North Korean Economy Watch

According to the Daily NK:

The North Korean authorities in Hamheung are demanding 150,000 won from each trader in local markets to support construction projects in Pyongyang, according to a source from the city.

“Since the start of October, Hamheung Municipal People’s Committee has been taking money from market traders on the premise that ‘You have to give material support to Pyongyang construction workers,’” the source told the Daily NK today. “In the case of traders in the markets in Hoisang and Sapo, they are being asked for as much as 150,000 won each.”

Hamheung is the most famous industrial city in North Korea, and as such has larger markets than many other places. Thus, given that each of the two markets mentioned by the source has more than 500 traders, if the authorities were to reach their goal figure then they would be able to take 75,000,000 won from each one.

However, the Market Management Office for each market already receives 300-500 won per day from traders in the form of a ‘stall tax’, with sellers of home appliances and other high priced goods paying 500 won and those who sell food only paying 300 won. Thus, 150,000 won represents a huge cost, and many traders are apparently reacting to the demand with incredulity.

The source also noted that this does not appear to represent a central Party directive, with only traders in South Hamkyung and Yangkang Province having been hit by it to date.

“In Hyesan Market in Yangkang Province, it is 100,000 won per trader,” the source revealed, adding, “It seems like a case of the provincial Party preparing funds to support Pyongyang construction by taking money from traders.”

Elsewhere, although traders are now angry at the demand for funding, everything else is good, with official market controls being very lightly implemented at the moment, according to the source.

“The market is open from morning to night, and with the exception of the usual crackdowns on grasshopper traders there are no notable inspections,” he revealed.

But then, he added sarcastically, “They are taking money from the market as if it were some kind of state industry, so maybe that’s why they are leaving it alone.”

Read the full story here:
To Hamheung Traders: 150,000 Won for Pyongyang!
Daily NK
Lee Seok Young
2011-10-18

UPDATE 6 (2011-10-4): According to the Daily NK:

Progress on the project to build 100,000 homes in Pyongyang is moving forward rapidly in at least one location: central Changjeon Street. According to a source from the city who spoke with The Daily NK yesterday, “There are around 30,000 homes being constructed along Changjeon Street, and the shells have almost all gone up.”

Changjeon Street is in the heart of Pyongyang, near well-known spots such as Mansudae Assembly Hall and the giant bronze statue of Kim Il Sung. The authorities are known to be focusing the state’s limited power on construction in this area, with the intention of completing at least the most visible part of planned projects ordered for the commemoration of the 100th anniversary of Kim Il Sung’s birth in April, 2012.

North Korea is understood to have invited a number of foreign dignitaries to witness several big events it has planned for next April, including the Spring Friendship Art Festival and the April 15th ‘Day of the Sun’ birthday celebrations. In that context, completing construction along Changjeon Street is a natural priority.

Changjeon Street was apparently given a further boost following the visit of Kim Jong Il to China in May. Kim was reportedly struck by the inadequacy of Pyongyang when held up against major cities in China, and called for improvement.

The authorities thereafter ordered that the skeletons of homes on Changjeon Street be completed by the anniversary of the Party foundation, which falls on October 10th. According to the source, “The pace of construction has picked up since the authorities ordered that the building frames be completed by October 10th.”

“They started work on a 40-storey building at the end of May, and now are up to the 35th storey. They are using a waterproofing agent that causes the cement to dry quickly, which means they sometimes get through three floors a day,” he continued.

Rodong Shinmun, the Party mouthpiece publication, described the renewed pace of operations on Changjeon Street last Thursday, stating proudly, “The blinding pace of the audacious construction offensive, paying no heed to night or day, has allowed for the construction of the framework of a 40-floor high-rise residential building in no time at all.”

Similar progress is being seen on road extensions and beautification projects nearby. The source said, “Road extension projects have been completed, including that of the road in front of the Botong River and Pyongyang Gymnasium. They’ve put flower beds by the side of the road and the whole area is now in a very good state.”

However, the fixation with construction on Changjeon Street is leading to accidents there, the source added, noting, “Because they only pressure us to speed up and don’t say anything about safety, there have been frequent incidents of workers falling.”

It is also causing other projects in the city to lag far behind. According to the source, “The authorities are doing renovations on houses along the main roads, but only painting and sprucing up the areas which can be seen. The buildings along Tongil, Hyungsaesan and Yongseon Streets were all demolished in 2009, but as yet there is no sign of progress from the company which has been tasked with the construction work.”

UPDATE 5 (2011-6-8): According to the Daily NK:

Finally, yesterday’s Rodong Shinmun, citing a statement from Kim Jong Il himself, went on to remind the people, “Construction in Pyongyang is not simply an issue of operational economics regarding the formation of roads and construction of homes, it is an important political issue related to the prestige of Socialist Chosun and dignity of the Kim Il Sung Motherland.”

This kind of propaganda push is aimed at ensuring the people are cogent of fact that modern buildings are being constructed by the authorities; an attempt to bring to life ongoing propaganda about the strong and prosperous state, which inside sources suggest is viewed with considerable public cynicism.

According to the Chosun Shinbo piece dated June 23rd, the construction at Mansudae is set to include a complex of 14 new apartment buildings, including North Korea’s tallest at 45 floors, a school, nursery and other public buildings. Elsewhere, there is a plan to pull down older construction in Mansu-dong and replace it with a park, and another to put up a modern cylindrical and square apartment building in the vicinity of Pyongyang Students’ and Children’s Palace.

Meanwhile, all the talk of modernity fits well with efforts to promote the youthful vigor of successor Kim Jong Eun, especially as it surrounds the statue of Kim Il Sung on Mansudae Hill, which is itself said to be undergoing a facelift.

In yesterday’s piece, Rodong Shinmun went on, “According to the Party’s grand capital construction plan, a fire of new Pyongyang creation is blazing violently in the ongoing Mansudae area construction,” adding, “According to this warlike strategy, in a short time, less than a month after it began, the groups taking part in the construction had achieved innovative results, digging the vast foundations of the new homes and laying the concrete.”

However, rumor has it that the reality does not meet the heights of this official propaganda, with the authorities having only managed to construct some 500 new residences in the period to the end of 2010.

UPDATE 4 (2011-6-8): KCTV has braodcast new footage of the construction zone and explained what a few of the new buildings will be.  I have uploaded the particular video clip to YouTube, and you can watch it here.

Below are screen shots.  In the picture on the left, we can see that many of the older buildings in the area have already been removed and holes have been dug for the new foundations.  In the picture on the right we can see another conceptual shot of the area from the other side of the Taedong River.

UPDATE 3 (2011-6-8): According to the Pyongyang Times:

A huge construction project has been undertaken to renew the looks of the Mansudae area of Pyongyang on the occasion of the 100th birthday of President Kim Il Sung (April 2012) as part of the grand capital construction plan of the Workers’ Party of Korea.

The project includes the construction of modern dwelling houses and a monumental structure in the area in central Pyongyang where the statue of President Kim Il Sung stands and the development of parks in the surroundings to meet the requirements of the new century. It will be a big stride forward to building Pyongyang magnificently as the world-level city.

The ground-breaking ceremony took place on May 22.

It brought together Premier Choe Yong Rim, Minister of the People’s Armed Forces Kim Yong Chun, Vice-Premiers Jon Ha Chol and Ro Tu Chol, officials from ministries, national agencies and municipality and tens of thousands of builders.

Premier Choe Yong Rim made a keynote speech.

He noted that leader Kim Jong Il saw that monumental structures were built everywhere in the capital to glorify the President’s revolutionary exploits for all ages. He then referred to the facts that the leader initiated the construction of Changgwang and Kwangbok Streets and other large projects and led them in the van to bring about a radical turn in building the capital and improving the people’s livelihood.

He said that under his wise guidance modern houses including those in Mansudae Street and at the foot of Haebang Hill, cultural and public service facilities, parks and recreation grounds were built in recent years and gigantic housing development and city landscaping projects are now dynamically pushed forward in Pyongyang.

More recently the leader suggested the development of the Mansudae area and took drastic measures to push the project from design to mobilizing the builders and supply of materials, he noted, and added that all the officials and builders should be well aware of the importance and significance of this construction, strictly observe the instructions of the designs, building operations and construction methods and work hard to create a new building speed.

He stressed the need to finish the construction of houses in Ryongsong, Sopho and Ryokpho areas in time together with the construction in the Mansudae area.

He called on the whole Party, the entire nation and all the people to turn out to support the construction in the Mansudae area.

