North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
2/24/2011

The trade volume between North Korea and China has steadily increased, reaching its record high of USD 3.4 billion in 2010. Total exports amounted to 1.19 billion USD while imports doubled that figure to USD 2.22 billion. Imports have continued to grow, increasing by 2.4 times over the previous year.

Since the Cheonan incident and the implementation of May 24 sanctions, inter-Korean economic cooperation has come to a halt, naturally resulting in rise in exports to China. In particular, a significant growth in anthracites exports was observed. The monthly anthracites exports that averaged around USD 10 million surpassed USD 70 million mark last August and maintained USD 50 million monthly average between September to November. In addition, cost-per-ton of anthracite in March which was USD 52.2, jumped to USD 82.8 in November, a climb of 60 percent. This boost is attributed to its increased export.

The current supply of electric power consists mostly of hydroelectric power — reaching over 60 percent– but during the winter season most of the hydropower plants are unoperational due to frozen facilities from harsh winter weather. Anthracites were the alternative resource to fill this gap. Sacrificing power production and exporting great amount of anthracites despite severe winter is a strong indication of the poor foreign currency situation in North Korea.

In its New Year’s joint editorial, North Korea placed heavy emphasis on its anthracite export that took up 60 percent of its total exports. In the statement, four vanguard sectors of coal, electricity, metals, and railroads were highlighted as important industries as “rich underground resources that will help with securing funds and resolving raw material problems.” This is the first time in 13 years – that is, since the Arduous March — for coal to be mentioned first in the New Year’s message.

North Korea also began to lift export restraints of mineral resources like coal and silver from the latter half of last year and ordered to increase imports of rice and corns in place of minerals.

The reason food procurement is placed first at the expense of its mineral resources is believed to be associated with the implementation of the succession involving Kim Jong Un, and to keep North Korean people’s dissatisfaction under control and manage the domestic situation.

North had placed restraints on coal, gold, silver, lead, and zinc exports from 2007 through adopting export control of mineral resources.

In addition, North Korea and China will meet in Beijing to sign an agreement on joint development of underground resources. This agreement will include Musan Mine and rare-earth mines that POSCO (The Pohang Iron and Steel Company of South Korea) has shown interest in in the past for development. China’s moves in this sector are suspected as China’s attempt to monopolize the DPRK’s underground resources.

The DPRK’s Joint Venture and Investment Guidance Bureau and China’s Ministry of Commerce were expected to meet on February 15 to discuss agreements related to underground resources development. On the agenda was Musan Mine, abundant in gold and anthracite, and other mines rich in rare-earth elements. Other mines are also known to be specified in the agreement.

China is expected to bring private companies into the underground resources development project after reaching an agreement with the DPRK. According to our source, “both parties will establish a joint venture investment corporation in Hong Kong after signing the agreement.”

Construction of a highway connecting Heilong City of Yanbian Korean Autonomous Prefecture to Nampyong and Chongjin of North Korea and railway system linking the cities of Heilong, Nampyong, and Musan are currently underway, expected to be in operation by end of this year. Jilin Province and Ministry of Railways of China began construction of this railway system from October 2010 investing CNY 1.19 billion, which runs a distance of 41.68 km. However, it is expected to extend further onto Chongjin and is considered to become the major transportation hub, integrating economic cooperation between the two countries.

Musan Iron Mine is known as the largest outdoor iron mine in Asia and Tonghua Iron and Steel Group along with three other Chinese corporations acquired 50-year development rights of Musan Iron Mine. They are bringing in about 120 tons of iron ore each year and more is expected to be brought in once the Heilong-Musan rail link is completed.

Andrei Lankov writes in the Korea Times about the state of the North Korean economy.  Excerpt below:

The existing statistics are remarkably untrustworthy, being essentially educated guesses by analysts. Nonetheless, these statistics indicate a moderate growth of the North Korean economy.

But the present author talks to North Koreans quite frequently. So I don’t need statistics to confirm what becomes clear from my talks with refugees, smugglers, migrant workers and those Koreans who have illegal Chinese mobile phones. Throughout the last ten years the economic situation in the country has improved, even though this improvement was very moderate.

