce, and some factories work according to the new system, often paying exorbitant salaries to the employees. A miner at the Musan iron mine, where the “experimental enterprise” system is functional, can now easily earn $70 a month, almost 100 times the average nationwide salary of less than a dollar a month.

This gives us reason to hope that sooner or later the reforms will be resumed, and that the current halt is merely provisional. After all, the introduction of household-based agriculture a few years ago followed a similar pattern: The new policies were first announced in June 2012, then shelved, but began to be fully implemented during the spring of 2013.

Nevertheless, the news remains disturbing. If North Korea rejects reforms, it will slide back into a state of stagnation. This will mean life will become even more difficult for North Koreans and will create a great deal of trouble for North Korea’s neighbours. A reforming North Korea has the possibility of survival, while a stagnant and stunted North Korea is inevitably bound to collapse.

UPDATE 10 (2015-5-27): According to Cao Shigong a member of the Korean Peninsula Research Society, Chinese Association of Asia-Pacific Studies, in the PRC’s Global Times:

A series of proactive measures to adjust economic policies and expand exchanges with foreign countries recently adopted by North Korea have drawn widespread attention. The moves aim to help the country escape the long-lasting economic woes, improve the nation’s political and social stability, and promote economic cooperation within the region. Therefore, they deserve welcome and encouragement. However, it is inappropriate to regard these measures as a signal of overall reforms or a starting point of further opening-up.

North Korea is always reluctant to label its measures for economic development as “reform and opening-up.”

To begin with, China’s implement of reform and opening-up is based on absolute disapproval of the mistaken route that deemed class struggle as the guiding principle. Yet North Korea, as a hereditary regime, does not allow any doubt or modification of its former leaders’ ideologies and political lines such as juche (“self-reliance”) and songun (“military-first”).

Besides, China’s reform has broken the traditional planned economy and set up a market-oriented socialist economy with the coexistence of other diverse forms of ownership, especially allowing the development of private business. But North Korea still cleaves to its old beliefs that planned economy and the public ownership of the means of production are the key characteristics of socialism, and that if they are changed, socialism will be lost.

In addition, as a big country, China enjoys strong tolerance and endurance. Even it is wide open to the world, under the pressure over intruding foreign cultures and values, it can still safeguard its political and social stability. North Korea, however, will find it hard to do the same if it opens up like China, against the backdrop of US hostility, the north-south divide, and fierce competition over systems.

Consequently, North Korea took the measures of “our-style (North Korea-style) socialism” and corresponding “reforms,” including the 7.1 Economic Management Improvement Measures, 6.28 Economic Reform Measures and 5.30 Measures. Though similar to the reform and opening-up of China, they have their own distinguished features.

For instance, the country initiated “land contracts,” yet did not end cooperative farms; it encourages its business to be flexible, yet without changing the way their property is held; it established special economic zones and economic development zones, but with focusing on advantageous areas and corridors.

The basic features of North Korean “reform” measures are improving the policy flexibility, introducing new management styles, and bringing the function of the market into full play, without changing its fundamental system. The country also introduces and utilizes foreign capital under the control of the government. Apparently, these practices stem from the nation’s domestic conditions.

It is generally acknowledged that North Korea’s reform measures have achieved initial success. North Korean economy has recorded positive growth for three consecutive years, with its domestic markets and consumption becoming more active and the strain on food and living supplies eased.

On the other hand, confrontation between North and South Korea is rumbling on, and the arrangements around the only industrial complex between the two sides, the Kaesong Industrial Region, is constantly encountering conflict, which has made business people skeptical about economic collaboration with North Korea. Especially as North Korea keeps conducting nuclear tests, it remains hard for it to break the sanctions and isolation from the international community.

All these factors prove the uncertainty of North Korea’s economic reforms. Hence, media and scholars should be reminded to deliver accurate and comprehensive information over North Korea to the world, in order to prevent giving misleading impression or weakening the risk awareness of investors, causing irreparable losses as a result.