He was followed by other speakers.

UPDATE 2 (2011-6-3): KCNA has finally published a story about the new construction in the Central District:

There started the project to build on the best level the Mansudae area in Pyongyang where President Kim Il Sung’s statue stands in the run-up to the centenary of his birth.

A monumental edifice, high-rise apartment houses, skyscraping buildings, public buildings and cultural and service facilities will appear as required by the new century in the vast area covering dozens of hectares where its old appearance will be no longer to be seen.

A new street will make its appearance as required by the modern sense of beauty, completely free from the existing mode of urban construction.

It will be unique in the formative artistic representation of architecture and the whole area will turn into a huge park. This is a new idea in the lay-out of the street in the area.

A round-shape big people’s theater will spring up in the area of Mansu-dong.

Trees of good species and flowering plants will be planted in the more than ten hectare area around the theater facing the Mansudae Assembly Hall. Promenades and public service facilities will keep in good harmony.

The height of the high-rise apartment houses to be built in the area covering hundreds of thousands of square meters in Kyongsang-dong, Jongro-dong and Taedongmun-dong is expected to gradually increase and twin tower buildings will be concentrated in the area near the Changjon Intersection so that one can enjoy a bird-eye-view of rhythmic distribution of huge buildings on the street.

A catering street will rise to face Okryu Restaurant and public buildings and cultural and service facilities of unique styles will be distributed to the convenience of the residents. They will be decorated with peculiar street lamps and diverse lights.

What draws attention in the lay-out of the streets is the fashionable appearance of high-rise and skyscraping apartment houses of peculiar styles, a harmonious combination of circular, semi-circular and angle style architecture.

The houses will have de luxe flats which will meet the cultural need of Pyongyangites.

When the construction of the Mansudae area completed, it will best match the monumental edifices including the Chollima Statue, the Tower of the Juche Idea, the Monument to Party Founding, the Grand People’s Study House and the Moranbong Theater and structures in the era of the Workers’ Party including An Sang Thaek, An Sang Thaek Street, Munsu, Mansudae and Changwang streets. This will change the appearance of the capital city beyond recognition.

Conceptual images of the construction area can be seen below.

UPDATE 1 (2011-5-24): In the comments, a reader points out a photo by a recent visitor to Pyongyang.  See a LARGE version of the photo here. The photo (2011-4-24) shows that renovation of the Mansudae area began over a month ago.  As of April 24, area families and all of their belongings had already been relocated (to where?); shops had been closed and emptied; and building destruction had begun.

ORIGINAL POST (2011-5-23):

The May 22 episode of the DPRK’s evening news (via elufa.net) featured a ground-breaking ceremony for a re-development project in the Mansudae area of Pyongyang’s Central District (만수대지구, 중구 역). You can see a clip of the evening news broadcast (with English translation) here.

I used the project overview map in the evening news to map out the construction area on Google Earth:

In Jongro-dong (종로동) the Pyongyang School Children’s Palace (평양학생소년궁전) will be spared destruction, but the exclusive Kumsong Middle School No. 1 next door (굼성제1 중학교–not to be confused with the Kumsong School in Mangyongdae) looks like it will be torn down.

In Mansu-dong (만수동) we will see the destruction of the historical Changjon Primary School (평양창전소학교) and the DPRK’s central bank.  Maybe the central bank will get a home in the new facilities, but I have no idea.

In Kyongsang-dong (경상동) the Pyongyang Kyongsang Kindergarden (for musically gifted youngsters) as well as the Pyongyang Children’s Department Store will be torn down.  These too may receive  a new home in the reconstructed neighborhood facilities.

Additional information:
1. This project comes immediately after the first Mansudae Area redevelopment project near the Potong Gate (just to the west of this one).  Read about the first Mansudae Street renovation project here.

2. This residential construction project, though unlikely to be completed by April 2012, is probably part of the DPRK’s 2012 Kangsong Taeguk (강성대국) campaign.  As part of the campaign, Pyongyang is to receive 100,000 new housing units.  Read more about 2012 construction projects here, here, and here.

3. One report says that the KPA has been put in charge of the DPRK’s renovations.

4. Pyongyang just held an architecture exposé.  See some of the work here.

5. These projects appear to be priorities as well.

Pictured above: An annual index measure of economic freedom in the DPRK from 1995 to 2011, published by the Heritage Foundation’s and Wall Street Journal’s Index of Economic Freedom.

Andrei Lankov writes in the Asia Times:

[The] Heritage foundation and the Wall Street Journal recently published a new edition of their annual index of economic freedom, according to which North Korea has the world’s least-free economy. One can hardly argue about this – North Korea has for decades worked hard to take Stalinism to its logical extremes, and slightly beyond that.

However, one gets perplexed when looking at the grades of unfreedom that are given by the Heritage Foundation to the North through the 1995-2011 period. According to the index, the level of economic unfreedom in North Korea was essentially the same throughout the entire 1996-2005 period. Then, in 2005 it deteriorated considerably and has continued a slow downward slide until now.

This depiction is bound to raise the eyebrows of anyone who is familiar with actual economic trends in North Korea. The graph is correct when it says that the economy became more restrictive in 2005, when the government tried to re-introduce the rationing and reconfirmed the ban on the private sale of grain (such a ban had existed since 1957, but ceased to be enforced around 1990).

However, the 2005 measures were, essentially, a backlash, an attempt to reverse the half-baked reforms of 2002 – and those reforms can be described only as liberalizing.

On balance, the 2002 reforms should not be overestimated. Nonetheless, the 2002 reforms legalized a significant part of the black economy, and also granted managers of state-owned industrial enterprises a measure of managerial freedom they had not had for many decades.

If this was not an increase in economic freedom, what was it? But the Heritage Foundation graph does not give any hint of this change: the line that purports to depict the level of economic freedom remains on the same low level in 2002.

This is more interesting because 1997-2002 was when actual economic freedom increased dramatically. The old hyper-Stalinist laws remained technically effective, but nobody bothered to enforce these restrictions. It is estimated that in the early 2000s, the average North Korean family drew some 80% of its income from various market activities.

This was technically illegal, but the authorities were ready to turn a blind eye to the re-emergence of some form of a market economy, and in 2002 they even grudgingly and partially legalized the already flourishing market economy.

However, these improvements – both de-facto and, in 2002-2005 de-jure – find no expression in the flat line of the Heritage graph which, however, does not fail to notice that after 2005 the situation again began to deteriorate due to a government backlash against the private economy. The backlash was not particularly successful, but it lasted until 2009, and this is correctly reflected by the downward line at the graph.

However, then the graph begins seriously misleading again – and again, seemingly due the same implicit assumption that in North Korea things can go only from bad to worse. The graph depicts 2009 as a year when the level of freedom went even lower – and this is a correct assumption, since in 2009 the authorities undertook currency reform.

The reform’s main, if not sole, purpose was to annihilate the private economy that had survived the 2005-2009 backlashes surprisingly well. There is little doubt that North Korean decision-makers really want, above all, to revive the hyper-Stalinist economy that alone guarantees the regime’s long-term political stability (or so they – and the present author – believe).

However, the 2009 bold attempt to go back to the Stalinist ways ended in complete and pathetic failure – and the government, fearful of the chaos its inept reform created, backpedaled immediately.

The failure of the 2009 currency reform was followed by another wave of economic liberalization. In May 2010, the government lifted all restrictions and bans on private retail trade that were introduced in the 2005-09 backlash. In fact, the North Korean economy nowadays is roughly as free (or rather unfree) as it used to be immediately after the 2002 reforms. But there is no hint of this roller coaster changes in the slowly descending line of the Heritage Foundation Index.

The same is applicable to the economic situation. Every year, we get reports about a looming famine in North Korea – and this year is no exception. A quick look through headlines of major newspapers can clarify that such reports surface with predictable regularity every year.

In March 2008, the International Herald Tribune ran a headline “Food shortage looms in North Korea”. In March 2009, the Washington Post headline said “At the Heart of North Korea’s Troubles, an Intractable Hunger Crisis”. One year later, in March 2010, the Times of London warned: “Catastrophe in North Korea; China must pressure Pyongyang to allow food aid to millions threatened by famine.” In March 2011, The New York Times wrote: “North Korea: 6 Million Are Hungry.” The predictions of gloom come every year, but famine does not.

Actually, from around 2002-2003, we have seen a steady but clear improvement in North Korea’s economic situation. North Koreans are still malnourished, and likely to remain so for the foreseeable future. Nonetheless, they are not starving any more – at least not in significant numbers.