What does “improvement” in this context exactly mean? First of all, few if any North Koreans now face the threat of starvation, though malnourishment remains a widespread problem. Many (perhaps, a majority) of North Koreans don’t have enough to eat in spring. This has a seriously negative impact on their health and is especially bad for children. Nonetheless, unlike the 1990s, it seldom leads to death.

The average North Korean meal is a bowl of boiled corn with a few pickles. Meat or fish are eaten only on special occasions or by affluent people.

Indeed the last decade was a time when material inequality increased in leaps and bounds. Some of the new rich are officials who take advantage of their positions while others are successful entrepreneurs running all kinds of private businesses.

A successful North Korean entrepreneur nowadays might even openly own a car. For instance in a relatively small borderland city with a population of some 90,000 people there are officially three private cars. Much more frequently well-to-do North Koreans prefer to register their cars with state agencies. At any rate, ten years ago a private car was almost unthinkable.

The less successful entrepreneurs or craftsmen are still doing quite well as indicated by significant increase in the number of consumer durables owned by North Koreans. Fifteen years ago a fridge was a sign of exceptional luxury, almost as rare as a private jet in the U.S. Now it’s a bit like a luxury car, an item that 10-20 percent of households can afford.

What is also interesting is the spread of computers, including privately owned ones. In most cases these are old, used computers which are imported or smuggled from China. They are quite outdated but they are computers nonetheless. Recently I interviewed a group of school teachers from the countryside, and they said that nowadays every high school, even in remote parts of the country, is likely to have at least one computer (admittedly, this wonderful contraption is seldom switched on).

This does not mean of course that North Korea has become a consumer paradise. In spite of some improvements, the gap between the North and its successful neighbors continues to widen. However in absolute terms the North Korean economy is not shrinking any more.

There have been serious setbacks, the currency reform early last year is a perfect example. For a while, this failure almost paralyzed the economy and created serious food shortages across the country.

But what brought about this moderate growth? It seems that there are three major contributing factors.

First, North Korea has been quite good at begging and blackmailing the outside world into providing aid. The aid was initially provided by South Korea and the U.S., but now it comes almost exclusively from China.

Second, North Korea’s technocrats have learned how to run the country in its new situation. They are not very efficient at this, but, to quote Marcus Noland, “they are muddling through.”

The present author is inclined to believe that it is the third reason which is the most important of all. Over the last decade a relatively powerful private economy has developed in North Korea. North Koreans did not merely learn how to trade privately, they now produce privately as well and this growth of industry invisibly and privately, seems to have contributed to the growth described above.

The growth is moderate, and no breakthrough is likely. Nonetheless, it is real and palpable.

Read the full story here:
Between myths and facts
Korea Times
Andrei Lankov
1/30/2011

The Choson Ilbo begins this story with “Rumor has it”….

Rumor has it that China is getting directly involved in the development of North Korea’s Rajin-Sonbong Port, once the center of the UN Development Programme’s Duman (or Tumen) River project in 1991. A source in Beijing said Wednesday, “As far as I’m aware, North Korea and China’s Commerce Ministry recently signed a memorandum of understanding outlining Beijing’s investment of US$3.5 billion over five years beginning next year” in the special economic zone there. The source said China is investing in roads, ports and gas facilities in the region.

The Rajin-Sonbong area, at the mouth of the Duman River, is a strategic point of economic cooperation between the two countries, but neither bank is Chinese territory. One side is in North Korea and the other in Russia, so to get to the East Sea China had to borrow a port from either side. China did nothing about the UNDP initiative in the 1990s, but since the mid-2000s, it has set its eyes on the area.

North Korea for some reason rented out the best equipped dock there to Russia in 2008 but since last year it has been seeking investment from China to overcome dried-up aid from South Korea amid international sanctions. North Korean leader Kim Jong-il urged Chinese President Hu Jintao when he visited China in May this year to invest in the region.

