Archive for the ‘Uncategorized’ Category

Kim orders officials to study lessons from China

Monday, July 2nd, 2018

Benjamin Katzeff Silberstein

Daily NK reports on both lower fuel prices and a decree by the central authorities for provincial officials to study the lessons Kim learned from his most recent trip to China:

After returning from his visit to China (June 19-20), North Korean Chairman Kim Jong Un summoned all provincial managers in the country to the capital city of Pyongyang. Sources indicate he used the meeting to explain the current status and future direction of strategic relations with China and handed down new orders on agriculture.

“After the leader [Chairman Kim Jong Un] visited China, he called into Pyongyang every provincial Party chairman and People’s Committee chairman. It seems he instructed the central Party cadres to learn from the agricultural scientific achievements that he witnessed in China,” a source in Ryanggang Province told Daily NK on June 27.

“Residents are saying that the authorities are showing special interest in agriculture because it’s the most important sector right now. Residents are sharing the thought that if they can only solve the country’s food shortage problem, they will be able to live like other strong nations.”

“Seeing as he visited China three times within a short time frame,” he added, “it’s likely that he spoke about that as well. He probably talked about how China will be useful in the new era that will focus on economic development.”

On his trip to a Chinese agricultural science center, Chairman Kim learned about advanced cultivation methods, with North Korea’s Party-run Rodong Sinmun publication providing detailed reports to the North Korean population. This can be viewed as an acknowledgment of China’s scientific excellence, as well as an effort to promote the normalization of Sino-NK ties to the domestic audience.

Following Chairman Kim’s visits, rumors are circulating among residents that “aid from China” could be in the offing.

“After the Leader’s trip to China this time, the Chinese government said that it had shouldered the burden for international train costs from [the Chinese border city of] Dandong to Pyongyang. The cost of diesel and gasoline has been declining recently, so residents are wondering whether China has been helping out,” a source in North Pyongan Province said.

The cost of gasoline per kilogram is 9,500 KPW and the cost of diesel is 6,500 KPW in the border town of Sinuiju. Compared to the beginning of the month, these prices represent a reduction of 4,500 KPW per kilogram in the price of gasoline and 1,000 KPW in the price of diesel.

Responding to the falling price of oil, the transportation and distribution sectors are showing signs of increased activity, with “servicha [vehicles used by independent operators to move people and goods for a fee] and other vehicle owners like the donju [North Korea’s new rich class] enjoying the cheaper gas prices,” he added.

As North Korea continues its diplomatic blitz, meeting with the US, South Korea, and China, the expectations of residents are surging.

“Recently, [Kim Jong Un] signed the Panmunjom Declaration with South Korea, then went to China, then held talks with America, known to be the enemy. On the domestic stage, there have been some minor changes, but residents have high expectations. We are holding these high hopes because all of these countries – South Korea, China, and the US – have very strong economies,” the North Pyongan Province-based source explained.

“The younger generation is particularly eager that they might be able to learn about the latest technology and technical skills from South Korea, China, and America. After the summit with the US, market traders have high hopes that the sanctions measures might be reduced.”

Article source:
Kim returns from China with new instructions for local Party leaders
Kang Mi Jin
Daily NK
2018-07-02

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The calm throughout the storm: North Korean market prices in May 2018

Thursday, May 31st, 2018

By Benjamin Katzeff Silberstein

Daily NK just released their market price index for May 29th. With that, we get a pretty clear picture of the market situation for the full month of May.

So, what’s new? Not much, and that is newsworthy in its own right. Throughout the period of so-called “maximum pressure” in economic sanctions pushed by the Trump administration, North Korean market prices have, save for some months of a shaky diesel market, remained remarkably stabile. This trend continued in May.

Overall, average rice prices for May, in three North Korean cities, was 5041 won per kg. The average USD-exchange rate for the same period was 8061 won for $1. For a simple point of comparison, the average three-city rice price for late April 2017 was 4900 won/kg, and for USD, 8057 won/$1. For early June, rice cost 5228/kg, and for USD, 8026 won/$1. That prices are climbing is fully natural given that we’re approaching the so-called “lean season”, when North Korea is at the furthest point from the last harvest, and closest to the coming one.

