Archive for the ‘Political economy’ Category

Some coal transports to China continue, while some controls tighten, Daily NK says

Wednesday, March 1st, 2017

Benjamin Katzeff Silberstein

Daily NK reports that coal smuggling continues despite the Chinese import suspension. Presumably, the suspension would also imply tighter controls on smuggling operations, some of which likely goes on with a degree of knowledge on the side of the authorities:

Although China’s Ministry of Commerce previously announced the suspension of coal imports from North Korea until the end of 2017, coal trading has continued in Rizao Port, Shandong Province, where regulatory control is known to be relatively loose. However, as of February 23, the customs clearance process was reportedly also strengthened in this region, leading to speculation that the coal trade will likely be curtailed in Rizao as well.
“Even on February 20, the day after the announcement to suspend North Korean coal imports, a vessel loaded with North Korean coal was permitted to unload after passing quality inspection at Rizao Port. Although official coal imports from North Korea have all been stopped, coal shipments have been continually imported through Rizao Port while circumventing customs clearance,” a source close to North Korean affairs in China told Daily NK on February 23.
“The North Korean trading companies have already signed contracts for coal trading in the first half of 2017, so they have no choice but to continue shipping in order to receive foreign currency. But the regulations have been strengthened as of today, so all coal is supposedly banned from entering China,” the source added.
To date, North Korean coal has been primarily exported by ships traveling through Nampo Port to Rizao Port, or from Songrim Port in North Hwanghae Province to Dongjiang Port in Dandong or Dalian. The coal is then sold to regions in southern China after passing quality inspection.
“The Chinese companies are obliged to import North Korean coal to secure their sales volumes. The coal trade between China and North Korea is mostly between individual merchants, so they are continuing to engage in smuggling, ignoring diplomatic pressure and sanctions,” the source said.
“When sanctions were imposed in earnest in April last year, the North Korean trading companies overcame the restrictions by changing their trading ports.”
However, in Dongjiang and Dalian, which are close to the border areas and where international attention is concentrated, the regulations imposed by Chinese customs offices are known to be strict.
“Rizao Port is relatively looser with their regulations than Dongjiang Port and Dalian Port because it mostly handles freight. The traders have resorted to Rizao Port in the face of sanctions because they can trade coal without going through the customs clearance process,” a separate source in China with ties to the coal industry reported.
“Even if the UN Security Council and the Chinese authorities tighten regulations on the coal trade, it cannot last long. Coal trading agreements are made between trading companies solely based on profit, so they are bound to create an alternate route whenever sanctions are introduced.”
“The traders can falsify records for coal and document it as other goods, or can borrow vessels belonging to other countries. The UN sanctions are currently ineffective for the land border between China and North Korea, which stretches for over 1300 km, so it will be impossible to block all coal smuggling via sea, which covers a far larger area,” he concluded.

Full article:
North Korean coal smuggling continues despite China’s import ban
Seol Song Ah
Daily NK
2017-02-27

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China says it is suspending imports of North Korean coal for the rest of the year

Saturday, February 18th, 2017

By Benjamin Katzeff Silberstein

In yet another so-called “strong signal”, China’s commerce ministry said on Saturday it won’t be importing any more coal from North Korea for the rest of the year. Remember, that coal that was already basically supposed to not be imported after last year’s sanctions (save for that generating revenue for humanitarian purposes). And the imports of which was already supposed to be capped at a low monetary limit. And so on and so forth.

Of course, as a usual caveat this time could be different but whether or not this decision will be enforced, and how strictly, remains to be seen, to put it mildly. China has other concerns in its relationship with the Korean peninsula and North Korea than signalling its commitment to the international community. Moreover, as I have written before, there are many factors that impact Chinese imports of North Korean coal than central government decisions. Domestic demand is one, and has probably played a greater role than diplomatic considerations over the past few years.

Other than the missile launch, one could suspect this is also a signal against the killing of Kim Jong-nam, who lived under Chinese protection.

Yonhap:

China’s commerce ministry said Saturday it will suspend the import of North Korean coal, apparently in response to the latest provocations made by Pyongyang.

Beijing’s Ministry of Commerce said the decision, which comes into effect on Sunday, is in line with the United Nation’s sanction against North Korea. The suspension will be valid through Dec. 31, the ministry added.