But the rumor of direct investment from the Chinese government has not been confirmed. One diplomatic source in Beijing said, “I’ve heard nothing about the Chinese Commerce Ministry’s direct involvement in negotiations. It’s just one of many rumors since North Korea became active in developing the Rajin-Sonbong area.”

UPDATE from the Choson Ilbo:

Chinese officials with close ties with North Korea say the North has used to demand hard cash for business deals but is now taking a more flexible approach. The Global Times, a sister publication of the People’s Daily, published a series of reports Saturday about the Rajin-Sonbong special economic zone of North Korea.

It said street lights and neon signs powered by windmills have appeared in the region, which had earlier been pitch dark at night, while the previously ubiquitous soldiers have vanished.

North Korea allowed 4,000 Chinese residents in the area to rent commercial property and agreed to designate an area in the Rajin-Sonbong special economic zone to be jointly administered by the two countries.

North Korea had offered China to develop one or two islands in the estuary of the Apnok River on a 50-year lease, but when China demurred it apparently offered a 100-year lease and even allowed construction of golf courses and other recreational facilities.

…

Many private Chinese companies are reticent about investing in North Korea. Not only is there a lack of business laws to protect their investment, there are also too many political uncertainties. As a result, the Chinese government is not playing a very active role. In the case of the bridge across the Apnok River, North Korea apparently wanted Chinese state-run companies to take part in construction, but Beijing declined.

One source in Beijing said some Chinese companies are showing great interest in developing the Rajin-Sonbong area, but most are biding their time. “Chinese businesses still don’t seem to trust the sincerity of North Korea’s desire to open up its economy,” the source added.

Additional Information:
1. The Chinese and Russians currently lease docks at Rajin. You can see a satellite image of them here.

2. Here is more information on China’s 10-year lease of Rajin.

3. Here is information on the Yalu Islands China is reportedly leasing.

4. The Russians are also building Russian gauge railway line from the Russian border to the port in Rajin.

5. Here are all previous Rajin (Rason)posts

Read the full stories here:
Beijing ‘Pouring Money into N.Korea’s Special Economic Zone’
Choson Ilbo
12/30/2010

N.Korea’s Cross-Border Business with China Picking Up
Choson Ilbo
12/30/2010

UPDATE: Martyn Williams writes in PC World (11/5/2010):

A new PDA (personal digital assistant) has hit stores in North Korea, according to a student who writes a blog from the secretive state.

The device, which doesn’t appear to carry any branding, has a color touchscreen display that occupies its entire front, according to photos published on the “Pyongyang Show and Tell” blog. The Russian-language blog is maintained by a Russian student who is studying in the country.

Installed software includes a Korean dictionary and translation dictionaries pairing Korean to and from Russian, English, Chinese and German, the blog report said. There are several basic utility programs and an electronic map of the country although the PDA does not feature GPS (global positioning system).

There is also no wireless networking so data transfer has to take place via a USB connection to a Windows or Linux computer. Data can also be transferred via MicroSD card, which is the same as used in domestic cell phones.

“Comparing it to modern things like, let’s say, the iPad, it’s nothing,” the blog’s author, who didn’t wish his name to be used, told IDG News Service via email. “It’s still good as a dictionary, except I don’t see any other advantages.”

It’s not the first PDA in North Korea.

In 2003 the country’s media said “Hana 21,” a PDA developed by the Samilpo Information Center, had been put on sale. The device included English-Korean and Korean-English dictionaries as its main function and also had several games and a basic word processor. Input was by pen and touchscreen.

According to published images of the Hana 21, the two devices are different.

At the time the Hana 21 was said to cost around 200 euros (US$182 at the exchange rate of the time).

The new PDA that hit stores recently costs around US$140.

“It’s still hard to buy for a Korean, but there are many people who keep their money for years and can afford it,” the student said via email.

PDAs have long been out of fashion in many countries after their features and functions were duplicated by smartphones. North Korea has a 3G cellular network, but most cell phones have only basic features.