How these relatively stabile prices are maintained is still very much a mystery. I maintain that if “maximum pressure” was truly all-encompassing, it would be very unlikely for at least foreign currency prices not to be impacted. The government may be keeping market prices stabile by adding to the supply of food and foreign exchange from their own coffers, and in the case of the foreign exchange rate, by contracting the supply of won by drawing down on credit supply to state enterprises, for example. But news of economic management at this scale would likely have been reported by at least one of the many outlets that regularly publish economic news from North Korea sourced from people inside the country. As things stand right now, there’s much we don’t know, but if the North Korean economy is truly in a crisis mode, market prices aren’t reflecting such a state of affairs.

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North Korean seafood continuously sold in China

Thursday, May 31st, 2018

Benjamin Katzeff Silberstein

Reports Daily NK:

There has been further confirmation that North Korean seafood products are being sold in China despite sanctions on the export of such items by the UN Security Council.
Large volumes of North Korean seafood products that were smuggled into the country as recently as last year are now being processed by China’s customs authorities, Daily NK sources say.
A photo of traders running to line up around trucks full of North Korean dried fish in Jilin, Húnchūn and Bàiquán Xiàn after inspections by the customs authorities appears to support these allegations.
In the image, the traders appear to be competing for a share of the North Korean dried fish, which has become difficult to purchase since international sanctions took effect.
“The tax authorities at Quanhe Customs seem to be allowing the passage of trucks full of dried fish from North Korea,” said a China-based source on May 29. “Because of that, we have started to see North Korean seafood products in the markets of Yánjí.”
The source added that the import of North Korean seafood products had been “totally prohibited following sanctions last year,” but that imports have “increased recently.” It is likely that smuggling has enabled the products to show up in China.
Daily NK sources suspect that China is “turning a blind eye” to the prohibitions on North Korean exports following recent summits between the Chinese and North Korean leaders.
“The Chinese prohibited the importation of fish, shellfish, dried squid and pollack up until last year,” said a separate source in China close to North Korean affairs.
“But after about a year they seem to be loosening the prohibitions.”
In August 2017, the UN Security Council adopted Resolution 2371, which includes seafood products in the list of banned North Korean export items. China announced a complete ban on the import of North Korean seafood products on August 15, 2017.
North Korean seafood products smuggled in via China ‘s customs authorities
Moon Dong Hui
Daily NK
2018-05-31
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The Koreas summit and the North Korean economy: why infrastructure is on the table

Sunday, April 29th, 2018

By Benjamin Katzeff 

It’s much to soon to expect concrete outcomes from all the summitry relating to the North Korean economy. Tentative signs suggest, however, that infrastructure will be on the table for the road ahead. A few of them:

  • Aside from a mention of promoting “balanced economic growth,” it’s really the only concrete measure within the economic sphere mention in the Panmunjom declaration: As a first step, the two sides agreed to adopt practical steps towards the connection and modernisation of the railways and roads on the eastern transportation corridor as well as between Seoul and Sinuiju for their utilisation. Sure, this is fairly vague too, but at least it’s something.
  • Kim mentioned infrastructure and railways during the summit, lamenting the comparatively poor state of North Korea’s transportation system:

During the talks, North Korea’s leader Kim Jong-un praised the quality of South Korea’s high-speed train system in Pyeongchang, while citing worries that if Moon were to visit the North, he would be inconvenienced since the transportation infrastructure there is much less advanced. “If (Moon) comes to the North after living in the South, it may be embarrassing. We will make preparations for a comfortable visit,” Kim said.

The South Korean president responded with hopes of restarting cooperation to build a railway connecting the South and North — which the two sides had agreed on during previous inter-Korean summits, yet never put to action.

“If the railroad is connected with the North, both the South and North can use high-speed trains. This is contained in the joint declarations of June 15 (2000), and Oct. 4 (2007), but it has not been executed over the past 10 years,” Moon said.

In other words, it’s already being talked about by the two leaders. It’s fairly uncontroversial and not politically touchy, at least not relatively speaking.

  • It’s not a coincidence that Putin mentioned infrastructure specifically during a phone call with Moon Jae-in about the summit. In theory, at least, it’s a potential win-win-win situation, both for North and South Korea and for other countries in the region, and therefore politically palatable. The idea of massive infrastructure projects as a way to facilitate trade, and peace, is certainly not new and has been part of the plan for inter-Korean economic exchange before, and the blueprints are too many to fully keep track of. Kim Jong-un will almost certainly be seeking support in this area, a crucial one for the second leg of Byungjin.