Read the full story here:
North Korean economic reforms tightly tied to domestic conditions
Global Times
Cao Shigong
2015-5-27

UPDATE 9 (2015-3-4): The Associated Press reveals additional details through an interview with Ri Ki Song, professor of the economic science section at Pyongyang’s Academy of Social Science:

The measures give managers the power to set salaries and hire and fire employees, and give farmers more of a stake in out-producing quotas. Some outside observers say they are a far cry from the kind of change the North really needs, but they agree with North Korean economists who say it is starting to pay off in higher wages and increased yields.

The changes were introduced soon after Kim took over in late 2011, codified last May and, according to North Korean economists who recently spoke to The Associated Press and AP Television News, are now being expanded to cover the whole country.

The focus is on management, distribution and farming, said economist Ri Ki Song of the Economic Science Section at Pyongyang’s powerful Academy of Social Science, in an interview in February with AP Television News. Ri said the goal is to prod North Korean managers and farmers to “do business creatively, on their own initiative.”

An embrace of capitalism it is not.

Pyongyang has not formally disclosed details of the measures, believed to have been approved on May 30, 2014. But according to the North Korean economists, these are some of the major points:

–Managers can now decide on salaries without following state-set levels. Once an enterprise has paid the state and reinvested income to expand production, develop technology and pay for the “cultural welfare” of its employees, it can use the remaining funds to determine pay levels. As an example, Ri said that since instituting this system, the Sinuiju Cosmetics Factory has raised its average monthly salary from 3,000 won (less than $1 or 119.5 yen on the black market) to 80,000 won, with the highest earners collecting 110,000 won. The new salary levels are more in tune with actual living expenses and costs in the real economy.

–Factories or other enterprises can directly negotiate trade deals with foreign entities and hire or fire workers at their discretion. They can also decide what materials to buy and from whom, and negotiate prices.

–On cooperative farms, subunits of 4 or 5 people have been set up so that each farmer has a greater stake in producing a better yield from their plot. Again, after giving the state its share and covering expenses, the surplus–either in cash or produce–can be distributed on a point-based system at the cooperative itself.

If the farming measures are implemented in a way that gives families long-term responsibility for specific plots, they could go a long way toward transforming millions of North Korean peasants from serfs who merely work the land to sharecroppers who gain at least some direct benefit from their labor. Ri said it was an important reason why crop yields were comparatively good last year, despite severe droughts.

Officials, meanwhile, insist they are holding fast to North Korea’s own brand of leader-centric socialism and are only trying out “new management methods of our own style.”

“Our country admits that our economic situation is difficult,” Ri Jun Chol, director of international economic relations at the academy, said in an earlier interview in Pyongyang with the AP. “What I can say is that looking at every quarter, it has made a lot of increase compared to the last year.”

The impact of the measures is impossible to verify because North Korea doesn’t announce economic indicators, saying such data would be useful to its enemies.

Officials also are not ready to give the nod to capitalist-style markets and small enterprises that have sprung up all over the country with the breakdown of the government’s ration system in the famine years of the 1990s. This shadowy private sector is a key engine of the North’s real economy–making up as much as 30 percent of the whole pie. The Kim regime has been more lenient than his father’s, but insists it is a temporary blip.

“In the future, the marketplaces will no longer exist,” the international economy specialist Ri said in his interview with AP. “The main role of the markets is to sell things that factories and other enterprises can’t supply. We allow the markets because the country right now doesn’t have sufficient capacity to produce daily consumer goods.”

UPDATE 8 (2015-2-28): The Economist has published a good article summarizing recent economic changes int eh DPRK–including mention of the 6.28 agriculture policies and the May 30 measures.

UPDATE 7 (2015-2-24): The Institute for Far Eastern Studies (IFES) has published a report on the “Socialist Enterprise Management System”:

“Socialist Enterprise Management System” under Full Implementation

According to the Choson Sinbo, a pro-North Korean newspaper in Japan, North Korea began to strengthen its economic reform measures by enhancing autonomy in industries from August 15, 2013.

The article entitled, “A Look to the Bright Prospects of Building a Powerful Economic Nation” was introduced. It covered a research forum held on February 11 in Japan in commemoration of the Day of the Shining Star.