“As coal takes up a significant portion of Pyongyang’s trade with China, the decision is anticipated to have a significant impact on North Korea,” an expert on China said.

Coal is estimated to take up 40 percent of North Korea’s exports to China.

China had banned imports of coal from North Korea in April last year, but had been making exceptions for those intended for household use, which led to criticism over the regulation’s effectiveness.

North Korea fired a new intermediate-range ballistic missile (IRBM) called the Pukguksong-2 on Sunday from an air base in the country’s northwestern province toward waters off its east coast.

Full article:
China suspends imports of N.Korean coal
Yonhap News
2017-02-18

(Update 02-19-2017): an analysis from Choson Exchange:

When the UN Security Council imposed the cap on coal trade, China was left with the question of how such a cap could be implemented. Would there be an auction system for quotas? Is it able to track forward contracts or does it only know belatedly the level of coal trade after import figures come out? This problem came to the fore last year when the Chinese were unable to meet their commitments regarding the import cap as they wrestled with these problems.

China has generally chosen to ensure adequate flexibility in the wording of UNSC sanctions to give it wiggle room, rather than outright violating those rulings. Allowing a coal cap to pass at the UNSC indicates their willingness to adhere to the ruling. In imposing a ban for 2017, China probably took into account rapidly rising coal prices and a probable rush by companies to frontload sales ahead of the cap to predict that the coal cap would be breached far earlier in the year. Rather than risk a violation of the coal cap limit, China is proactively clamping down on trade.

Domestic concerns might also play a part. China is restricting domestic production of coal. Between domestic producers and North Korean ones, China obviously prefers the former.

Full article:
Why China imposed a ban on North Korean coal imports
Choson Exchange blog
2017-02-19

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North Korean rice prices have dropped drastically one year after the sanctions. Why?

Wednesday, February 8th, 2017

By: Benjamin Katzeff Silberstein

Prices for rice have fallen in North Korea. Daily NK, which tracks prices of rice and foreign currency in three North Korean cities, reported in the beginning of this week that rice prices have fallen thanks to continued development of the market economy and a steady flow of goods to and from China. This has happened despite expectations that the sanctions that the UN passed one year ago would cause inflation.

In theory, the sanctions were supposed to curb trade with China because they targeted North Korea’s crucial minerals trade. In practice, a steady stream of news from the border suggests that trade has continued, albeit with periodic squeezes, following a familiar pattern of China’s sanctions implementation waxing and waning.

This makes a lot of sense. A better functioning and more efficient market should logically lead to lower prices, as should increased trade with China, given the increase in supply. But neither of these two factors explains the timing. There are several other elements to take into consideration when analyzing price changes in North Korea. I am not making any certain claims here about the relatively drastic shift in prices, but rather, pointing to a few factors that may have contributed.

First, one must ask: how big is the drop? The short answer is: pretty big, but not unprecedented. The following graph shows the last and first price observations in the Daily NK market prices database for every year since 2010–2011. (I’ve excluded 2009–2010 because of the distortions that the 2009 currency reform creates in the data.) It shows that a similar price drop happened between 2011 and 2012 as well.

Graph 1: rice prices in North Korea, last and first year observations. Graph by NKeconwatch.com. Data from Daily NK.

This latest price point, however, is not a historic low-point. We’ll see if prices continue to drop over the weeks, but as of now, there are fairly near time points when prices have been lower, such as April 2014 (see graph further down).

Prices are seasonal to a degree. Though the market system and the public distribution system (PDS) obviously function under very different mechanisms, the following graph from the World Food Program’s 2013 food and crop assessment (the latest exhaustive one they published, to my knowledge) underscores the point that supply varies depending as the harvest draws farther and closer, and suggests that overall supply tends to be particularly good in December and January in other years as well:

Figure copied from World Food Program Food and Crop Assessment in the DPRK, November 2013, showing seasonal variations in government grain distribution.

Overall, the story under Kim Jong-un’s tenure seems to be one of price stability. Since around the spring of 2014, prices have moved in a fairly delineated fashion (as visible in the right half of this graph):

Rice prices, average of three cities, 2012–2017. Data from Daily NK, graph by NKEconwatch.com.

Second, though it would be intuitively easy to conclude that the drop in prices was caused by better functioning market mechanisms and agricultural management changes, this doesn’t seem to be the whole story. Again, such changes are crucial and may well have played a large role in the greater price stability of the past few years. But they would not explain this sudden shift.