 

 

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Goods, and people, crossing the China-North Korea border

Wednesday, April 25th, 2018

By Benjamin Katzeff Silberstein

Over the past couple of weeks, there’s been several news stories that suggest and increased stream of goods – and people – across the North Korean border to China. First, there were the reports that some 400 North Korean workers, who were earlier expelled due to China’s sanctions implementation, came back to China. It shouldn’t be all that shocking if Chinese sanctions enforcement eased somewhat after Kim Jong-un’s visit to Beijing a few weeks ago. Judging from historical patterns, Chinese sanctions enforcement on North Korea may well have relaxed as international tensions around North Korea’s nuclear program are somewhat eased as well.

South Korea’s MBC seem to make the same assessment in a recent dispatch from the Sino-Korean border. On April 24th, they reported that North Korean-owned restaurants in Dandong have opened again after being closed for several months, since China began enforcing UN security council-mandated sanctions against North Korea. Shops selling North Korean goods in China have had their shelves restocked, and judging by ticket sales, the number of Chinese tourists visiting North Korea has increased.

It’s hard to tell precisely what all this means. Surely, this could all be a sign of Chinese concessions to North Korea following Kim’s meeting with Xi. More likely, the relaxation is also a concession to Chinese companies: China’s implementation of sanctions has not only hit against North Korea, but against Chinese business interests in the border regions as well. It appears that the main beneficiaries of whatever relaxation has happened are businesses near the border, such as a number of Chinese factories, and North Korean-run restaurants (usually run as joint ventures with Chinese partners). Information is, as usual, very spotty and one should be careful not to draw too many general conclusions from anecdotal evidence.

In any case, as I write for NK Pro, the signs of relaxation we’ve seen so far don’t merit any change in the assessment that North Korea is experiencing significant pressure from the sanctions. Key exports that dropped in 2017 due to China’s sanctions implementations have, as far as we can tell from publicly available information, not gone up. This may very well change in the future, and the anecdotal signs of relaxation along the border may be indicative of a broader change. But for now, the evidence doesn’t seem to be there.

 

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Developments in Sinuiju under Kim Jong-un

Monday, April 23rd, 2018

I wrote a short piece on some of the changes that have taken place in Sinuiju in the Kim Jong-un era. Sinuiju is interesting because not only is it a provincial capital, but it is an important hub in China-DPRK trade as well.

The article is broken up into three parts. There is the main narrative, a timeline feature, and a chart.

You can read the article here.

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South Hamgyong Sci-Tech Library

Monday, April 2nd, 2018

This information has already been published in RFA (in Korean), so here is the English version:

Pictured below is the Sci-Tech Complex in Pyongyang:

It is one of the most iconic buildings of the Kim Jong-un era. On the inside, it is an educational facility for science and technology, the development of which is a cornerstone of economic policy under Kim Jong-un. On the outside, the building (designed to look like a beryllium atom [four electrons]) is a showcase piece for the new style of design and architecture characteristic of the Kim Jong-un era.

In true North Korean style, which aims to establish equality across each province, it is possible that new “Sci-Tech Libraries” (과학기술도서관), based on the model complex in Pyongyang, are being constructed in each of North Korea’s provinces. I have to say “probably” because I am only aware of one new Sci-Tech Library in Hamhung, and I cannot say the plan is to build them across the country until I see them in other provinces.

According to Google Earth imagery (see below), the South Hamgyong Sci-Tech Library was built on the site of the former South Hamgyong Cultural Exhibition House sometime between 2016-2-26 (Top) and 2016-11-30 (Bottom).

Here are before and after ground-level photos:

The new building appears to be a mixture of architectural styles seen in Ryomyong  and Mirae Scientists Street. It contains two features resembling stylized hydrogen atoms, or planets with rings, on the roof. There is also a statue of a helium atom (two electrons) in front of the building.

The completion of this facility was not announced in the official media as far as I am aware, so this slipped by me until I stumbled on a broadcast image of a library card that featured the new building.