ORIGINAL POST: Show and Tell Pyongyang introduced the world to the DPRK’s version of Linux: Red Star.  Now he has introduced us to the DPRK’s new Personal Digital Assistant (PDA).

Here are pictures from the Russian web page:

According to the Russian-language web page (via Google Translate):

A few weeks ago in North Korea has started selling the first PDA. In all the computer shops you can see the advertising of the new items. [I] offer a small review of this device.

On sale are a few options. The difference between them – is the amount of internal memory and a built-in slot for the stylus. The most feature-rich [costs] $ 140 and has 8 gigs of internal memory and a slot for the stylus, so you do not accidentally lose it.

In addition, there is a slot for MicroSD memory cards – the same as in the local mobile phones.

The main function of which is worth noting (and more generally for which there is a fly sabzh), an electronic dictionary Samhyn (삼흥) with the Russian language. It is no secret that South Korea produced electronic translators, but, according to eyewitnesses, the Russian language is absent in them as fact. And in this case, Russian-Korean and Korean-Russian dictionaries most voluminous in the number of vocabulary words. Besides, there are English, Chinese and German. Also has a large Korean Wiki Grand Korean Dictionary.

So for me personally, the main value of the PDA – is an electronic dictionary, which can carry with them always and everywhere. And the rest is not so important.

So what else is there? There is a map of Korea’s system of teaching foreign languages (English, Chinese). By the way, about a month ago there was an opportunity to put maps on your mobile phone. Application free of charge and requires activation. Put it on a large computer center of the city. []

Device has access to TV, headphones and a USB-slot. Possible to connect devices to both Windows, and Linux (in this case, Red Star)

On the whole – everything is simple and works quite well. At the moment, the firmware needs some work, not all features fully implemented, but the Korean comrades promise to update and refine.

If anyone else has more information, please let me know.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-11-01-1
11/1/2010

The North Korean Ministry of People’s Security (MPS) recently issued an order restricting the use of automobiles and warning that any car or truck used to earn private income would be confiscated by the State. There were a few cases of authorities cracking down on the use of private buses in the mid-2000s, but this is the first time there has been a widespread crackdown on the private use of all vehicles.

According to a report from the Daily NK, a source from North Hamgyeong Province has revealed that “on an order from the MPS, a crackdown on privately-owned cars, buses, and 1.5-2 ton small trucks began last month,” and, “all traffic police were mobilized and are checking all registrations, car-use permits, and driving licenses.” According to the source, each regional transportation authority is filing comprehensive situation reports, which show that with the exception of cars used by the elite, all illegally-used cars are being confiscated. Even cars used by military-run foreign capital organizations are subject to inspection by police.

In North Korea, the lack of electricity has led, since the mid~2000s, to the sharp drop in the use of trains and a rise in reliance on the so-called ‘service car’ as the primary method of moving people and goods around the country. This crackdown on service cars will be carried out in two phases: Phase 1 will run until the end of the year, then Phase 2 will be carried out until April 2011. The ownership and use of cars by organizations and businesses will also be investigated, while other cars will be inspected one at a time as they travel the roads. If any illegal use is discovered, the car will be impounded.

This kind of measure appears to be one aspect of North Korean authorities’ on-going battle against “anti-socialism.” Cars and other government property being put to private use is problematic, but a crackdown of this size indicates that organizations and government workers are abusing the rules on such a scale that the government can no longer tolerate their corruption. In order for these service cars to exist, authorities must break laws, forge documents, and pay bribes to get a car registered, purchase gas, and handle profits.

However, a crackdown on these cars is expected to have many side-effects. Service cars began replacing trains in 2004, but the people’s reliance on them grew so quickly that they are now the primary means of transportation throughout North Korea.

Ultimately, the North can not avoid significant aftershocks of the measure; without service cars, not only will businesses suffer production problems, those people who make their living through wholesale and retail markets will suffer, and the standard of living for people across the country will take a hit.

Previous posts on this topic cna be found here and here.