Instead, the story seems to partially be the opposite, one of government action. A few days ago, Voice of America reported that PDS distributions in January of this year have, according to a World Food Program official, gone up by around ten percent as compared to the same period last year. Both in September and November, the North Korean government imported significantly larger quantities of rice than usual. These imports presumably go out through state channels rather than the private markets.

So while it’s impossible to isolate different effects from one another, it looks like the state can still have a significant impact on the food economy, even with the strong and continuously evolving market sector. This impact seems particularly likely this time around, given the sudden drop in prices. Only time will tell whether drop continues, or if prices continue to bounce within the limits of the past few years.

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Private ownership of cars in North Korea

Tuesday, January 31st, 2017

By Benjamin Katzeff Silberstein

Yonhap reports (citing Joongang Ilbo) that since last year, private North Korean citizens are able to register ownership of cars formally and legally. The headline is slightly misleading – visitors and pictures from Pyongyang and other large cities have long since showed a vast increase of cars in the country, so their existence there is itself nothing new. However, if a change has occurred in ownership structures to make an already prevalent practice formally legal, it follows along with a trend over the past few years where practices already taking place are further incorporated into a formal legal framework:

Under civil law, North Koreans are allowed to possess cars and bequeath or inherit them, but in reality, people register cars under the name of organizations, not under the name of individuals.

Local newspaper JoongAng Ilbo reported that ordinary North Koreans have been permitted to register cars in their names since late last year, a move that heralds the recognition of private ownership.

The Ministry of Unification, which handles inter-Korean affairs, said more North Koreans are moving to own vehicles for personal use.

Full article:
N. Koreans showing inclination to possess cars: unification ministry
Yonhap News
2017-01-31

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More North Korean coal shipments going into China, says VOA/Yonhap

Wednesday, January 4th, 2017

By Benjamin Katzeff Silberstein

As in the past, Chinese sanctions enforcement appears to have been a waxing and waning phenomenon. Yonhap reports, citing Voice of America:

China seems to have resumed imports of North Korean coal by lifting a temporary ban on them which it employed early last month, a U.S. broadcaster, monitored here, reported Wednesday.

On Dec. 11, China’s Commerce Ministry announced that it would ban imports of North Korean coal through the end of that month to comply with the U.N. Security Council Resolution 2321 adopted on Nov. 30 to punish the North for its fifth nuclear test. Coal is the North’s single largest export item, and China accounts for nearly 40 percent of the shipments.

Three North Korean vessels — Kumreung No. 5, Kumsan and Wonsan No. 2 — are confirmed to have moored in seas about 10 kilometers off the China’s leading coal port of Qinhuangdao, Hebei Province, from Sunday through Tuesday, the Voice of America said, citing MarineTraffic, which provides live ship tracking intelligence worldwide.

On top of that, North Korean ships Kumhae and Kumho No. 1 berthed at the ports of Longkou and Penglai, Shandong Province, respectively, and Susong and Jonwun No. 68 were also on standby for entry near the ports, the broadcaster said.

Eight other North Korean boats were anchored in seas near Yantai, Rizhao and Lanshan, Shandong Province.

The ships, which are believed to have left the North starting Sunday and arriving in the Chinese ports on Monday or Tuesday, are bulk carriers capable of transporting coal, the broadcaster said, citing MarineTraffic.

Satellite images show heaps of black objects at the Chinese ports without exception, it said.

The Resolution 2321 is aimed largely at significantly curtailing the North’s coal exports — a source of hard currency for its nuclear program — by putting a cap on its total export amount.

The cap, set at whichever is lower between 7.5 million tons or US$400 million, is aimed at cutting the North’s annual coal export revenue by more than 60 percent or about $700 million, a huge sum that accounts for nearly a quarter of its total exports estimated at $3 billion.

Article source:

China appears to have resumed imports of N. Korean coal: VOA
Yonhap News
2017-01-04

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Kim Jong-un’s 2016 Acitivites

Saturday, December 31st, 2016

According to Yonhap:

North Korean leader Kim Jong-un carried out the fewest public activities this year since he took office in late 2011, data showed Saturday, amid toughened international scrutiny over Pyongyang’s nuclear and missile tests.