It is possible that this is a unique facility and that it will not be replicated in other parts of the country. Hamhung has a number of specialized research and production facilities (including the largest branch of the State Academy of Science outside of Pyongyang), and this could be a facility meant to nurture the particular industries of the area. However, it could also be the first Sci-Tech Library at the provincial level, and more are on the way. We will have to wait and see.

North Korea has been regularly featuring provincial-level “Sci-Tech Exhibitions” in the official media. The Pyongyang exhibitions are held in the Sci-Tech Complex, so perhaps the provincial exhibitions will be held in Sci-Tech Libraries such as these in the future.

North Korea was already in the process of updating local libraries (도서관) into “Miraewon” (미래원–roughly translated as “Future Complexes”). I am unsure if this will continue, or if new libraries will be re-branded as “Sci-Tech Libraries”…

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Developments in North Korea’s electronic payment systems

Monday, March 12th, 2018

I have recently published most of the information below in Radio Free Asia (in Korean), so here it is again in English.

As an economist with an interest in North Korea’s monetary policy, banking, and capital markets, I have kept an eye on developments in North Korea’s payment technologies.

In this area I have previously posted about Koryo Bank Card, Narae CardKumgil Card, Ryugyong Commercial Bank ATMs, Jonsong Card, Golden Triangle Bank Card, Mirae Bank toll-road payments, e-commerce platforms Okryu, Sangyon, and Kwangmyong, and loyalty card programs at Haemaji Restaurant, Kwangbok Supermarket, and Moran Shop. There are, of course, other examples I have not blogged about.

Recently, however, the North Korean media has highlighted continued developments in this field, and I wanted to capture some of that information for readers here.

According to the North Korean media (2018-1-21), the Pyongyang Information Technology Bureau (평양정보기술국) and a subordinate organization, the Card Research Institute (카드연구소), appear to be developing cards for North Korea’s electronic payment system. Perhaps rather ominously, KCTV mentions that the agency is working to  expand the use of cards with features like user identification. Below is a screenshot of some of the cards that they are producing. 

Below are the names of cards as best I can tell (L-R,T-B):
1. Koryo Bank
2. South Hamgyong Province Sci-Tech Library Card
3. Pyongyang Metro
4. KoryoLink
5. ?
6. ?
7. Yaksu (mineral water) Payment Card
8. Jonsong Card
9. Soson? Gas Station
10. Jangmi Health Complex
11. Jonsong Card (Duplicate)
12. ?
13.  Taedongmun Cinema?
14. ?
15. Mirae Health Card
16. “Juyu” Card

We already know that some of these cards are in use (KoryoLink, Jonsung) and others are apparently still in development (Pyongyang Metro Card) [As far as I am aware, people still pay for the metro with tokens]. Some of these are prepay cards for a specific service (KoryoLink for mobile phones), some are prepay cards for broader commercial transactions (Koryo Bank, Jonsong Card), others are probably a mix of loyalty and prepay cards.

A couple of recent articles in DPRK Today shed additional light these developments. The new smart card management system is called Ullim (Ulrim, 울림), presumably named after the famous waterfall in North Korea. The Ullim Network acts as a clearing house for outstanding fuel cards, bank payments, member card services, etc. The system is 100% locally developed (they claim).

I am unsure how the Ullim Network is related to the Narae Network which is managed by the Foreign Trade Bank. Narae Cards are noticeably absent from any of the information put out by/on the Pyongyang Information Technology Bureau. Since all of these products seem connected to the Jonsong Card, under the control of the Central Bank, it may be that the Central Bank and the Foreign Trade Bank, which are still legally separate organizations last I heard, are developing their own separate e-payment networks. But foreigners buy KoryoLink cards (featured in this material) with Narae Cards, so I am not sure what exactly is going on. Maybe KoryoLink Cards for North Koreans (as opposed to foreigners) can be bought on the Jonsong card on the Ullim Network and foreign KoryoLink cards care bought with Narae cards issued by FTB? Maybe I am just overthinking all of this… Here are  some other Ullim member cards featured in DPRK Today (KKG Bank was circled by me):

The cards featured in the lower image are (clock-wise from the top):
1. Koryo Bank
2. Jonsong Card
3. Pyongyang Children’s Hospital
4. Ryugyong Health Complex
5. Pyongyang Information Technology Bureau
6. Sci-Tech Complex

DPRK Today has also published information on the Pyongyang Bike Share Card, “Ryomyong” (려명자전거카드). This card is also part of the Ullim Network.