According to the Daily NK:

With North Korea’s domestic security forces having been engaged in inspecting and confiscating vehicles being used for private gain since October 18th, the question of whether the so-called “servi-cha” industry will stay the course has become a central issue for many. This is because the presence or absence of the “servi-cha” can make or break the North Korean domestic economy, much like last year’s currency reform.

What is a “servi-cha”?

There are two types of “servi-cha”. The first are vehicles, mainly buses and trucks, owned by state organs and enterprises, which transport people and supplies in exchange for money. Enterprises use the money earned from the service to provide rations for the workers, cover transportation costs or obtain further raw materials for production.

The second type of “servi-cha” is those owned by individuals but registered as being owned by an enterprise; they are used for private gain. Collusion among three parties; the owner of the vehicle, the driver and the enterprise under whose name the vehicle is registered, is necessary in such cases. The owner of the vehicle acquires a car from, predominantly, China or Japan, whereupon cadres of a certain enterprise or local unit register the vehicle under the name of the enterprise or unit. A driver is hired thereafter, who then gets a drivers’ license from the cadre and sets about earn a profit by providing public transportation to residents or moving supplies. A portion of the money earned is given to the cadre, who will usually take a fraction for personal gain and register the remainder as company profit.

In general, two people man a “servi-cha”; the driver and his assistant. Alongside them, the owner of the freight being transported is present, and thereafter empty seats are taken by other passengers. If the car meets an inspection on the way to its destination, there is no problem; on paper, the vehicle is legitimate; it belongs to a unit, and the owner of the freight carries a transportation permit that he/she has received from the car owner. With a bit of alcohol and tobacco on hand to bribe the inspector, even the people occupying the empty seats are free to pass.

A North Korean license plate contains information on the institution the vehicle belongs to. As most people do not have a travel permit, they tend to prefer “servi-cha” that display the license number of a powerful institution. Transportation fees differ according to the type of license plate on the “servi-cha”. “Servi-cha” with plates from powerful groups charge higher fees than those with plates from food factories and agricultural offices, for example.

Vehicles are assigned numbers based on certain rules; license plates that reflect an auspicious date are deemed best; either 216 (February 16th; Kim Jong Il’s birthday) or 727 (July 27th; Victory Day). The license plate of a car given as a gift by Kim Jong Il to someone on the Central Committee might be assigned a number such as 216-11-101.

Furthermore, each department of the Party uses its own license plate number in order to distinguish ownership of vehicles. For example, the Party’s Finance and Accounting Department uses the number 02; 11 and 12 is reserved for Party offices; 12 to 14 for administrative units; 15 to 17 for the People’s Safety Agency; 18 to 20 for the National Security Agency; 21 for judicial branches; 22 for a unit under Party Department No. 39, 90 for the Central Party liaison office, and 46 for passenger transport services.

Inspections are stricter for those “servi-cha” with less impressive license plates. Travel permit checks become more thorough, and the inspectors ask more questions about the cargo. Thus, vehicle owners with “weaker” plates tend to have to give more bribes.

Origins of the “Servi-cha”

Public transportation virtually stopped in North Korea during the economic collapse which began in 1995, bringing about shortages of fuel and electricity. The country was incapacitated to the point that the government issued a decree calling on cadres to walk.

The first people to break the logjam were from foreign-currency earning units. They were able to use imported fuel to transport freight for other companies, at a price. Many enterprises quickly spotted the rising demand for freight logistics services, and started earning considerable profits by importing Chinese Dongfeng or Japanese second-hand trucks.

Demand for this was not limited to institutions and enterprises. Vendors also wanted to move their supplies around the country. The importing of Chinese products to the Rajin-Sonbong Special Economic Zone beginning in 1997 was followed by a rise in long distance cargo transportation to cities as far as away as Pyongyang, Hyesan, Sinuiju, Kaesong and Haeju.

The Different Types of “Servi-cha”

In general, trucks are a popular choice. This is because they can transport cargo and people at the same time. Buses, which are more readily owned by institutions and enterprises than trucks, are also often utilized for long-distance trips. A regular 45-person bus will often be full to capacity, with the central aisle lined with makeshift seats.