The North’s leader conducted 132 field guidances in 2016, compared to 153 cases recorded the previous year, according to Seoul’s unification ministry and analysis of North Korean media reports by Yonhap News Agency.

Since his public appearances peaked at 212 in 2013, they have been on the decline, the data showed.

According to my data (which are slightly different from Yonhap’s), here are the total number of Kim Jong-un’s guidance trips since taking power:

2012: 150
2013: 223
2014: 173
2015: 157
2016: 140

The Yonhap article speculates that the decline in activity is due to foreign observation of his activities. However I completed disagree with this assessment.

You can read the full story here:
N.K. leader’s public activities hit 5-year low in 2016: data
Yonhap
2016-12-31

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The size of North Korea’s market economy, and why it matters

Saturday, December 10th, 2016

By Benjamin Katzeff Silberstein

The other day, South Korean think-tank KINU (Korean Institute for National Unification) reportedly claimed that North Korea has 404 official markets in total. As Curtis Melvin has already pointed out on twitter, the real number is actually higher, but all this depends on what precise definition you use of markets (institutionalized and government recognized, versus operating in a legal gray zone, et cetera). As this report by the U.S.-Korea Institute laid out last year – also using satellite imagery, like the KINU report does – markets have grown significantly in size since the early 2000s.

The more interesting figures, in my opinion, are KINU’s estimates for what the markets actually generate in terms of income for the government, and how many people they employ. Below, I place these figures in a comparative perspective within the economy as a whole, and discuss the proportional weight of the markets in the North Korean economy. But first, some of the usual caveats:

As with any figures relating to the North Korean economy, a great deal of caution must be exercised in approaching these numbers. It would seem nearly impossible, for example, to accurately calculate the number of people employed by the markets. In theory, this should not be that hard. Using Google Earth, you can measure, with a fair degree of accuracy, the size of the trading grounds, and knowing the rough size of the average market stall in a North Korean market and how many people work in each one, getting a rough number for the amount that they employ should not be impossible. It would be a very rough estimate but arguably that is better than nothing. But in practice, it would still not give the full story of how many people work in the markets, since many people work there part-time, at least according to (possibly outdated) anecdotal evidence.

Moreover, it is important to remember that the market system is not the entire private sector – many other types of exchanges and transactions go on in the North Korean economy, not all recognizable from above, in complexes such as residential buildings and the like, where small business have been known to operate from. So any number for government revenues, it is important to bear in mind, will only be an estimate (again, a very rough one) for the specific type of markets that KINU has recorded. KINU does not seem to have made its report available online yet – perhaps their methodology is laid out clearly enough to answer some of these questions.

What do the numbers tell us?

Still, the numbers are interesting as starting points for a broader analysis of the proportions and size of the North Korean economy. Starting with the number of individuals employed within the market system, KINU puts the number at 1.1 million. This is about 1/25 of the entire population of the country, as derived from the 2008 census. Table 34 (page 187 and onward) gives the total working-age population as approximately 17.37 million. Subtracting the share of the population listed as “studying,” we get around 16.4 million. Further subtracting the share of the population listed as “retired,” which arguably we shouldn’t do since elderly North Koreans are known to be significantly involved in market activities, we get approximately 13.3 million individuals. I do not subtract the share listed as “doing housework” simply because it seems far too unlikely that such a category in North Korea would really be excluded from the market labor force.

Just assuming as a theoretical experiment that KINU’s figures and the census numbers are accurate, we get a 7.5 percent share of people employed in the official market sector. In reality, the share may well lower since many people in the demographic groups subtracted are known to be involved in market activities. Conversely, it may be higher if KINU’s number does not take part-time workers into account or otherwise underestimates the number of market workers. Wheher or not one thinks this to be a high or low number is a matter of perspective. For comparison, the share of the labor force employed in retail trade in the United States was 10.2 in 2014.

Another interesting figure KINU gives is that for government revenue from the markets. Again, this, too, should not be hard to estimate in theory: if you approximate the amount of market stalls through satellite imagery and multiply the amount by the fee paid by each trader to the government, it shouldn’t be impossible to get a rough estimate for how much the trade brings the government. But of course, here, too, complications abound: when looking at markets from above, it is nearly impossible to determine exactly how large the actual trading grounds are, for example, and how much is made up of administrative and storage facilities. Still, an approximate estimate is immensely valuable as a starting point for a broader debate.