The article quoted Professor Jae-Hoon Park of Choson University in Japan: “The new economic management method that was adopted into the industrial and agricultural industries from August 15, 2013 was recently formalized into the ‘Socialist Corporate Responsible Management System’ and specific measures were named to fully implement the measures.” He elaborated further on the achievements of the economic reform measures.

This is the first time to hear that a new economic reform measure went into effect in North Korea from August 15, 2013. Previously, North Korea had announced its plans to undergo new economic measures in June 28, 2012 and May 30, 2014.

The Choson Sinbo explained the ‘Socialist Corporate Responsible Management System’ is a new economic reform system in which, “business enterprises are granted certain rights to engage in business activities autonomously and elevate the will to labor through appropriately implementing the socialist distribution system.”

This measure emphasizes the autonomy of business enterprises and is seem to be an expansion of the previously mentioned June 28 and May 30 measures.

In addition, another participant at the forum, Professor Ho-il Moon, explained that “[Work Team] (pojon) responsibility system was introduced from 2013 nationwide. This system was developed to overcome the limitations of equalization of product distribution that goes against socialist distribution principles.”

This year North Korean state media is emphasizing the production in the agricultural industry, and touting the fruition of the pojon system. As a result, the Kim Jong Un regime’s agriculture reform with the pojon system at the core of the changed policy is expected to gain in strength.

According to the Rodong Sinmun, an article on February 6 introduced a successful case of pojon system in an article entitled, “Pojon Responsibility System that Produced Silver.” The article introduced the successes of a cooperative farm in Yongchon District in North Pyongan Province where it is reported to have reaped in more than one ton per chong (or 9,917 square meter) of crops from the previous year in 2013.

The pojon responsibility system reveals a reduction in size of work units working on cooperative farms (previously 10 to 15 people) to a smaller number (3 to 5 people per farm), with each group responsible for cultivating a portion of land. Speculation is that this measure by North Korea may be a precursor step before transitioning to a private farming system.

UPDATE 6 (2015-2-17): The Tongil-Ilbo claims to have a four-page document produced by the North Koreans to explain the 5.30 Measures to foreigners. They did not publish the four page document (why?), but they wrote about it on their web page. Here are some English translation notes from the article:

Could 1st Sec. Kim Jong-un become the North Korean Deng Xiaoping?

– On March 30th, 2013, North Korea adopted Byungjin (병진). Based on this strategy, for now, Kim Jong-un focuses more on economic construction. In 2015 New Year’s address, he emphasized enhancing the living standard of the people.

– Some say that Kim Il-sung tried to construct a political ideology for the nation through the Juche Idea. Kim Jong-il emphasized a “military power nation” based on nuclear power through its military first policy. Kim Jong-un is trying to be Deng Xiaoping in North Korea through economic development.

– Last year, Kim Jong-un proposed the direction of new economy policies through 5.30 Measures, and there is a strong likelihood that North Korea announces specific economic measure from the conception of policies this year marking the 70th anniversary of founding Workers’ Party.

Our Style Economic Management Methods
– 5.30 Measures (5.30담화), announced on May 30th last year with officials who are in charge of the party, state, and military organizations, are about establishing “Our Style Economic Management Methods” (우리식경제관리방법) according to the needs of the day for development.

– In these measures, Kim Jong-un said the methods should be established based on Byungjin (병진) in order to successfully realize the construction of a strong and prosperous socialist nation.

– Especially, Socialist Corporate Responsible Management System (사회주의기업책임관리제) allowed factories (공장), enterprises (기업소), and cooperative organizations (협동단제) to have practical management rights over the means of production based on socialistic ownership (사회주의적 소유), which makes laborers fulfill their responsibility for production and management and realize the principle of collectivism.

– Kim Jong-un urged in the New Year’s address this year that all the factories (공장) and enterprises (기업소) should reduce import dependence or get rid of imports (수입병: “import disease”, too much dependence on imports) and to try to localize materials and facilities [AKA import substitution].