Party and military cadres also use their vehicles as “servi-cha”. It is commonplace for them to order drivers to look out for long-distance travelers as a means of earning extra money when the car is not in use. This also applies to the case of military cadres.

Sometimes, the seats of Japanese second-hand vehicles or Chinese second-hand jeeps are removed in order to take a maximum of eleven passengers.

Earning Money through “Servi-cha”

Use of “servi-cha” has vastly increased the quantity of goods and number of people crossing provinces, with goods smuggled in across the Tumen and Yalu Rivers in the north spotted in locations as far away as South Hwanghae and Kangwon Province, both of which border South Korea. Therefore, it can be said that production and trade between enterprises and vendors owes a great deal to the “servi-cha”.

For example, in 2001 the price of sweet potatoes peaked in the Rajin-Sonbong Zone. Demand for sweet potatoes was high in places north of Hamheung because climate conditions in that northern region are not favorable for cultivating the crop. While sweet potatoes were priced at 7 won per kilogram in South Hwanghae Province, in the Rajin-Songbong Zone the price exceeded 45 won per kilogram.

Vendors from Rajin-Sonbong were therefore able to increase profits 50% by selling Chinese everyday goods in Hwanghae province, and then make seven times more money selling southern sweet potatoes in the north.

It goes without saying that initial expenditure is required to pull this off. The cost of changing tires, of filling up the vehicle with gas, of bribing officials for travel permits and drivers’ permits, all added up to about 70,000 won. However, a round-trip could earn the “servi-cha” crew a net profit of 60,000 to 70,000 won. At the time, it was very good money.

Kim Kyung Hee’s “Servi-cha” Experiment

On her way to Kangkye in Jagang Province, Kim noticed a throng on the street, and approached, concealing her identity. They were people waiting for a “servi-cha”. Leaving her assistant and vehicle behind, Kim quietly stood in line with the other people.

Eventually, a 10-ton “servi-cha” arrived and people began scrambling for seats on the platform normally reserved for cargo. Paying her fare, 50 won, Kim also tried to board, but the driver noted her less than ordinary appearance and gave her the passenger seat.

After a few minutes of travel, a strange voice could be heard;

“Comrade, our time is up.”

The source of the sound was Kim’s watch. It was a message from her assistant, who was following the “servi-cha”. The driver, concerned for any number of reasons, immediately stopped and asked Kim to descend from the cab. In the end, the “servi-cha” left her behind on the road. It has been said that Kim went back to her vehicle and told her assistant that the “servi-cha’s are rather fun”.

Read the full story here:
Servi-Cha: the Lifeblood of the People’s Economy
Daily NK
Im Jeong Jin
10/28/2010

According to the Daily NK:

The People’s Safety Ministry has declared war on the use of vehicles for private gain, according to a source, raising fears that another period of social upheaval is on the cards.

Vans, buses and trucks have been in use as so-called “servi-cha” (service cars) in North Korea since the late 1990s, after the authorities became unable to provide regular electricity to the railroads. Since then, this alternative transportation system has become a core means of distribution and domestic movement.

However, a source from North Hamkyung Province reported on Sunday, “A crackdown on sedans, vans, and 1.5 to 2-ton trucks belonging to individuals has begun under a decree handed down by the People’s Safety Ministry on the 18th. Now, all traffic safety agents are checking car registration documents, vehicle licenses, car permits and driver’s licenses on the streets.”

The source explained, “The PSM intends to confiscate all kinds of vehicles apart from those registered for cadres and businesses in the Traffic Office database in each province. Even those vehicles belonging to military-owned foreign currency-making enterprises have been targeted for inspection, but the military police will deal with them.”

According to the source, the North Korean authorities have divided the crackdown on the servi-cha system into two steps: the first is to be carried out until the end of this year, and the second by late April, 2011. First, for the next six months, the PSM will investigate vehicle ownership in government organs, companies and factories, inspecting all vehicles on the streets and confiscating those found guilty of illegality. In the second phase, the PSM will move on owners of private vehicles.