Recently, North Korean media also highlighted an electronic payment card for the Kwanghung Shop located in Rakrang District. It is unclear if the Kwanghung Shop card is related to the Ullim Network since it has not appeared in any of the marketing materials yet.

According to the report, the Kwanghung Shop card can be used offline and for online purchases. The shop also claims to offer delivery services for their goods if ordered online  or by phone.

According to KCTV news (2018-2-23), the Energy Information Research Institute (전력정보연구소) under the Ministry of Electric Power Industry (전력공업성) is developing a payment card and mobile phone payment app:

The research discussed in the video is part of the National Power Management System (국가통합전력관리체계) named Pulyagyung (불야경/Bright Night Lights). The phone payment system displayed is a prototype remote electricity allocation system that allows retail electricity consumers to order electricity service from their mobile device instead of going to a physical office to have power allocated to a specific location.

Implications: There is a bright and a dark side to this technology. On the light side, we can group benefits to consumers: Payments are facilitated, savings options are increased, transactions costs are lowered meaning consumers benefit even as individual firms may earn float from the technology.

The dark side of the technology is of course how it can be used by the government for purposes of control/appropriation. In the old days, North Korea (and many other communist and developing countries) kept foreign currency out of the hands of their people through the use of Foreign Exchange Certificates (FECs). People had to change their foreign exchange into “green” money (for capitalist countries) and “red” money (for communist countries) to spend in local hard currency shops. This allowed the spenders to use their hard currency value to purchase imported goods while the actual hard currency paper stayed out of the hands of the people in the shops. This system was scrapped in the early 2000s. Electronic payment technologies mark a return to the goals of the FEC system…People can have foreign exchange balances to spend on imported goods at hard currency shops, but the actual paper currency remains on deposit at a bank.

This is bad news for North Korea’s black market and unofficial economy as well. With electronic payments it is harder to hide income and transaction history from the government (for tax/appropriation purposes). It would be very easy for officials in an anti-corruption investigation to pull up a spreadsheet of ones legal income and transactions to see if there is a substantial mismatch with your assets and standard of living.

Anyway, we will see how this develops. There is still a great deal we do not know.

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On the December Dandong-Sinuiju bridge closing

Friday, November 24th, 2017

By Benjamin Katzeff Silberstein

Yesterday, Japan’s Yomiuri Shimbun reported that the Dandong-Sinuiju bridge will be closed during the coming weeks. The bridge is to be closed for ten days. Ostensibly for repairs, they said China was also closing the bridge for political reasons.

Should the bridge be closed for any longer period of time, that would be very problematic for North Korea (and for traders on the Chinese side, too). Around 70 percent of trade between the two countries is estimated to go through this connection point. Given North Korea’s poor infrastructure, re-routing goods transports through other parts of the country would likely be difficult.

But the closing most likely is not a measure taken to punish North Korea or the like, despite the current context. First, as many travellers going across the bridge attest to, repairs are in dire need. Second, the end of the year typically sees a lull in goods flows across the border anyway. Transport volumes are cyclical and no one point in the year is fully representative for the rest. Third, simply closing up the bridge would seem like an odd blanket-type measure, and should China want to punish North Korea, there are certainly much more efficient ways of doing so.

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Latest in North Korea Tourism: Pyongyang Central Court

Thursday, November 2nd, 2017

By: Benjamin Katzeff Silberstein

Have you ever wondered what it’s really like to sentenced to years and years of hard labor for actions that wouldn’t be called “crimes” in most of the world? Ever wanted to visit a site where show trials have taken place, where defendants were later sentenced to death for trumped-up charges of spying for the American imperialists? Now’s your chance, with Swedish North Korea tour operator Korea Konsult. From their October newsletter:

You wish is our command! Visit the central court of Pyongyang and meet Korean judges to receive a legal consultation or ask questions about the legal system.  What are you waiting for? Start here. Book today

Presumably this is an offer and not a threat…

One may wonder how these legal consultations go down. “What is my best course of action if I have taken part in an anti-state demonstration, violating article 59, chapter 3, of North Korea’s criminal law?”.

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