However, opponents of the regime cannot admit that people are not starving or report about (however marginal) improvement of the food situation, since, as I have said, from their viewpoint nothing can possibly improve in North Korea. At the same time, supporters of the regime will not admit that the North Korean people are still malnourished, and the regime itself is active in presenting exaggerated evidence of a looming famine (or perhaps, even fabricating such evidence when necessary) – as this will help it get more free food from the outside, and this is what Pyongyang needs.

One can see the same trends everywhere. For example, human-rights non-governmental organizations keep telling us about a further deterioration in the human-rights situation in the North. However, the evidence tells a different story. Human rights are still by far the world’s worst, but they are better than 20 or 30 years ago.

Just one example of this under-reported improvement will probably suffice. Until the mid-1990s, the entire family of a political criminal – that is, all people who were registered at the same address as he or she, were by default shipped to a concentration camp. Some 10 or 15 years ago, this approach ceased to be universal, so families of many political criminals – including some prominent activists based in Seoul – remained free.

There is little doubt that families are harassed, and even distant relatives of dissenters are denied good jobs and/or the right to reside in Pyongyang and major cities. Nonetheless, there is a great difference between inability to live in a major city and incarceration in what might indeed be the world’s worst prison camp system.

However, this change is seldom reported. Human-rights advocacy groups obviously cannot bring themselves admit that something can get better under the Kim family regime. Probably, they think that such admission would make the situation look less urgent and thus would help the Kim family regime in some indirect way. These worries might be even well-founded – but the result is the tendency to ignore a particular type of “politically incorrect” news.

Paradoxically, regime sympathizers – whose presence is especially noticeable among the South Korean left – are equally reluctant to attract any attention to these minor improvements. It is understandable, since we are talking about changes from the awful to the very bad, and Pyongyang champions cannot bring themselves to admit how brutal and inefficient the regime actually is.

For example, if pro-Pyongyang media outlets report that the “family responsibility” principle does not apply in many cases, they would have to admit that in the supposed “paradise” of national purity and/or anti-globalist determination in North Korea, not only dissenters, but their families as well were shipped to concentration camps until quite recently. No member of South Korea’s radical nationalist left could bring him or herself to admit this fact.

One cannot imagine a pro-North Korean leftist blogger in Seoul triumphantly writing something like this: “In the past, if somebody watched a South Korean melodrama, he would be arrested, beaten unconscious and then sent to prison for life together with his entire family. Nowadays, things are so better: only his teeth – not ribs! – are likely to be broken during an investigation, and then he or she will spend in prison merely a couple years, and his family are now allowed to keep their freedom. What an improvement!”

The sad irony is that this change is actually an improvement, but neither side of the political debate is going to report it. This is confirmation to the old truism: political passions make people oblivious to the obvious. However, propaganda is a poor substitute for honest and objective analysis – even when such propaganda is produced by people who believe it themselves.

Read the full story here:
It’s not all doom and gloom in Pyongyang
Andrei Lankov
Asia Times
2011-9-23

China has reportedly agreed to provide electricity to the Rason special economic zone, and the minimum wage investors can expect to pay the North Korean government to employ North Korean citizens qill be approximately US$80.

According to the Korea Times:

China has agreed to provide electricity to a special economic zone in North Korea’s northeast, a source said Tuesday.

The agreement to provide power to the Rason economic zone was signed between Jang Song-thaek, vice chairman of the North’s powerful National Defense Commission, and China’s Commerce Minister Chen Deming, during an economic meeting on June 8, the source said.

The source cited Chinese officials familiar with the project.

The project calls for laying high-voltage power distribution lines between the Chinese border city of Hunchun and the North’s city of Rajin as well as building a thermal power plant in Rason, the source said.

Construction for the power lines is likely to begin soon while the two sides are in talks to work out details for the envisioned power plant, the source said.

“Power is an important infrastructure in developing the Rason special economic zone,” said Cho Bong Hyun, an expert at the Seoul-based IBK Economic Research Institute. “China’s agreement to provide power increases the chances of the zone’s success.”

The North designated Rason as a special economic zone in 1991 and has since striven to develop it into a regional transportation hub, though no major progress has been made. (Yonhap)

According to Yonhap:

The minimum monthly wage for workers at a North Korean special economic zone has been set at US$80, a source familiar with the reclusive state said Thursday, a small enough sum that could attract Chinese firms to invest there.

North Korea designated Rason as a special economic zone in 1991 with the aim of developing it into a regional transportation hub. Amid few signs of progress, the country broke ground in June on a joint project to develop it into an economic and trade zone with China. The northeastern port city borders both China and Russia.

“According to a booklet I obtained on the tax policy of the Rason economic and trade zone, the minimum monthly wage for workers is $80,” said the source, who spoke on the condition of anonymity.

Under a North Korean law for the Rason economic zone, revised in January last year, the minimum monthly wage for local employees at foreign firms is set jointly by the employer and the municipal authorities.

The amount is higher than the $63.814 recently set as the minimum wage for North Korean workers at the inter-Korean industrial park in Kaesong, the North’s western city bordering South Korea, but less than the average salary of Chinese workers. According to the South’s state-run Korea Trade-Investment Promotion Agency (KOTRA), Chinese workers are paid a minimum of $167 per month.

Experts say this wage gap could attract Chinese investors to Rason, as they have already started showing signs of relocating operations to Vietnam, Indonesia and other countries with cheaper labor than China.

The booklet also contains details of Rason’s tax policy, including a five-year property tax exemption for buildings purchased through private funds and a corporate income tax rate of up to 14 percent, according to the source.

“The booklet was made by Rason’s tax bureau in July-August to introduce foreigners to its tax policy,” the source said.

And according to the Institute for Far Eastern Studies (IFES):

Hwang also elaborated on the eight preferential policies providing special tax benefits to foreign investors. He asserted, “The government of North Korea will guarantee the investment of the foreign investors by not nationalizing or demanding requisitions. For inevitable cases where such demands occur, proper compensation will be provided.”

The income tax is also at 14 percent, which is 11 percent lower than other areas in North Korea. For companies with business plans over ten years, foreign capital companies will receive three years of tax-free benefit starting from the profit earning year and two years thereon after will receive 50 percent tax-free benefits. According to Hwang, over 100 foreign companies and offices are operating businesses currently in the special economic zone.

Read the full stories here:
China agrees to provide power to NK’s Rason economic zone
Korea Times
2011-9-13

Minimum wage at N. Korean special economic zone set at US$80: source
Yonhap
2011-9-8

Stephan Haggard and Dan Pinkston have found and posted comments attributed to Kim Jong-il revealing some of his thinking on “markets” and the “market economy”:

Kim Jong-il, “On the promotion of a superior socialist economy…adhering to the principles of socialism” June 18, 2008, dialogue with party and state officials.

“…As I said on many occasions during the recent period, one must have a correct understanding of the market. As we allowed a certain use of markets with respect to economic management, some people understood this as a departure from the socialist principle and as a move towards a market economy through “reform” and “opening up” of the country’s economy.

But this is a very wrong way of reasoning. Having a misguided understanding of the market and the market economy on the part of economic planners shows their lack of ideology and knowledge… [If] one fails to exactly and deeply recognize the party’s ideology and policy with regards to economic planning, that person will have his or her faith in the superior socialist economy shaken and can be dazzled by “reform” or “opening up” that the imperialists brag about and also be captured by the fantasy that the capitalist market economy promises.