Vehicle management in North Korea is the work of the Traffic Department of the People’s Safety Ministry. The Traffic Department has a Traffic Office under each municipal or provincial People’s Safety Ministry which is in charge of monitoring vehicles within that region. Vehicles belonging to the military are managed and monitored by the rear guard unit of each corps, division or regiment; punishment, monitoring and crackdowns are military police duties.

The operation of a “servi-cha” requires the collusion of three parties; the car’s real owner, a driver and a cadre from an organ or enterprise.

A used car arrives from China or Japan, whereupon the cadre, who has close relations with the smuggler of the car, registers it in the name of his organ or enterprise, since all vehicles must belong to a group, not an individual.

Then, the car owner hires a driver and operates the vehicle as a bus or delivery truck.

Gains are divided between the cadre and the owner, who also pays the driver’s salary. The cadre extracts some of the profits for himself and records the rest as company income.

Under this mechanism, almost every organ, company, factory and even collective farm has at least one “servi-cha” in its name; profits are used to cover other losses, since there is no support coming from Pyongyang anymore.

This system is probably the most decisive influence on the growth of the jangmadang in North Korea. Thanks to the “servi-cha”, volumes of commercial traffic and personnel migration have increased and products smuggled in across the Tumen and Yalu Rivers from China are able to reach remote southern provinces such as Kangwon and Hwanghae.

Since the late 1990s, when the operating ratio of the railroad dropped to as low as 40%, the servi-cha system spread as an alternative to the collapsing public transit network. As permanent markets emerged in 2004, demand from people for migration and the distribution of goods increased drastically, and thereafter the system became the core transportation tool.

Considering the dominant influence of the “servi-cha” in the daily lives of the North Korean people today, if the crackdown is long and/or successful over a long period, other serious effects may be felt in North Korean society, where the aftershocks of the currency redenomination have only just dispersed.

This measure is being interpreted as part of a series of struggles for the eradication of what the North Korean authorities see as “anti-socialist elements”. Additionally, it seems to be an attempt not to ignore the abuse of loopholes in the system by cadres.

From the authorities’ perspective, the wide-spread usage of the servi-cha represents a loss of control over the society, because the movement of goods and people naturally incorporates the circulation of information.

The obvious problem is that any crackdown on the servi-cha industry will cause instability in the markets.

The source said, “Getting rid of ‘servi-cha’ is the same as letting us starve to death,” adding, “If they eliminate ‘servi-cha’, it won’t just be a problem for companies; any life tied up in markets including wholesaling and retailing will hit a brick wall.”

He explained further, “The measure will be a blow to cadres in the middle and lower levels, who are in collusion with traders. Therefore, lower cadres are likely to resist the measure first.”

Therefore, it is very much open to question whether the measure will be a success or a failure, just like previous crackdowns over markets and the currency redenomination.

Read the full story here:
War Declared on the Servi-Cha
Daily NK
Im Jeong Jin
10/25/2010

1. The Boston Globe puts together a great photo album of the celebrations attended by Kim Jong-un.

2. Pyonghwa Motors did a car show in Vietnam where several of their vehicle models are sold. Who would have thought that both the North Koreans and the Unification Church would approve of a showcase model! See the Pyonghwa Motors Wikipedia page here.

3. See the KPA’s “Funky get down Juche party” (Youtube).  It only works with audio!

4. Here is a group of North Koreans in China visiting Starbucks! (They were only seen outside the Starbucks, I cannot confirm they went in)

5. Recently I have posted a lot of pictures of North Koreans wearing Western brands (Jesus, Mickey Mouse, South Park, etc).  Today we see Jurassic Park (h/t to an anonymous colleague):

6. Fourjay Industries of Dayton, OH, might like to know that their products are helping to motivate swimmers at the Kim Il-sung University swimming pool (satellite image here).  I am willing to bet that the DPRK’s order (probably made through one or more intermediaries) did more good for the state than the stimulus package (zinger)!  I realize this picture proves nothing.  You just have to trust me that it came from Kim Il-sung University (Gag located the product web page here):

7. Finally, here is a good copy of a very famous picture:

FIRST: A visitor to Pyongyang sent me these photos of a North Korean boy wearing a South Park shirt on Mansu Hill:

I trust that I do not need to explain why this is interesting.