According to KINU, the North Korean government collects between $13 and $17 million per day in fees from market traders. Ever since 2003, the North Korean market regime has become increasingly formalized and incorporated into the official economy. This trend has reportedly continued under Kim Jong-un as well, and arguably accelerated during his tenure. This is clearly a wise move from a policy perspective: the government needs the markets and it needs the revenue, and their depiction as a threat to the regime may not be the full story.

Using the low number of $13 million gives us a figure of $4.7 billion in revenue per year, while the higher figure of $17 million gives $6.2 billion per year. Both the low- and the high-end estimates would put government revenues from market fees at a significantly higher figure than, for example, North Korea’s trade with China. In 2015, for example, North Korea’s exports to China estimated a total of $2.95 billion. The latest sanctions additions are estimated to take off around $700 million from North Korea’s export incomes. It is important to remember that even if they were to accomplish that, which remains doubtful, North Korea still has a domestic economy that matters greatly too. And remember – these are only estimated (estimated!) figures for government revenue from a specific type of market. They do not represent the entire private sector in North Korea.

So, while the role of exports should not be underestimated, it is important to remember that North Korea has a domestic economy of considerable size. Perhaps whatever pressure the sanctions applies on the North Korean economy could serve as an argument for those in the policy bureaucracy pushing for economic reforms that could further let the private economy develop.

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The November 2016 North Korea sanctions: some perspective

Thursday, December 1st, 2016

By Benjamin Katzeff Silberstein

Responding to North Korea’s second nuclear test within one year in September, the United Nations adopted a new sanctions package yesterday, Wednesday November 30th. These are some of the main points:

  • By far, the most significant measure is a “cap” on imports of North Korean coal at $400 million or 7.5 million metric tons in a year, cutting its revenues by about $700 million per year. This is to supplement the current provision that coal can be imported when the proceeds go to livelihood purposes in North Korea, a provision that has proven to be a massive loophole (shocker!).
  • Four more minerals have been added to the sanctions list: copper, nickel, silver and zinc.
  • Exports of statues have been banned, targeting the somewhat peculiar North Korean practice of building statues in various African countries.
  • The resolution also limits the number of staff allowed at North Korean diplomatic missions, and forbids them from opening more than one bank account per person.

So what does this mean for the North Korean economy? Obviously, one shouldn’t speculate too much in advance. As always, China’s enforcement will be the main determinant. Here are some things worth noting:

First, while $400 million cap would certainly be a significant income loss for the North Korean regime, it might not be disastrous. It is worth remembering that North Korean government revenue from minerals exports already fluctuates heavily, since market prices do. Just for a sense of perspective, in 2015, North Korea’s export income stood at about $3 billion, and this was a decrease by 16.4 percent from the preceding year. In 2014, textile exports to China brought in around $800 million. Moreover, the $700 million revenue cut claim does not take into account the extent to which North Korea could make up for the loss through other sectors.

Second, the likelihood of full and consistent Chinese sanctions enforcement remains fairly low at best. Historically, we have seen a pattern where China will increase enforcement during certain time periods, or take single measures that receive a lot of attention (such as the Hongxiang inquiry) but where things return to normal pretty quickly. Case-in-point: the unusually strong sanctions from earlier this year, and the promises of Chinese enforcement, ending with record trade in coal. Obviously the “livelihoods” exemption provided a large enough loophole, particularly after the announcement by the US and ROK that THAAD will be deployed in South Korea. It is difficult to see why this cap would be impossible to circumvent. After all, China is (presumably) responsible for gather the data and for ringing the alarm bells when said cap is reached. (See also Adam Cathcart’s essay on the recent Sino-North Korean rapprochement at Sino-NK).

Third, and relatedly, history tells us that many, many factors other than the international sanctions regime determine Chinese imports of North Korean coal. Domestic demand is arguably far more important as a determinant than sanctions, as evident by the fact that declines in imports of North Korean coal often fluctuate much more with demand than with sanctions.

As always, we can only wait and see, but at the face of it, these new sanctions seem far from revolutionary.