Workers need to be awakened from these pitfalls…. Markets are both home to and a hotbed for un-socialist phenomenon and capitalist factors in the economic sectors. Without devising a national plan about markets and neglecting them as they are, or further encouraging their activities and expanding their reach, the country’s economy will inevitably turn into a market economy. However, following the practical conditions by using the market to a certain extent while keeping it under national control does not necessarily mean a movement towards market economy. Markets and a market economy are not the same concepts. The question resides in how to perceive and treat the market, and how to use it following [appropriate] principles and direction…”

-Original text in Korean

“…….내가 최근시기 여러 기회에 말하였지만 시장에 대한 인식을 바로 가져야 합니다. 우리가 경제관리에서 시장을 일정하게 리용하도록 하였더니 한때 일부 사람들은 사회주의 원칙에서 벗어나 나라의 경제를 《개혁》《개방》하여 시장경제로 넘어가는 것처럼 리해한 것 같은데 이것은 아주 잘못된 생각입니다. 경제지도일꾼들이 시장과 시장경제에 대한 그릇된 인식을 가지게 되는 것은 사상의 빈곤 지식의 빈곤에 빠져있다는 것을 말해줍니다. 누구나 할 것 없이 경제사업과 관련한 당의 사상과 방침을 정확히, 깊이있게 인식하지 못하면 사회주의 경제의 우월성에 대한 신념이 흔들리게 되어 제국주의자들이 떠벌이는 《개혁》《개방》에 현혹될 수 있고 자본주의 시장경제에 대한 환상에 사로잡힐 수 있는 것입니다. 이에 대하여 일군들이 각성을 높여야 합니다….시장은 경제분야에서 나타나는 비사회주의적 현상, 자본주의적 요소의 본거지이며 온상입니다. 시장에 대하여 아무런 국가적 대책도 세우지 않고 그대로 내버려 두거나 시장을 더욱 조장하고 그 령역을 확대하는 방향으로 나간다면 불피코 나라의 경제가 시장경제로 넘어가게 됩니다. 그러나 현실적 조건에 따라 국가적 통제 밑에 시장을 일정하게 리용하는 것이 곧 시장경제로 가는 것은 아닙니다. 시장과 시장경제는 같은 개념이 아닙니다. 문제는 시장을 어떻게 보고 대하며 그것을 어떤 원칙과 방향에서 어떻게 리용하는가 하는데 있습니다….”

Marcus Noland followed up with a [longer] publication by Kim Jong-il’s sister, Kim Kyong-hui:

Strengthening Centralized, Unified State Guidance Over Economy, Kyo’ngje Yo’ngu

Our army and people are vigorously carrying out a general onward march to elevate the economy to a stage of leaping development through a new great revolutionary upswing under the great party’s military-first leadership.

Today, when our country is displaying its majestic appearance and might as a politically, ideologically, and militarily powerful state, in order to build it into an economically powerful socialist state and a socialist paradise where the people enjoy an affluent life with nothing more to desire in the world by concentrating efforts on the economic construction and on improving the people’s living standard, it is necessary to adhere to the socialist principle in the economic work and bring the superiority of the socialist planned economy into high play, and what is important in this is to strengthen the centralized and unified guidance of the state over the economic construction.

The great leader [ryo'ngdoja] Comrade Kim Jong Il [Kim Cho'ng-il] has pointed out the following:

“Above all else, it is necessary to strengthen the centralized and unified guidance of the state over the economic construction.”

Strengthening the centralized and unified guidance of the state in the socialist economic management arises as a basic demand for improving the economic management in line with the intrinsic nature of socialist society, further consolidating and developing the socialist economic system by bringing the superiority of the socialist planned economy into high play, and accelerating the construction of an economically powerful state.

Strengthening the centralized and unified guidance of the state is a basic demand for improving the socialist economic management because, above all, managing and operating the country’s economy in a planned manner under the state’s centralized and unified guidance is an intrinsic demand of the socialist economy that is based on collectivism and a basic principle of the socialist economic management.

Realizing the centralized and unified guidance of the state in the socialist economic management serves as a lifeline of the socialist economic management, which stems from the natural law-governed nature of the socialist economic development and the essential characteristics of the socialist economy.

The centralized and unified guidance of the state over the economy is, above all, an intrinsic demand of the socialist economy that is based on collectivism. The socialist economy is a large-scale collective economy in which all sectors and units of the people’s economy are organically connected with each other based on social ownership of the means of production, and it is a highly organized and centralized planned economy. This is the essential superiority of the socialist planned economy, which is distinct from the capitalist market economy that operates spontaneously on the basis of private ownership of the means of production. In a capitalist society, the bourgeois state is not able to perform the function of interconnecting the management activities of different enterprises and leading them in one direction. In a capitalist society, the economy moves in a spontaneous manner amid the pursuit of profits and competition based on the law of the jungle due to the conflict of interests between the capitalist class and the working popular masses and among capitalists, and this accompanies the bankruptcy of enterprises.

In contrast, the socialist economy is based on social ownership of the means of production, and it is managed and operated through goal consciousness by the popular masses as the masters. Social ownership of the means of production calls for combining all economic sectors and units into a single production organism, and also for the factories and enterprises comprising its components to move under a unitary command. Realizing planned ties between factories and enterprises and ensuring that the economy operates under a single unitary command are firmly guaranteed by the unified guidance of the socialist state.

The centralized and unified guidance of the state over the economy is also a basic principle of the socialist economic management.

Apart from the centralized and unified guidance of the state and the principle of managing a planned economy, socialism cannot be defended in the economic field, and the socialist economy cannot be developed.

The initiative of lower units has to be brought into high play in the socialist economic management, but this has to be achieved strictly on the basis of firmly guaranteeing the centralized and unified guidance of the state and within the framework of the socialist planned economy. It is only through the centralized and unified guidance of the state that it is possible to correctly map out plans so as to guarantee the greatest actual profits consistent with national interests and the all-people’s economic interests, mobilize all production potentials of the country to the maximum, concentrate forces and resources on the objects that are of key significance in the overall economic development, and thus achieve a planned and balanced development of the economy. If one moves in the direction of giving a free rein to economic management and enterprise management in an attempt to enhance the initiative of lower units and strengthen their “independence” and “self-reliance,” then the lower units will break way from the unified guidance and control of the state and act as they please, and this will not only bring about tremendous national waste and loss but also make it impossible to neither defend socialism in the economic field nor develop the socialist economy.

Strengthening the centralized and unified guidance of the state is a basic demand for improving the socialist economic management also because the centralized and unified guidance of the state over the economy has to be strengthened in order to be able to mobilize all potentials to the maximum based on the principle of self-reliance and thus elevate the country’s economy to a stage of leaping development and accelerate the construction of an economically powerful socialist state.

Today’s great upswing calls for more highly holding up the banner of self-reliance, and an economically powerful socialist state is a powerful state of self-reliance, a powerful state with a mighty self-supporting national economy.

We have laid the strong foundation of a socialist self-supporting national economy by highly displaying the revolutionary spirit of self-reliance under the wise leadership of the great leader [suryo'ngnim] and the respected and beloved general. Mobilizing and utilizing the potential of the already provided foundation of a self-supporting economy to the maximum is the most accurate way to elevate the country’s economy to a stage of leaping development and accelerate the construction of an economically powerful socialist state in our style in the present circumstances.

Though many obstacles are still lying in the way ahead of us, we have to open a road of advance for victory by relying on the boundless creative ability of all the people, our resources and technology, and the superiority of our system.

The centralized and unified guidance of the state over the economy has to be strengthened in order to elevate the country’s economy to a stage of leaping development by mobilizing the potential of the already provided foundation of a self-supporting national economy to the maximum and to accelerate the construction of an economically powerful socialist state.

Above all, the centralized and unified guidance of the state has to be strengthened in order to ensure a balanced and harmonious development of the economy in conformity with the aspiration and demand of the popular masses. An important task we are faced with in the economic construction at the present time is to rely on the superiority of the socialist planned economy to closely combine the normalization of production with modernization and push ahead with it vigorously, and thus decisively surpass the highest production level in all sectors of the people’s economy. It is only under the condition of strengthening the centralized and unified guidance of the state that it is possible to create the military-first era’s speed of waging the general onward march by mobilizing all production potentials of the country to the maximum from the viewpoint of national interests consistent with the party’s policy demands, and also accelerate the construction of an economically powerful socialist state by harmonizing the production ties centered on the objects of key significance in the economic development, guaranteeing the planned and disciplined nature of the economic work, and thus achieving a balanced development of the overall economy.

The centralized and unified guidance of the state has to be strengthened also to be able to bring the initiative of individual sectors and units, and local areas into high play and thus actively mobilize and utilize the potential of the self-supporting economy.

There may be things that are in short supply and that are missing in the process of building an economically powerful state. This is why the demand for bringing the initiative of each sector and unit into high play arises in order for all sectors and units of the people’s economy to normalize production and surpass the highest production level based on the existing assets.

Only when the centralized and unified guidance of the state over the economy is realized smoothly, is it possible to enhance the initiative of all sectors and units in line with the intrinsic requirement for the development of socialist economy that is based on collectivism and decisively boost the economic effectiveness in mobilizing and utilizing the reserves.