Emphasis on Both ‘Principle’ (원칙) or ‘Actual Benefit’ (실리)? Where should we be more focused?
– As Kim Jong-un pointed out not just the socialistic principle, but also the achievement of actual economic benefits through objective economic principles and scientific logic, he practically focused on “actual benefits”.

– The 5.30 Measures also highlights scientific technology including the importance of scientification (과학화) in economic guidance (경제지도) and all the procedures and elements of production (생산) and enterprise management (기업관리).

– It urges enterprises (기업소) to actively develop new technologies (기술) and new products (신제품), and improve their quality by exercising the authority over product development (제품개발권), quality management (품질관리권) and human resource management (인재관리권), which elevate their competitiveness.

– More specifically, it recommends that factories (공장), enterprises (기업소), and cooperative farms (협동농장) implement Responsibility System (담당책임제) to use and manage national/cooperative property (국가적 협동적 소유) including machine facilities (기계설비), land (토지), and facilities (시설물).

– It is also provides that enterprises (기업소) should assess labor, and distribute in compliance with socialism so that workers receive (받다) fair/commensurate (공정한/일한것만큼) compensation.

– Kim Jong-un urged officials to learn advanced management knowledge and eventually to raise the level of management.

– In the 2015 New Year’s address he emphasized the importance of improving people’s standard of living and constructing an economically powerful and self-supporting economy (자립경제). He also proposed to diversify foreign economic relations (대외경제관계) and to actively carry on its economic special district development business (경제개발구개발사업).

Working-level Taskforce(실무 상무조) is a new generation, assembled for planning and implementation
– It seems that a taskforce (실무 상무조) that normally consists of executives (간부) of each ministry (성) and committee (위원회) was constructed around cabinet executive office (내각 사무국) and national planning committee (국가계획위원회), and it is making specific implementation plans, said Jung Chang-hyun, an adjunct professor of Kukmin University.

– It seems that the taskforce is composed of a younger generation staff, and unlike the 2002 7.1 Measures which were comprehensively implemented, the 5.30 Measures are likely to be implemented incrementally.

– This year, the 70th anniversary of independence, at the same time, for North Korea, the 70th anniversary of the establishment of Workers’ Party, there would be a great celebration on October 10th for the anniversary of founding the party in North Korea, and success or failure of the celebration would depend on economic development, especially, the improvement of living standard of the people that Kim Jong-un proposed at the New Year’s address.

UPDATE 5 (2015-2-9): A Chinese journal has published information on the May 30  Measures.

UPDATE 4 (2015-2-5): Andray Abrahamian at Choson Exchange writes about the May 30 Measures in the Wall Street Journal

UPDATE 3 (2015-2-5): A new report by the Institute for Far Eastern Studies (IFES) refers to a Choson Sinbo article and implies that financial reforms will also be part of the May 30 Measures:

New Economic Management Improvement Measures to Support Financial System Reform

North Korea has a new economic development goal with a target to draw the accumulated capital of North Korean people to promote economic development. Changes to the financial system are being introduced including development of various savings products and promotion of people’s credit card use.

The president of the Central Bank of the DPRK, Kim Chon Gyun, interviewed with Choson Sinbo (a pro-North Korean newspaper in Japan) on February 3 and explained the role of the bank — responsibility for the state’s overall monetary distribution, financial leadership and management — and the recent changes taking place in the bank.

According to President Kim, “The country is trying to better circulate domestically hoarded money to meet the demand for cash in the country’s developing economy.” In this effort, the regime is developing various financial products as well as encouraging its people to use credit cards.

This is an indication that the regime is working on various measures via the development of a variety of banking products to attract more people to deposit money in the bank and use credit cards for purchases.

With increasing international sanctions against the country, North Korea is suffering from foreign capital shortages and is attempting to attract people’s private funds to the bank to fund economic development plans.

“With the establishment of our-style economic management methods, there are plans of improving the methods of financial and economic institutions and installing financial measures in accordance with the emergence of entrepreneurial activities,” said Kim.

This shows that the spread of the market economy is expanding the autonomy of enterprises and increasing the role of the bank in lending activities to provide funds for companies.