(Update 2016-12-02)

Japan, South Korea and the United States have announced additional, multilateral sanctions independent from those by the U.N. Joshua Stanton over at One Free Korea argues that some of the measures potentially carry some real impact power. For example, they include North Korea’s national carrier Air Koryo. Moreover, they sanction China’s Hongxiang Industrial Development, making it the first time that a single Chinese company is directly targeted by South Korean sanctions. Yonhap:

“We have expanded the number of those subject to sanctions by adding to the list 35 entities and 36 individuals that are playing a critical role in developing weapons of mass destruction and contributing to the North Korean regime’s efforts to secure foreign currency,” Lee Suk-joon, the top official in charge of government policy coordination at the Prime Minister’s Office, told reporters.

Included in the blacklist were Choe Ryong-hae, a vice chairman of the Central Committee of the ruling Workers’ Party, and Vice Marshal Hwang Pyong-so, director of the military’s general political bureau, both of whom are regarded as close aides for North Korean leader Kim Jong-un.

The Workers’ Party and the State Affairs Commission were also added along with other entities suspected of supporting the regime’s efforts to export its coal and generate earnings.

In particular, Dandong Hongxiang Industrial Development and four of its executives were included on the list, marking the first time that a Chinese firm is facing South Korea’s unilateral sanctions.

The company is under investigation on suspicions that it exported aluminum oxide — a nuclear bomb ingredient — to the North at least twice in recent years. In September, the U.S. blacklisted it along with its owner and other company officials.

With the latest action by Seoul, a total of 79 individuals and 69 entities will be subject to sanctions in connection with the North’s nuclear programs. The government announced a blacklist in March as a follow-up move to the UNSC’s Resolution 2270 adopted in the wake of the North’s fourth nuclear test in January.

Any financial transactions with them will be prohibited, while their assets in South Korea will be frozen. The blacklisted people will also be banned from entering the country, which is seen as a symbolic action given that there are no exchanges between the two Koreas.

Other prohibitive measures include blacklisting the North’s state-owned airline Air Koryo on suspicions that it helps its regime transfer workers abroad, and move cash and other embargoed materials into the isolated country.

The Seoul government has also toughened its maritime sanctions by banning any ships that have traveled to the North within the past one year, an extension from the previous 180 days, from entering South Korean ports.

In addition, a watch list “tailored” to enhance the monitoring on activities related to the North’s submarine-launched ballistic missile capability will be prepared and shared with the international community, it said.

Full article:
S. Korea blacklists scores of N. Koreans, entities linked to nuke, missile program
Yonhap News
2016-12-02

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North Korea exporting sand, gravel and coal to China from Sinuiju

Tuesday, November 15th, 2016

Benjamin Katzeff Silberstein

An interesting example of how the transition from state-owned to private enterprise impacts the workings of certain firms. Daily NK:

North Korean ships from Sinuiju, North Pyongan Province are reportedly exporting in excess of 100 tons of sand and gravel into China each day.
“Shipping firms from Sinuiju are earning foreign currency through contracts with private Chinese construction businesses. The North Korean authorities are supporting the operations after receiving orders to finance the export of coal and sand to China. They are also providing wages and food for the workers,” an inside source from North Pyongan Province told Daily NK on November 11.
Additional sources in North Pyongan Province corroborated this information.
The source added that although the city’s shipping industry was originally a state enterprise, that is no longer the case. The industry is now run by private enterprises that deal with the domestic and Chinese markets. When the operations were state owned, there were chronic shortages of capital and sailors were forced to use sub-standard vessels. The regime’s new policy – to let the industry rehabilitate itself through benign neglect – has allowed the businesses to revitalize themselves. By exporting sand across the Yalu River into China, these businesses have earned enough capital to purchase better vessels. A number of enterprises and the associated infrastructure has grown as a result.
“As the volume of sand exported continues to rise, the shipping companies are inducing more service providers and factories to participate in the industry. The Anju Country 105 Sand Factory collects sand from the Chongchon River and transports it by way of the Yalu River to the shipping firms,” the source added.
When asked about the scale of the trade, she noted, “Sinuiju Harbor sees a daily influx of Chinese boats that carry away more than 100 tons of sand and gravel. Because exports are continuing to climb, the shipping firms are using the capital to enter new industries such as coal export.”
The North Korean enterprises see sand as an inexhaustible natural resource, the source explained, adding, “The more we sell, the better quality sand we can bring in. The enterprises are doing quite well for this reason. The factory cadres are accumulating vast sums of money, and continue to look for ways to increase their profits.”
The flourishing business has also improved prospects for workers. Laborers in the sand and gravel collection factories can earn enough money to put food on the table for a family of four – with food provided to them plus approximately 50,000 KPW per month (U.S. 6.14) for extras.
“The authorities are also using the opportunity to generate propaganda about the generosity of ruler Kim Jong Un,” the source asserted.
The revitalization of the sand collection industry is a positive development from the point of view of the authorities, as all Yalu River sand enterprises are first and foremost responsible for the supply of Kim Jong Un’s pet construction projects, such as the Ryomyong Street Project.
“The authorities can simply sit back and relax as they receive money, supplies, and credit for the success of the sand business. This reveals that the solution to North Korea’s problems is freedom of the market,” she added.
As exports continue to increase, the donju (North Korea’s nouveau riche) have expanded the scope of their interests and investments. “First, they purchase a large boat. Next, under the pretense of being a shipping business, they start to branch off into other industries to make more money. The factories give the donju the authority to do the trading and receive 30% of the profits in return,” the source concluded.
Full article:
NK exports 100 tons of sand, gravel, & coal daily from Sinuiju Harbor
Seol Song Ah
Daily NK
2016-11-15
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North Korea’s natural resources and the “Five-year Plan”