Strengthening the centralized and unified guidance of the state over the economy in no ways means disregarding the initiative of lower units. The socialist economic construction can be carried out successfully only when the unified guidance of the state is combined correctly with the initiative of lower units. This is because if the state’s centralized and unified guidance enables the economy to develop harmoniously on a pan-social level, then the initiative of lower units spurs factories and enterprises to increase production and perfect the production and technical processes on their own by positively exploring and mobilizing the existing reserves and production potentials pursuant to the economic plans established by the state. If the lower units are restrained based on the opinion that the management activities of each unit should be unconditionally subordinate to the state, then the initiative of factories and enterprises will be suppressed and the production will not proceed smoothly. This is why the centralized and unified guidance of the state over the economy is based on the premise of further enhancing the initiative of lower units.

All the economic guidance functionaries should have a correct perception of the state’s centralized and unified guidance and realize it correctly, and thus bring the genuine superiority of socialist planned economy into high play.

“위대한 당의 선군령도따라 우리 군대와 인민은 새로운 혁명적대고조로 경제를
비약적인 발전단계에 올려세우기 위한 총진군을 힘있게 벌려나가고있다.

정치사상강국, 군사강국의 위용과 위력을 온 세계에 떨치고있는 오늘 경제건설과
인민생활향상에 힘을 집중하여 우리 나라를 사회주의경제강국으로, 인민들이
세상에 부러움없이 잘 사는 사회주의락원으로 건설하기 위하여서는 경제사업에서
사회주의원칙을 고수하고 사회주의계획경제의 우월성을 높이 발양시켜야 하며
여기서 중요한것은 경제건설에 대한 국가의 중앙집권적, 통일적지도를
강화하는것이다.

위대한 령도자 김정일동지께서는 다음과 같이 지적하시였다.

《무엇보다도 경제건설에 대한 국가의 중앙집권적, 통일적지도를 강화하여야
합니다.》

사회주의경제관리에서 국가의 중앙집권적, 통일적지도를 강화하는것은
사회주의사회의 본성에 맞게 경제관리를 개선하고 사회주의계획경제의 우월성을
높이 발양시켜 사회주의경제제도를 더욱 공고발전시키며 경제강국건설을
다그치기 위한 기본요구로 제기된다.

국가의 중앙집권적, 통일적지도를 강화하는것이 사회주의경제관리개선의
기본요구로 되는것은 무엇보다먼저 나라의 경제를 국가의 중앙집권적,
통일적지도밑에 계획적으로 관리운영하는것이 집단주의에 기초한 사회주의경제의
본성적요구이며 사회주의경제관리의 기본원칙이기때문이다.

사회주의경제관리에서 국가의 중앙집권적, 통일적지도를 실현하는것은
사회주의경제발전의 합법칙성과 사회주의경제의 본질적특성으로부터 출발한
사회주의경제관리의 생명선이다.

경제에 대한 국가의 중앙집권적, 통일적지도는 우선 집단주의에 기초한
사회주의경제의 본성적요구이다. 사회주의경제는 생산수단에 대한 사회적소유에
기초하여 인민경제의 모든 부문들과 단위들이 유기적으로 련결된 대규모의
집단경제이며 고도로 조직화되고 중앙집권화된 계획경제이다. 이것은 생산수단에
대한 사적소유에 기초하여 자연발생적으로 움직이는 자본주의시장경제와 다른
사회주의계획경제의 본질적우월성이다. 자본주의사회에서는 부르죠아국가가
각이한 기업체들의 경영활동을 서로 맞물리고 하나의 방향으로 이끌어나갈수
있는 기능을 수행할수 없다. 자본주의사회에서는 자본가계급과
근로인민대중사이, 자본가들사이의 리해관계의 대립으로 하여 경제가 리윤추구와
약육강식의 경쟁속에서 자연발생적으로 진행되며 이것은 기업파산을 동반한다.

이와는 달리 사회주의경제는 생산수단에 대한 사회적소유에 기초하고있으며
인민대중이 주인이 되여 목적의식적으로 관리운영된다. 생산수단에 대한
사회적소유는 모든 경제부문, 단위들을 하나의 생산유기체로 결합시키는 한편 그
구성부분으로 되는 공장, 기업소들이 유일적인 지휘에 따라 움직일것을
요구한다. 공장, 기업소들사이에 계획적인 련계를 실현하며 경제가 하나의
유일적인 지휘밑에 움직이도록 하는것은 사회주의국가의 통일적지도에 의하여
확고히 담보된다.

경제에 대한 국가의 중앙집권적, 통일적지도는 또한 사회주의경제관리의
기본원칙이다.

국가의 중앙집권적, 통일적지도와 계획적경제관리원칙을 떠나서는 경제분야에서
사회주의를 지킬수 없고 사회주의경제를 발전시킬수도 없다.

사회주의경제관리에서 아래단위의 창발성을 높이 발양시켜야 하지만 그것은
어디까지나 국가의 중앙집권적, 통일적지도를 확고히 보장하는 기초우에서,
사회주의계획경제의 테두리안에서 이루어져야 한다. 국가적리익,
전인민경제적리익에 맞게 가장 큰 실리를 보장할수 있도록 계획을 세우며 나라의
모든 생산잠재력을 최대한으로 동원하고 전반적경제발전에서 관건적인 의의를
가지는 대상들에 력량과 자원을 집중하여 경제의 계획적, 균형적발전을
이룩하는것은 국가의 중앙집권적, 통일적지도에 의해서만 옳게 실현될수 있다.
아래단위의 창발성을 높이고 《독자성》과 《자립성》을 강화한다고 하면서
경제관리, 기업관리를 풀어놓는 방향으로 나간다면 아래단위들이 국가의
통일적지도와 통제에서 벗어나 제멋대로 움직이게 되며 국가적으로 막대한
랑비와 손실을 가져오는것은 물론 경제분야에서 사회주의를 지킬수도 없
사회주의경제를 발전시킬수도 없다.

국가의 중앙집권적, 통일적지도를 강화하는것이 사회주의경제관리개선의
기본요구로 되는것은 다음으로 경제에 대한 국가의 중앙집권적, 통일적지도를
강화하여야 자력갱생의 원칙에서 모든 잠재력을 최대한 동원하여 나라의 경제를
비약적인 발전단계에 올려세우고 사회주의경제강국건설을 다그칠수
있기때문이다.

오늘의 대고조는 자력갱생의 기치를 더 높이 들것을 요구하며
사회주의경제강국은 자력갱생의 강국, 위력한 자립적민족경제의 강국이다.

우리는 위대한 수령님과 경애하는 장군님의 현명한 령도밑에 자력갱생의
혁명정신을 높이 발휘하여 사회주의자립적민족경제의 토대를 튼튼히 마련하였다.
이미 마련된 자립적경제토대의 잠재력을 최대한 동원리용하는것은 오늘의
형편에서 우리 식으로 나라의 경제를 비약적인 발전단계에 올려세우
사회주의경제강국건설을 다그치는 가장 정확한 길이다.

우리앞에는 의연히 많은 난관이 가로놓여있지만 전체 인민의 무궁무진한
창조력과 우리의 자원과 기술, 우리 제도의 우월성에 의거하여 승리의 진격로를
열어나가야 한다.

이미 마련된 자립적민족경제토대의 잠재력을 최대한 동원하여 나라의 경제를
비약적인 발전단계에 올려세우고 사회주의경제강국건설을 다그치자면 경제에
대한 국가의 중앙집권적, 통일적지도를 강화하여야 한다.

우선 국가의 중앙집권적, 통일적지도를 강화해야 인민대중의 지향과 요구에 맞게
경제의 균형적이고 조화로운 발전을 보장할수 있다. 현시기 경제건설에서
우리앞에 나서는 중요한 과업은 사회주의계획경제의 우월성에 의거하여
생산정상화와 현대화를 밀접히 결합시켜 힘있게 밀고나감으로써 인민경제 모
부문에서 최고생산수준을 결정적으로 돌파하는것이다. 국가의 중앙집권적,
통일적지도를 강화하는 조건에서만 당의 정책적요구에 맞게 국가적리익의
견지에서 나라의 모든 생산잠재력을 최대한 동원하여 선군시대의 총진군속도를
창조할수 있으며 이와 함께 경제발전에서 관건적인 의의를 가지는 대상들을
중심으로 생산적련계를 조화롭게 하고 경제사업에서 계획성과 규률성을 보장하여
전반적경제의 균형적발전을 이룩함으로써 사회주의경제강국건설을 다그칠수
있다.

또한 국가의 중앙집권적, 통일적지도를 강화하여야 개별적부문과 단위, 지방의
창발성을 높이 발양시켜 자립경제의 잠재력을 적극 동원리용할수 있다.