SECOND: From Koryo Tours: The latest news from Pyongyang is that Arirang, the spectacular 100,000-strong mass gymnastic event has been extended until October 25th, marking the final performance of the 2010 season. If you haven’t yet seen tens of thousands of people moving in unison, 20,000 students forming a giant mosaic or the dancing eggs that makes Arirang unique, don’t miss our Last Chance Tour. Visitors can also see the massive monuments of Pyongyang, eat food “fit for royalty” in the ancient city of Kaesong and watch the North and South stare each other down at the DMZ. There’s no word yet on whether 2011 will have mass games at all – this just might be Arirang’s last dance. Don’t miss it!

If you are not able to see the Mass Games this year you should still see Centre Forward!

THIRD: NKNews.org has a couple of interesting recent updates from the DPRK.  The first claims that all of Pyongyang’s traffic ladies have been replaced by traffic lights.  Read the report here.  The second report covers a whole list of interesting observations.  Check out the report here.

According to the Daily NK:

It has been reported that the North Korean authorities have declared a “Special Vigilance Period” and begun regulating civilian access to Pyongyang. The move looks like the start of preparations for the Delegates’ Conference of the Chosun Workers’ Party, which could begin as early as the end of next week.

An inside source reported the news in a telephone conversation with The Daily NK today, saying, “Since the 26th, they have been regulating access to Pyongyang for provincial residents at all the ‘No. 10 Checkpoints.’”

The General Security Bureau of the National Security Agency sets checkpoints at every major entry point into Pyongyang, and these are called “No. 10 Checkpoints.” They are used to regulate the floating population; at all checkpoints, vehicles and civilians have their documents checked.

There are approximately ten checkpoints, with Junghwa No.10 (Hwangju, North Hwanghae Province to Pyongyang), Seopo No.10 (Pyongsung, South Pyongan Province to Pyongyang), and Majang No.10 (Sariwon, North Hwanghae Province to Pyongyang) seeing the highest traffic flows.

The source added, “There is also a decree whereby all local cadres on business trips and others visiting Pyongyang on family business or for other reasons must leave Pyongyang by the end of this month.”

Special Vigilance Periods are a customary move when important events are held in Pyongyang on national holidays.

On Kim Il Sung’s and Kim Jong Il’s birthdays (April 15 and February 16), the founding day of the Chosun People’s Army (April 25) and the Chosun Worker’s Party (October 10), the four major national holidays, the Special Vigilance Period conventionally lasts for seven to ten days, while there is customarily a three or four day Special Vigilance Period when the Supreme People’s Assembly is sitting. Additionally, when international VIPs visit Pyongyang, access to the city is generally restricted for four to six days.

The only specific public evidence of the start date of the Delegates’ Conference came in the form of a June 26th Chosun Central News Agency dispatch, according to which, “The Politburo of the Central Party summons a delegates conference of the Chosun Workers’ Party at the beginning of September, 2010 to elect the leading apparatus of the Workers’ Party and reflect new demands for the revolutionary development of the Party, which is facing critical changes in bringing about the strong and prosperous socialist state and Juche revolutionary achievements.”

While the statement could mean any time between September 1st and 10th, considering September 9th is the founding day of the North Korean regime, the conference looks likely to be held between September 6th and 8th.

The Chosun Central News Agency (KCNA) also reported today that county delegates’ conferences have been held and provincial delegates’ conferences will be held soon. The latter will elect provincial delegates who will go forward to the main conference.

In another report, Chosun (North Korea) Central Broadcast (the state radio station) reported that Kim Jong Il had been voted in as a delegate for the North Korean People’s Army in a military party delegates’ conference held in the April 25 House of Culture on the 25th.

Read the full story here:
Pyongyang Getting Set for Delegates’ Conference
Daily NK
Yoo Gwan Hee
8/27/2010