Monday, August 29th, 2016

By Benjamin Katzeff Silberstein

North Korea’s natural resource and minerals issue runs as a clear thread throughout its economic past and present. On the one hand, they provide immense wealth (not least through export revenues), but on the other hand, the leadership has often been wary of letting their role grow too large. Moreover, it appears that the North Korean leadership, both at various times in history and in recent years, has seen individuals scrambling to amass personal wealth through mineral exports as a danger to state incomes and economic control. Recall that one of the accusations against Jang Song-taek was that he sold off the country’s natural resources to “foreign countries” for cheap.

In a brief from the beginning of the month, IFES analyzes Rodong Sinmun coverage of the role of natural resources in implementing the five-year plan for economic development, the details of which are yet to be revealed:

Kim Jong Un has appealed for all energy to be put into developing underground resources in order to implement the ‘Five Year State Economic Development Strategy’ (unveiled at the 7th Party Congress of the Workers Party of Korea held in May).

In reporting that appeared in Rodong Sinmun on July 13, 2016 it was asserted that “The task of developing and using underground mineral resources effectively to raise self-sufficiency and independence lies in front of party members and workers who are vigorously participating in a 200 day speed battle to make a breakthrough in the implementation of the Five Year State Economic Development Strategy in the country, which is known worldwide for its minerals.”

Self-sufficiency and natural resource dependence have often been highlighted in North Korean economic publications as mutually exclusive. Presumably, Rodong Sinmun advocates that natural resources be used for economic production through fuel and the like, rather than merely for export incomes.

It went on to urge that “with the close collaboration between the state resources development sector and scientific research groups, all resources must be concentrated on prospective and current surveys (surveys that measure mineral reserves) to ensure that the Five Year State Economic Development Strategy succeeds.”

It added, “energy must be put in to find more as yet undeveloped potential sites for development . . . reserves must be secured to ensure that mine production continually rises.”

It also emphasized that “all illegal extraction of underground mineral resources by [production] units, factories and collective organizations for the benefit of their own unit alone must be gotten rid of . . . [and] the role of institutions supervising and controlling underground resources and environmental protection must be strengthened.”

In other words, incomes from mineral extraction should go to the central government, and individuals trying to exploit the expanding opportunities for private business activity to generate personal profits through mineral exports should be kept under control.

Admittedly, the paper also demanded natural tourist attractions be protected: “the staff of supervisory institutions must engrave deeply in their hearts the earnest wish of the Great Leader by not developing Mount Kumgang and Mount Myohyang, regardless of how large the underground mineral deposits are there, and hand down their beautiful scenery and nature to posterity.”

At the aforementioned 7th Party Congress, Kim Jong Un unveiled the ‘Five Year State Economic Development Strategy’, and also set out to revolve energy problems and strengthen the self-sufficiency and independence of the people’s economy.

Full publication here:
Mobilizing “All Energy in Securing Underground Resources” to Implement Development Strategy
Institute for Far Eastern Studies
2016-08-01

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