Accordingly, speculations are that financial reform is taking place to raise capital in relation to the recent announcement by Kim Jong Un of the May 30th measures, through expansion of individual’s disposition rights, autonomy of enterprises, and decentralization of power.

Meanwhile, the Rodong Sinmun reported on February 3 that “Choson [North Korea] has steadfastly entered the road to happiness.” The newspaper vaunted the achievements of the Kim Jong Un regime, listing as successes the construction of Pyongyang Nursery, Wisong (Satellite) Scientist Street, and Munsu Water Park.

The news reiterated that major changes are underway to resolve food shortages, expressing confidence in economic measures with significantly increased autonomy of economic units. This hints at how the autonomy and decentralization granted to economic agents is acting as an important engine for economic development.

I am still trying to track down a link to the original Choson Sinbo article, but I believe this is it. Here is additional coverage in the JoongAng Ilbo and KBS.

UPDATE 2 (2015-1-26): The Choson Sinbo published an article called “Construction of economy based on the parallel pursuit of economic development and nuclear armament /병진로선에 기초한 경제건설/사회과학원 연구사가 말하는 《현장의 변화》”. A respected colleague has translated the parts related to the “May 30 Measures” and the earlier “June 28 Agriculture Measures” below:

Professor Ri Ki-song [economic research laboratory of the Academy of Social Science] also mentioned that the “Our style economic management /우리 식 경제관리방법의 확립”, which is receiving attention from other countries, also promptly meets the needs of today in terms of North Korea’s earnest strive for economic revival in a peaceful environment.

“At the end of 2011, our supreme leader Kim Jong Un gave guidance on the direction of North Korea. Scholars and workers of the economic field have examined the improvement proposals and broadened its implementations after demonstrative introductions in some units. Last May, our supreme leader also clarified the principle problems concerning ‘Our style economic management methods’.”

According to the professor there are three “clarified principles”. First is accomplishing government’s unified guidance and strategic administration in the economy sector. Second, properly accomplishing responsibility management system of socialist companies in factories, corporations and collective organizations and lastly guaranteeing the party’s leadership in economic business while also firmly promoting political business.

In the meantime, the parliamentary cabinet system along with the parliamentary center system of North Korea has been strengthened and a series of rights (programming rights, organization of production rights, development of products rights, labor management rights, financial rights, joint cooperation rights, etc.) that enable all enterprises to actively and emergently lead business activities, have been readjusted.

During the past 2 years, production has increased in many business entities that accordingly brought on a rise in employees’ standard of living. There were many cases that guaranteed much higher living expanses than previous also in the suburban factories that Professor Ri had visited. There was significant increase especially in units that produced exports such as the Rakwon Machine Complex Enterprise.

In collective farms, a system within the work team management, which makes the farmers take responsibility for their assigned fields, interconnected with the farmers’ enthusiasm for produce and increase in grain production was seen as a result.

Professor Ri pointed out that “there are objective conditions that enable ‘the method that makes farmers take responsibility for the farming of their assigned field’ to be effective”.

“One is establishing a financial basis for agriculture. That is, the nationwide land readjustment program and organization of the natural flowing waterway that were realized in the 20th century by the order of our supreme leader Kim Jong Un. Other is the increase of national investments in the agriculture sector following the parallel pursuit of economic development and nuclear armament of the Kim Jong Un era.

Farmers in collective farms also received increased shares of agriculture produces according to the work done.

So this article sets up the narrative that Kim Jong-un launched the process for establishing new management measures in 2011.

UPDATE 1 (2015-1-15): According to the Institute for Far Eastern Studies (IFES):

In a January 8, 2015 article publish by the Choson Sinbo (a pro-North Korean newspaper in Japan), the North Korean economy was described as a “flexible collectivist system,” adding that “Choson’s (North Korea’s) socialist economy promotes the establishment of a collectivist system that can flexibly respond to the current development.”

The news article explicated that this system is “under the plan and unified guidance of the state which guarantees the socialist enterprises to achieve economic development through ensuring active and evolutionary actions.” This hints at North Korean leader Kim Jong Un’s plans to continually promote a somewhat relaxed socialist planned economy in the future.