경제강국을 건설하는 과정에는 부족한것도 있고 없는것도 있을수 있다. 따라서
인민경제 모든 부문, 모든 단위에서 있는 밑천을 가지고 생산을 정상화하
최고생산수준을 돌파하기 위하여서는 매개 부문, 단위의 창발성을 높이
발양시켜야 할 요구가 제기되게 된다.

경제에 대한 국가의 중앙집권적, 통일적지도를 원만히 실현하여야 모든 부문,
모든 단위의 창발성을 집단주의에 기초한 사회주의경제발전의 본성적요구에 맞게
발전시킬수 있으며 예비를 동원하고 리용하는데서 경제적효과성을 결정적으로
높일수 있다.

경제에 대한 국가의 중앙집권적, 통일적지도를 강화한다는것은 결코 아래단위의
창발성을 무시한다는것을 의미하지 않는다. 사회주의경제건설은 국가의
통일적지도와 아래단위의 창발성을 옳게 결합시킬 때 성과적으로 진행될수 있다.
그것은 국가의 중앙집권적, 통일적지도가 전사회적범위에서 경제가 조화롭게
발전될수 있게 한다면 아래단위의 창발성은 공장, 기업소들이 국가가 세운
경제계획에 따라 있는 예비와 생산잠재력을 적극 탐구동원하여 생산을 늘이
자체로 생산기술공정을 완비하도록 추동하기때문이다. 만일 매개 단위의
경영활동이 국가에 무조건 복종되여야 한다고 하면서 아래단위를 얽어매놓으면
공장, 기업소들의 창발성이 억제되여 생산을 원만히 진행할수 없게 된다.
그러므로 경제에 대한 국가의 중앙집권적, 통일적지도는 아래단위의 창발성을
더욱 높이는것을 전제로 한다.

모든 경제지도일군들은 국가의 중앙집권적, 통일적지도에 대한 옳은 인식을
가지고 이를 옳바로 실현함으로써 사회주의계획경제의 참다운 우월성을 높이
발양시켜나가야 할것이다.”

UPDATE 2 (2011-9-2): According to KBS:

The Voice of America (VOA) reported Friday that the International Committee of the Red Cross (ICRC) has confirmed that North Korean universities were ordered to suspend studies.

In a report on North Korea covering the first half of 2011, the International Red Cross said that all universities in the Communist nation had been on leave since June to work on construction sites in regions including Pyongyang. The report said the enforced leave of absence will likely continue into April next year during the centennial celebration of the birth of late North Korean founder Kim Il-sung.

VOA said the report appears to have been confirmed by a North Korean authority, as it contained the contact number of a North Korean Red Cross official.

UPDATE 1 (2011-7-11): According to the Daily NK:

Large numbers of additional soldiers and students have been mobilized to try and address the slipping schedule for the construction of 100,000 homes in Pyongyang by 2012, with universities in the capital and some bigger local universities having received a ‘socialist construction mobilization order’ in mid-June.

A Pyongyang source, explaining the situation today, said, “I know that students from universities in Pyongyang like Kim Il Sung University and Kim Chaek University of Technology have been sent to the construction of 100,000 houses. I hear that they will be at the construction site for at least two months or more.”

The mobilization could easily be extended depending on the status of the construction project, he further added.

Another source from North Hamkyung Province reported similar news on the 7th, saying, “Since July, juniors and seniors from No. 1 and 2 Colleges of Education in Chongjin have been mobilized for construction projects under the ‘socialist construction mobilization order,’” and confirming that the students have been sent to Pyongyang.

He went on, “I hear that the center (meaning Party central authorities) notified each university of the number of people required for the Pyongyang construction work. Accordingly, each university selected a certain number of students and sent them to Pyongyang.”

However, the order does not appear to amount to a full, nationwide shutdown of universities. For example, certainly some universities in Yangkang Province have evaded the mobilization order. One college student living in Hyesan, the provincial capital said, “There has been no ‘socialist construction mobilization order’ handed down. We are going on summer vacation in late July.”

Mobilized personnel are reportedly working primarily on construction in neighborhoods where major public works idolizing the Kim family are to be found.

The Pyongyang source reported, “Construction of houses in Changjeon Street, where the Suryeong’s statue is, started in early May. Soldiers have been mobilized to this construction site in large numbers; even some previously involved in construction in the Hyeongjesan district have been in that region for about a week.”

He added, “Equally, the Mansudae region (Kim Il Sung’s birth place) is another place where ‘construction must be completed even if it is not completed elsewhere’, so they have mobilized people from construction sites in other regions.”

According to sources, the pace of construction in those places where soldiers have been mobilized is markedly quicker than elsewhere, although interior construction remains problematic because it calls for special materials.

One source reported, “In Seopo and Hadang 2-dong, where there are soldiers, buildings have already been erected, so people can move in there in August. However, the interiors have not been completed, so people don’t actually want to move in.”

However, on those sites staffed by people from enterprises, events are characterized by a lack of basic materials and the siphoning off of what is available.

The source said, “They are short of materials, while individuals are selling off existing materials and cement to buy rice because the authorities are not providing them with any support. Of the construction overseen by enterprise work units, almost none have been erected. In Hyeongjesan district, with the exception of those sites for which soldiers are responsible, they have only erected the bottom floor.”

According to one source, on April 1st the National Defense Commission ordered, “Complete the construction of 100,000 homes by April 15th, 2012 and get people to move into the new homes without condition.”

However, reports suggest widespread skepticism of this, with one source saying, “According to rumors, there was even a threat, ‘Those in charge of construction who cannot complete it must prepare to leave their posts.’ However, there are many people saying that the 100,000 houses won’t even be done by 2017.”

See more on the priority construction projects here.

ORIGINAL POST (2011-6-30): According to the University World News (thanks to a reader):

Close watchers of North Korean affairs were caught on the hop this week by reports that universities in the hermit kingdom would be closed from 27 June for up to 10 months while students are sent to work on farms, in factories and in construction.

Diplomats in Pyongyang confirmed that students were being drafted into manual labour on the outskirts of the city until April next year to prepare for major celebrations to commemorate the centenary of the late leader Kim Il Sung’s birthday. But they said this did not mean the closure of universities.

Reports originating in South Korea and Japan suggested that the Pyongyang government had ordered universities to cancel classes until April next year, exempting only students graduating in the next few months and foreign students.

The reports said the students would be put to work on construction projects in major cities and on other works in a bid to rebuild the economy. This could indicate that the country’s food crisis and economic problems are worse than previously thought.

Experts on North Korea said full-scale university closures would be unprecedented. However, it was not unusual for students to be engaged in manual labour, with the academic year sometimes shortened in order to send students onto farms and construction sites.

Peter Hughes, British Ambassador to North Korea, told University World News by email from Pyongyang: “There has been no official announcement in DPRK [Democratic People's Republic of Korea] about university students being sent to carry out manual labour for the next 10 months, but I can confirm that students from all the universities in Pyongyang have been mobilised to work at construction sites in the outskirts of the city until April 2012.

“Some two years ago the DPRK announced that it would build 200,000 units of accommodation in the city to ease the chronic housing shortage. To date only some 10,000 units have been built, so the students have been taken out of universities in order to speed up the construction of the balance before major celebrations take place in April 2012 to commemorate the 100th birthday of the founder of the DPRK, Kim Il Sung.”

Universities are not closed as lecturers and postgraduate and foreign students remain on campuses, Hughes said on Thursday.

“The UK has an English language teacher training programme at three universities in Pyongyang. The mobilisation of the students should not affect this programme as the majority of activity is focused upon teacher development and not teaching students.”

Charles Armstrong, Director of the Centre for Korea Research at Columbia University who returned from Pyongyang earlier last week, said he had visited two state-run universities, Kim Il Sung University and Kim Chaek University of Technology in Pyongyang, as well as the private Pyongyang University of Science and Technology (PUST) in the last few weeks.

At the two public universities the vast majority of students were not present, Armstrong told University World News. “It is also a very busy time for rice transplanting and you see a lot of young people in the fields.”

However, students were studying as normal at PUST, a postgraduate institution funded by Korean-American and South Korean philanthropists that teaches mainly engineering.

“It is very hard to get information in and out of the country and there may be some confusion because every summer students have to go down to the fields to help with the rice planting. It is not the first time that I have heard reports that universities have shut down for a period,” Armstrong said.

“My impression is that there is not a lot going on in terms of teaching and studying in public universities and student time is taken up with ‘extra curricular’ activities including political education. This is a regular part of university life but I have not heard of the universities being shut down completely except for a short while during the 1990s [famine],” he added.