Since Kim Jong Un came to power, his regime has taken action to change the management structure and expand the autonomy (and incentives) of enterprises and farms, inter alia. Such changes can be interpreted as North Korea’s moves to highlight the flexibility of the system and the independent actions of economic agents.

The Choson Sinbo article continued: “By adhering to socialist ownership and strictly following objective economic laws in economic guidance and management, rational and just economic space will be created.” It added that “the ultimate conclusion in the establishment of our-style of economic management system is the improvement of people’s living standards.”

According to the article, “Kim Jong Un announced a historic measure regarding the establishment of ‘our-style economic management method’ in May 2014.” This seems to confirm that the recent economic policy announced in North Korea was headed by Kim Jong Un. (Note that in his 2015 New Year Address, Kim Jong Un also emphasized the need for the Cabinet, state, and Party organizations to “make proactive efforts to establish the economic management method of our style,” suggesting it as an important task of 2015.)

Until now, there was only speculation that North Korea had plans to expand elements of the market economy and widen the scope of the policy target. The speculation was based on last year’s announced ‘May 30th Measures’, the details of which were vaguely known. However, this recent article by Choson Sinbo seems to support the certainty of this policy.

The newspaper further elaborated the importance of North Korea’s ‘parallel policy of nuclear and economic development’, but also emphasized the regime’s focus on improving people’s living standards through the “defense industry’s lead to develop the science and technology sector and introduce its achievements to the economic sector associated with people’s livelihoods.”

In regards to the recent US sanctions against the DPRK following the Sony Pictures hacking incident, the news article explained that North Korea was embarking on a variety of strategies — such as seeking multifarious development of foreign economic relations, realizing various trade transactions, increasing the ratio of domestic goods (versus imported goods) of raw materials and equipment — in order to minimize the impact of the US sanctions against the DPRK economy.

The news article concluded that North Korea is not likely to give up its current ‘parallel policy’, despite the foreign threats. Rather, in response to the threats, the DPRK is developing existing foundations of the self-supporting economy in order to be self-sufficient in raw materials and equipment and improve the ratio of domestic goods to imported goods.

ORIGINAL POST (2015-1-15): I was on holiday break when all of the discussion on the “May 30 Measures (5.30조치)” broke out on the internet, so I am getting a late start to this.

First there were two reports (both in Korean) that apparently discuss new “May 30 Measures”. One report is by the Institute for Far Eastern Studies (IFES) and the second is by the Hyundai Research Institute. I will see if I can get these translated (the key parts anyway).

In the meantime, here is a summary that appeared in Yonhap (2014-11-30):

North Korea’s Kim Jong-un regime may announce a new policy vision for politics and the economy next year as the country intensifies efforts to open up a new era of the new leader, a report by a local institute showed Sunday.

“There is a possibility that North Korea may propose a new set of governing norms and power structures as it opens up the era of Kim Jong-un next year, in which the three-year mourning period for (late leader) Chairman Kim Jong-il will have been ended,” said the report by the Institute for Eastern Studies at the Kyungnam University.

“(The country) could suggest a new power structure that suits the Kim Jong-un epoch as the National Defense Commission system was (introduced) for the Kim Jong-il era and the premier system for the Kim Il-sung era,” according to the report.

On the economic front, the North is expected to push to legalize a set of new economic measures the country has experimented with in recent years, the report said, adding homegrown market forces have been pressing for economic reform.

“North Korea’s efforts to lure in foreign investment to its special economic and economic development zones may continue into the (following years),” it noted.

Andrei Lankov commented on the new economic measures mentioned in the two reports–implying that these measures are built on the success of the June 28 (6.28) Measures–with management changes in store for the agricultural and enterprise sectors of the economy. Writing in Al Jazeera, he noted:

This time, the big news is indeed a decision, the so-called “May 30th Measures”, jointly issued early this year by the North Korean cabinet of ministers and the Central Committee of the Korean Worker’s Party. This decision was initially classified, but because it was supposed to be read by so many people, its contents have become public knowledge.

The contents are revolutionary. It seems that, at long last, North Korea has decided to begin Chinese-style reforms. Marshal Kim Jong-un is obviously inclined to do what his late father, Generalissimo Kim Jong Il, was too afraid to, that is, to attempt to transform his country into a developmental dictatorship, largely similar to present-day Vietnam or China.

This decision did not come out of the blue. Indeed, it agrees very well with what Kim Jong Un and his advisers have quietly been doing over the last three years – albeit the slow-motion transformation of the country has attracted little attention from outside world.

The first significant step was the introduction of the so-called “June 28th Measures”. These measures were introduced in 2012, but only became fully into force in 2013. While on paper, they did not look that ground-breaking, they represent a sweeping reform of agricultural management in the North.

The “June 28th Measures” allowed North Korean farmers to create their own production teams of five or six people. It was not explicitly stated, but it was a signal that individual households should register as “production teams”. Such teams were given a plot of land, the assumption being that they would toil the same area for several consecutive years. The land technically remained under the jurisdiction of the state-owned and state-managed “collective farm”, but the produce would henceforth be split 70:30 between the state and the production team (ie the family). Up until then, North Korean production teams had been much larger, and all produce had to be submitted to the state in exchange for a fixed daily grain ration that was allocated to every farmer.

Given the precedent in agriculture, the “May 30th Measures” are not quite as surprising as they may first appear, though they are indeed truly radical by the standards of North Korea before 2013.

According to these measures, from 2015, North Korean farming households (for ideological purposes still branded “production teams”) will be allocated not 30 percent but 60 percent of the total harvest.

Additionally, farming households will be given large plots of land – some 3,300sq m – to act as their kitchen gardens. Until now, North Korea, unlike nearly all other communist states, never tolerated private agriculture to any significant degree, and thus, for decades, kitchen gardens were limited to a meagre 100sq m.

The measures did not stop there, though. This time the North Korean leadership has set its sights on reforming the moribund and hollowed out state industrial sector. According to the reforms, directors of state factories will find themselves covered by a new “director responsibility system”. This system makes a director, hitherto state-appointed and carefully supervised representative of the party and state, into the approximate equivalent of a private businessman (factory managers in North Korea are almost always men). Under the new system, factory directors will have the freedom to decide how, when and where they purchase technologies, raw materials and spare parts necessary for their enterprises. They will also be allowed to decide who to sell to. They are also given the right to hire and fire workers, as well as to decide how much to pay for a particular job.

Under the new system, there is a tacit assumption that directors will be able to reward themselves generously for their own work – a feature that makes them virtually indistinguishable from private entrepreneurs in market economies. As a matter of fact, a few foreign delegations that recently visited North Korea were privately briefed about coming changes.

Lankov also wrote a similar article for the New York Times:

A new set of market-oriented reforms adopted by the Central Committee of the Workers’ Party and by the cabinet of ministers on May 30, 2014, appears to aim to liberalize the economy as a whole. The content of this classified economic policy document was first partially leaked to the South Korean daily Segye Ilbo in June. Later it was confirmed by many sources and is now widely discussed by Pyongyang watchers.

The “May 30 Measures,” as they’ve come to be known, envision the significant reduction of state control of the economy and a dismantling of central planning. Managers of state enterprises will be allowed to purchase items on a free market, making deals with other enterprises or even private businesses. They will be given the right to fire and hire workers, and pay them as much as they want.

At coal mines near the border with China, where the new “system of managerial responsibility” has been tested since late 2013, the best miners may now receive up to $70 a month, an exorbitant wage for the North.

Mr. Kim has also left untouched the unofficial private economy, which began to grow in the 1990s and now contributes significantly to North Korea’s tiny G.D.P., as much as 50 percent by some estimates. This economy of small businesses like food stalls, bicycle repair shops and truck deliveries, as well as larger ones like small coal mines and fishing companies, has never been explicitly accepted by the government. But since Mr. Kim’s ascension, officials have left this gray market alone.

The agricultural reforms are already bearing fruit. In 2013, the country enjoyed the best harvest in decades when — in a first since the 1980s — it produced nearly enough food to feed its population on a subsistence level.

Choson Exchange also offered some helpful comments from the Hyundai paper.