A major famine and economic crisis in the late 1990s meant that much farm equipment went unused and simply rusted in the fields, so the need for manual labour has grown. Students and army recruits are mobilised to help, often having to travel far from where they live.

“My understanding of the university system is that it is largely dysfunctional. Resources are lacking, many professors spend their time earning from private tuition – so my impression is that it would not make a great deal of difference if they are shut down,” said Armstrong.

Aidan Foster-Carter, a writer and researcher on North Korea, formerly at Leeds University in England, said: “North Korea sets great store by these anniversaries. They decreed a few years ago that 2012 would be their date for becoming a great and prosperous nation defined in economic terms. It would make sense having extra persons out there to help with construction, though normally it is the army that does it.”

But any mass use of student labour for longer than the summer vacation months would mean a trade-off against achieving economic goals that required educated workers, he said.

“North Korea’s is a strange and broken economy but they also need educated people to pull them out and it would be a major precedent to close the universities. It could be a sign that they are in a worse mess than we thought.”

Hazel Smith, professor of security and resilience at Cranfield University who also lectures at Pyongyang’s Kim Il Sung University, said North Korean universities were operating as usual in and outside the capital when she was there in May.

She said it would be counterproductive for the regime to close universities. Despite huge labour shortages throughout the country, the regime is “fully aware that people need to be taught IT and technology and of course nuclear [engineering].

“They are dependent to fulfill their economic goals on people who are computer literate and engaged in advanced science. I don’t think [closures] will last very long. There are too many other priorities to deal with.”

Analysts in Japan and South Korea suggested there could be other reasons behind the decision to disperse the students across the country, including the possibility of demonstrations at campuses inspired by the Arab Spring uprisings, which began at universities.

They noted that North Korea had purchased anti-riot equipment from China in recent months, including tear gas and batons, while there has been an increased police presence at key points in Pyongyang in recent weeks.

Foster-Carter said North Korea watchers have been closely monitoring for signs of unrest since the spring, but there had not been any.

“The amount of information from the Middle East reaching the ordinary citizen is very, very limited and there has been nothing at all in the official media,” Armstrong said. “There has been no student unrest that we know of for the last 50 years.”

According to North Korea analysts, party controls are in place to prevent student uprisings, including political indoctrination and strong surveillance. Some analysts said surveillance on campuses had relaxed in recent years because many party officials had not been paid.

However, experts agreed that the possibility of universities being shut would be an ominous sign of tension. “The most likely reason [to shut universities down completely] would be for military mobilisation if they thought they were going to be attacked,” Smith said.

Read the full story here:
North Korea: Learning stops as students sent to work
University World News
Yojana Sharma
2011-6-30

Several days ago, Yonhap reported that the DPRK had quietly reduced its goal of building 100,000 housing units by 2012. So of the 200+ buildings that are currently under construction, which projects are priorities? Mansudae Part II for sure (see here and here).  But what else? There are many construction sites that were launched well before the second renovation of the Mansudae area was begun, and the deadline for completion is rapidly approaching.

Well North Korea recently broadcast a propaganda television show touting Pyongyang’s housing construction (along with quite a lot of singing).  I was able to match up this North Korean television footage with satellite imagery of Pyongyang construction sites to help answer this question.  Given the amount of propaganda being used to promote these particular developments, I would say the following three are also 2012 priorities:

Ryongsong-guyok, Chonggye-dong (룡성구역, 청계동)

Click on images for larger versions.  See in Google Maps here.

Hyongjesan-guyok, Sopho-2 Dong (형제산구역, 서포2동)

Click on images for larger versions.  See in Google Maps here.

Rakrang-guyok, Tongsan-dong (락랑구역, 동산동)

Click on images for larger versions.  See in Google Maps here.

The DPRK also recently hosted an architecture expo in Pyongyang. I have uploaded a video of the event to YouTube, and you can watch it here. I was able to match up some of the projects (though not all) with current satellite imagery. Aside from the renovation of the Ryugyong Hotel, there is no publicly available satellite imagery showing that these projects have been launched.

Hyoksin Area (혁신)

Ryugyong Area (류경)

Additional Informaiton

1. So Marcus Noland was right.  They want tall buildings.

2. For several years now I have been tracking construction in Pyongyang.  See here, here, here, here, here, here, here, and here.

Institute for Far Eastern Studies (IFES)
NK Brief 2011.06.30

North Korea designated this year as the “year of light industry” in an effort to increase consumer goods production and enhance the lives of the people. In addition, a June 23 editorial in the Rodong Sinmun reiterated the importance of science and technology for building a strong and powerful nation and improving the lives of citizens.

Science and technology was mentioned as one of the three pillars for building a strong and powerful nation — the other two being ideology and advanced weaponry.

The editorial emphasized, “We must construct a self-reliant economy and stand on our own two feet no matter what,” and stressed that production system of Juche steel and Juche fertilizers is a victory for the Juche ideology and the science and technology policy of North Korea.

In addition, the column highlighted the importance of promoting Juche, modernization, and informatization in all sectors. “Modern successes in science and technology must be fully adopted and institutionalized in order to enhance production and economic effectiveness. To do so, we must engage in the fight for conserving energy, fuels, materials and national resources.”

The role of scientists and technicians was also accentuated. The future development of science and technology and construction of a strong and powerful economy was depicted to be in the hands of this group. In particular, importance for science research in light industry, agriculture, people’s economy, and modernization for industries was further highlighted.

“To meet the demand of modern times of integrating science and technology and production, technological revolutionary movement must be started and combine the collective knowledge of producers and masses.” It was said that the core and fundamental technology (information, nano, and bioengineering technologies) along with cutting-edge technology (new materials, energy, and space science technologies) must be incorporated to fully contribute to the building of a powerful socialist state.

This editorial appears as an attempt to encourage the growth of production in light and agriculture industries in order to meet the goal of reaching the “strong and powerful nation” by 2012. In this year’s New Year Editorial, revolutionary development in science and technology, tight integration of science and technology with production, revolution of light industry and development of people’s economy through science research were mentioned as chief objectives of the year. It was said that significant weight will continue to be placed on the economy and technology including “integration of science and technology and production” and “technological revolutionary movement of the masses.”

Nicholas Eberstadt offers some stark economic data on the DPRK.  According to his article:

While it is true that the DPRK suffered a severe economic shock from the collapse of the Soviet Bloc, this unexpected economic dislocation did not automatically presage log-term economic failure, much less famine. The counterexample of Vietnam–another socialist Asian economy heavily dependent on Soviet subsidies in the late 1980s–proves as much. According to the World Bank, Vietnam’s per capita income rose by over 150% between 1990 and 2007, and its per nominal per capita exports (in US dollars) rose by a factor of over 7 times during those same years, whereas North Korea’s nominal per capita exports slumped by over 25% between 1990 and 2007.

Further, it is of course true that the US–and in more recent years, Japan and South Korea–have imposed a plethora of economic sanctions on North Korea (America alone has over 30 such legal and administrative strictures in force today). But these penalties cannot explain North Korea’s miserable economic performance with the rest of the OECD countries, most of which are in principle open to commerce with the DPRK.

Let’s exclude Japan, South Korea, and America from OECD trade for the moment. Between 1980 and 2007, the import market for these other OECD countries expanded in nominal US dollars from just over $1 trillion to nearly $7 trillion–but according to the UN COMTRADE database, North Korea’s exports to those same countries collapsed: plummeting from $330 million to $177 million. When one takes inflation and population growth into account, this means the DPRK’s per capita exports to the rest of the OECD fell by almost 80% over those 27 years–and since these same export markets were growing all the while, North Korea’s share was twelve times smaller in 2007 than it had been in 1980.

What then is the problem? Closer inspection strongly suggests that North Korea’s long-term economic failure is directly related to the policies and practices embraced and championed by the Pyongyang government. North Korea’s current “own style of socialism” [or Urisik Sahoejuui] is a grotesquely deformed mutation of the initial DPRK command planning system, from which it fatefully and increasingly devolved over time.

North Korea is still in principle a planned Soviet-type economy: but for almost two decades it has in reality been engaged in “planning without facts”, and even in “planning without plans” (in the memorable phrase of Japanese economist Kimura Mitsuhiko). In and of itself, this would be enough to consign the North Korean economy to trouble. But to make matters worse, North Korean leadership has insisted on saddling the economy with a monstrous military burden under its campaign of “military-first politics” [Songun Chongchi]. Further, in contradistinction to virtually all other contemporary economies, North Korean trade policy for almost two generations has systematically throttled the import of productive and relatively inexpensive foreign machinery and equipment, thereby guaranteeing that the national economy would be saddled with a low-productivity, high-cost industrial infrastructure of its own making.