These items are probably also related:

1. Economic Management Improvement Measures – changes after one year (IFES, 2014-4-11)

2. North Korea’s ‘New Economic Management System’: Main Features and Problems (Korea Focus, Park Hyeong-jung)

3. Recent DPRK wage increases / economic management changes

4. Recent information on implementation of economic adjustment policies

5. “Securing economic profit,” fundamental to economic management (IFES 2014-10-31)

6. North Korea’s evaluation of its 2013 economic policy

7. Worker’s Party sets up Economy Department

8. North Korea making visible progress towards economic reforms

9. DPRK altering Commercial Distribution system

10. Kim Jong-un’s directions on improving economic management

11. Miners Fail to See Promised Salary Bump (Musan Mine)

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North Korean economic reforms tightly tied to domestic conditionsCao Shigong

Wednesday, May 27th, 2015

According to Cao Shigong a member of the Korean Peninsula Research Society, Chinese Association of Asia-Pacific Studies, in the PRC’s Global Times:

A series of proactive measures to adjust economic policies and expand exchanges with foreign countries recently adopted by North Korea have drawn widespread attention. The moves aim to help the country escape the long-lasting economic woes, improve the nation’s political and social stability, and promote economic cooperation within the region. Therefore, they deserve welcome and encouragement. However, it is inappropriate to regard these measures as a signal of overall reforms or a starting point of further opening-up.

North Korea is always reluctant to label its measures for economic development as “reform and opening-up.”

To begin with, China’s implement of reform and opening-up is based on absolute disapproval of the mistaken route that deemed class struggle as the guiding principle. Yet North Korea, as a hereditary regime, does not allow any doubt or modification of its former leaders’ ideologies and political lines such as juche (“self-reliance”) and songun (“military-first”).

Besides, China’s reform has broken the traditional planned economy and set up a market-oriented socialist economy with the coexistence of other diverse forms of ownership, especially allowing the development of private business. But North Korea still cleaves to its old beliefs that planned economy and the public ownership of the means of production are the key characteristics of socialism, and that if they are changed, socialism will be lost.

In addition, as a big country, China enjoys strong tolerance and endurance. Even it is wide open to the world, under the pressure over intruding foreign cultures and values, it can still safeguard its political and social stability. North Korea, however, will find it hard to do the same if it opens up like China, against the backdrop of US hostility, the north-south divide, and fierce competition over systems.

Consequently, North Korea took the measures of “our-style (North Korea-style) socialism” and corresponding “reforms,” including the 7.1 Economic Management Improvement Measures, 6.28 Economic Reform Measures and 5.30 Measures. Though similar to the reform and opening-up of China, they have their own distinguished features.

For instance, the country initiated “land contracts,” yet did not end cooperative farms; it encourages its business to be flexible, yet without changing the way their property is held; it established special economic zones and economic development zones, but with focusing on advantageous areas and corridors.

The basic features of North Korean “reform” measures are improving the policy flexibility, introducing new management styles, and bringing the function of the market into full play, without changing its fundamental system. The country also introduces and utilizes foreign capital under the control of the government. Apparently, these practices stem from the nation’s domestic conditions.

It is generally acknowledged that North Korea’s reform measures have achieved initial success. North Korean economy has recorded positive growth for three consecutive years, with its domestic markets and consumption becoming more active and the strain on food and living supplies eased.

On the other hand, confrontation between North and South Korea is rumbling on, and the arrangements around the only industrial complex between the two sides, the Kaesong Industrial Region, is constantly encountering conflict, which has made business people skeptical about economic collaboration with North Korea. Especially as North Korea keeps conducting nuclear tests, it remains hard for it to break the sanctions and isolation from the international community.

All these factors prove the uncertainty of North Korea’s economic reforms. Hence, media and scholars should be reminded to deliver accurate and comprehensive information over North Korea to the world, in order to prevent giving misleading impression or weakening the risk awareness of investors, causing irreparable losses as a result.

Read the full story here:
North Korean economic reforms tightly tied to domestic conditions
Global Times
Cao Shigong
2015-5-27

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