Add to this North Korea’s unrelenting war against its own consumers (no other modern economy has ever seen such a low ratio of consumer spending to national income, even at the height of Maoism or Stalinism) and Pyongyang’s stubborn, longstanding policy of “reverse comparative advantage” via a juche food policy that attempts to devote no more funds to overseas cereal purchases than foreigners pay for North Korean agricultural products in a country where cropland is scarce and growing seasons are short, and one begins to see how North Korean leadership engineered the country’s remarkable Great Leap Backward–and eventually, even a famine.

There is, to be sure, a grim logic to the DPRK’s destructive policies: for the same strategy that has ruined the country’s economy has also served to sustain its peculiar political system and ruling elite. In fact, given Pyongyang’s narrowly racialist ideology, its now-improbable but continuing quest for absolute mastery of the entire Korean peninsula and its undisguised fear that “ideological and cultural infiltration” will subvert the DPRK’s political order, the policies that the North Korean government pursues today may be regarded as careful, deliberate and faithful representations of the state’s overarching priorities.

Unfortunately, Pyongyang’s official policies and practices just happen to make the North Korean economy incapable of anything like genuine self-reliance, juche slogans notwithstanding, So DPRK state survival depends upon successfully generating a steady stream of subventions and concessional transfers from abroad.

Even so: the North Korean economy is so dysfunctional that it a positive net flow of foreign subsidies is not always enough to prevent calamity. After all: the Great North Korean Famine of the 1990s took place when the country (to judge by the import and export figures of its international trading partners) was receiving hundreds of millions of US dollars a year more in merchandise for abroad than it was shipping out. Quite obviously, that surplus was too small to overcome the grave built-in defects of the modern North Korean economy, or to forestall mass hunger.

So to continue its very existence, the North Korean system must commit itself to a permanent, predatory hunt for life-giving foreign funds: monies that it extracts from abroad by stratagems of military extortion, humanitarian hostage-negotiations (for the external feeding of its own population), and what might be called “guerilla commerce” (i.e., duping credulous foreigners who think there is money to be made from the DPRK by any but the country’s own elite).

North Korea, incidentally, seems to make it a point of honor not to repay its foreign creditors–and although “imperialist” banks and businesses from the West have learned this fact to their sorrow in abortive attempts to do commerce with Pyongyang, this is a bad habit that goes back to the early years of the Cold War, when the DPRK’s routinely reneged on loans from its “socialist comrades” in Beijing and Moscow.

North Korea has honed impressive skills in separating foreign governments from their own money. According to the US Congressional Research Service (CRS), for example, the USA transferred for than $1 billion in humanitarian, economic and security assistance to North Korea between 1995 and 2009: this despite a supposed “hostile US policy”. By the CRS’ reckoning, North Korea obtained over $4 billion from South Korea over those same years–and those were only the officially acknowledged payments by Seoul.

But China’s aid to North Korea puts all these Western subsidies in the shade. Beijing is almost completely opaque about its economic relations with Pyongyang–yet Chinese trade statistics suggest that North Korea has enjoyed a net resource transfer from China of over $9 billion since 1995, and the annual transfers look to have jumped markedly after 2004 (although China has never offered any sort of public explanation for why it would have increased its economic assistance to Pyongyang so significantly in recent years).

Earlier this year, North Korea announced a new “Ten Year State Strategy Plan for Economic Development” designed to lift the DPRK into the ranks of “the advanced countries by 2020″. Although the details of the plan have not yet been revealed, we can be sure it has enormous investment requirements–running into the tens or even hundreds of billions of dollars. It is also a safe bet that Kim Jong Il’s visit to China in May 2011 was a sort of fundraising tour aimed at securing some of the many billions of dollars envisioned by this ambitious plan.

After Kim Jong Il’s return from China, Pyongyang unveiled a new “joint economic zone” with China on two border islands in the Yalu rive–a projectr meant to underscore a new direction for the North Korean economy, and to jumpstart the new development campaign. But haven’t we seen this movie before? Ever since Kim Jong Il’s highly publicized visit to China in the early 1980s, there has been recurrent foreign speculation that would “inevitably” have to embrace economic reform. Yet all North Korean efforts at “opening” and “reform” to date have been confused and half-hearted, and every one of these initiatives has ultimately ended in failure.

Will this latest plan mark a decisive break from decades of ever more wayward North Korean economic policy? Some in China clearly believe that the DPRK can be gradually coaxed onto a path of pragmatic economic policymaking. To judge by Beijing’s swelling economic subsidies for North Korea, Chinese leadership may be banking on as much. The results of any such wagers, however, remain to be seen.

In China and other socialist countries, big changes in economic policy have typically followed, and depended upon, big changes in national leadership–but Pyongyang appears absolutely intent upon carrying the Kim family’s dynastic rule into its third generation. North Korean policymakers may genuinely want the DPRK to be what they call a “prosperous and powerful state” [Kangsong Taeguk]–but at the same time they have been totally unwilling to risk the sorts of steps that could actually generate such prosperity. Until this contradiction is resolved, North Korea is most likely to remain the black hole in the Northeast Asian economy.

Read the full story here:
What Is Wrong with the North Korean Economy
American Enterprise Institute
2011-7-1

Pictured above (Goole Earth): New housing construction in Rakrang-guyok

For several years, the DPRK has been touting that it will build 100,000 new housing units by 2012. See here, here, and here for background.

This week, many South Korean news outlets reported that the DPRK had significantly downsized that number.  According to Yonhap:

North Korea has dramatically cut its goal of building 100,000 houses by next year, a government source said Monday, amid the North being economically squeezed by the international community for its nuclear and missile programs for years.

After the North started the project in Pyongyang in 2009, as part of its plans to achieve a strong and prosperous country by 2012, the North cut the number of planned houses by 75 percent to 25,000. The year 2012 marks the centennial of the birth of Kim Il-sung, the country’s late founder.

The North, however, is continuing to repair a towering bronze statue of Kim and renovate around the Kumsusan Memorial Palace, where his embalmed body lies, the source said on condition of anonymity, citing policy.

Kim is the father of current leader, Kim Jong-il. The Kims are the subject of a massive personality cult that pervades almost every aspect of North Korean society.

Still, the North has embarked on a project to demolish buildings and facilities in central Pyongyang to make room for high-rise apartments, a theater and a park for senior officials.

The North has begun interior work on one of its landmarks, the 105-story Ryukyong Hotel, which stood unfinished in downtown Pyongyang for nearly 20 years due to a lack of capital.

In 2008, the North resumed construction of the skyscraper, but it appears unlikely for the project to be completed next year. It is believed, however, that the North will finish some floors for use.

The last time that KCTV mentioned the 100,000 housing unit goal was on May 26, 2011…nearly a month ago.  I will keep up to see if it is ever mentioned again.  I would not hold my breath waiting for a lower number to be announced, however.

Using satellite imagery of Pyongyang, I can see appx 200 residential buildings under construction.  They are mostly concentrated in Hyongjesan-guyok.  On average, each of these buildings would have to contain 500 housing units to reach 100,000.  This is not possible given the dimensions of the buildings we can see. Additionally, most of these facilities are a long way from being completed.  With a goal of 25,000, that would mean new buildings on average would only need to contain 125 units…a much more reasonable number.

In terms of residential construction, the government now seems to be focusing its efforts primarily on completing the second phase of the Mansudae Street renovations in time for Kim Il-sung’s 100th birthday. See here and here.

The prestigious units (visited by Kim Jong-il) that have been completed are all in Pyongyang’s Central District: Near the Potong Gate (Google Maps), Near Haebang Hill (Google Maps), and behind the Central Market (Google Maps).  I should point out, however, that these are not the only buildings to be completed.  Other less-prestigious buildings have been completed and occupied.  Also, many villages (ri, 리) outside the capital are being upgraded and provided new facilities.  I am not sure what the procedure is for deciding which villages receive new homes, but it can’t be random.  Being located next to a major highway seems to be an important variable (keeping up appearances).  I am also unsure what the DPRK does with all of the displaced residents. Are they going somewhere else to live with their families?  Are they living in temporary shelters?

The Daily NK and Choson Ilbo also covered this story.