North Korean Economy Watch

According to Yonhap:

South Korea is inspecting its major ports to keep North Korean products from entering its soil after Seoul banned trade with the communist state over the sinking of a warship, an official said Thursday.

The ban took effect in late May when Seoul announced that a multinational probe found Pyongyang responsible for the March 26 sinking of the 1,200 Cheonan corvette. Forty-six South Korean sailors died in the sinking for which North Korea denies any role.

According to KBS:

Japan is reportedly planning to implement on Sunday its special law on cargo inspections of ships with suspected illicit ties to North Korea.

Kyodo News reported Friday that the law allows inspections of cargo if there are suspicions that nuclear weapons or missile-related goods are being transported by ships that visit North Korea. Consent from the country to which the vessel belongs will be required for inspections of ships from a third nation.

The law passed the Japanese parliament in May 2009 after sanctions were adopted by the United Nations Security Council in response to North Korea’s nuclear tests.

The Japanese government also plans to hold joint drills in the waters off its island of Kyushu under the assumption that a North Korean-related ship appears in Japanese waters.

To the American readers I wish you a happy July 4th weekend.  I have already read the Declaration of Independence today and plan on doing some scuba diving and spear fishing this weekend.  For readers in other countries, have a great weekend.

 The signing of the Declaration of Independence was portrayed well in the HBO series John Adams.  See it here.

According ot the Daily NK:

A source from inside North Korea has offered an insight into the lives of the rich and powerful Pyongyang elite thanks to some rare pictures of the Rakwon Department Store.

Rakwon Department Store, which can be found on Changgwang Street in the capital’s central district, is operated by Daesung Corporation, part of the powerful No.39 Department of the Chosun Workers’ Party. Lying in an area near Changgwangwon, Air Koryo HQ and the Changgwangsan Hotel, with one of the city’s nicest apartment complexes directly behind it, the store boasts state-of-the-art facilities.

On the first floor, there is a supermarket selling food and other daily requirements, while electronics and clothes are to be found on the second floor.

On the third floor, there is a restaurant with a separate exit to the street which boasts an advanced microbrewery imported from Germany to produce various draft beers.

The restaurant has a main area with twelve tables and a further fifteen rooms. Each room houses a 30” wall-mounted TV and karaoke facilities used by Party officials and their families. The restaurant is known to be among the best in the city, comparable with Roksanwon, which is run by the People’s Security Ministry.

The restaurant’s draft beers are particularly popular with the rich, and other restaurants in the city are now also seeking to import similar facilities, the source told The Daily NK.

As the pictures show, all restaurant prices are denominated in Euro.

There is also a sauna in the basement, the source said. Inside the sauna, there is both a swimming pool and family bathing area. As it happens, there is another popular swimming pool, Changgwangwon, right next door, but The Daily NK’s source explained which is better, saying, “Changgwangwon is for middle-class Pyongyang residents, but they really envy those Party officials and the privileged few who can go to Rakwon Department Store.”

A $30,000 grand piano was sold by Rakwon Department Store even during the currency reform period, causing a sensation among Pyongyang insiders, he added.

Here are the pictures from the story:

The Rakwon Department store used to sell the highly-demanded, high-quality Japanese goods for yen.  It is interesting to see how their business model has changed since the 1980s.

Read the full story here:
Pyongyang’s Fine Dept. Store, Rakwon
Daily NK
Park In Ho
7/2/2010

DPRK Women’s Softball
North Korean state television broadcast a women’s softball game last May.  I found it fascinating viewing.  The full seven-inning game was just over 40 minutes long.  I posted 10 minutes of it on YouTube, which you can watch here.

There is much in this game with which Americans can identify.  The mannerisms, look, and feel of the game are just like any game here in the US.  The North Korean women wear similar styled uniforms and equipment.  The two teams walk across the field and slap hands together after the game.  The umpire shouts “strike”, and the television announcers even maintain a familiar banter about the game.  The match also offers a unique glimpse into North Korean civil society.  There is nothing nationalistic, political, or staged about the game–just people out enjoying themselves.

I do not believe that softball is widely played in the DPRK.  In fact, the field used in this match is the only functional field I have located in the entire country.  It is in Moranbong (Pyongyang), just north of the Moranbong Middle School.  Here is a GeoEye satellite image from Google Earth (Coordinates on the image):

Pyongyang began construction of a softball field in the Sosan Sports District in Manyongdae sometime before 2000.  It is still uncompleted today:

A softball field used to be located on May Day Island but it was converted into a soccer field in 2006.  The coordinates are 39° 3’10.61″N, 125°46’54.73″E.

Kremlinology
Perhaps Kim Jong-il is sending us a signal that something has changed?

Nikita Khrushchev did not mix signals:

Kim Il-sung Reminiscences
Kim Il-sung Reminiscences is an eight-volume text—and probably unread by most modern-day DPRK watchers.  You can read all eight volumes on the Chongryun site uriminzokkiri.com (click here). The eight volume set, however, does not contain an index.  Long-time DPRK watcher Paul White (author of a new monthly DPRK business newsletter) has made one.  You can download the indexes for all eight volumes below:

Volumes 1 & 2
Volume 3
Volume 4
Volume 5
Volume 6
Volume 7
Volume 8

Pyongyang gets more bars!
(h/t Zen Kimchi and Yonhap)

There are more than 150 beer houses in North Korea’s capital Pyongyang, which provide customers with a variety of draft and bottled beer, the official state media reported on May 27.

“More than 150 beer parlors in different parts of Pyongyang are alive with customers every day,” said the (North) Korean Central News Agency (KCNA).

On the back of increasing demand for alcohol in the North, Taedong River Beer Factory has recently modernized its production and management system, which are all computer-controlled, and has also set up new facilities.

The KCNA said the production capacity of the factory, which was established in 2002, has doubled through the modernizing process since its establishment.

The country’s No. 1 beer maker, Taedong River Beer, is a globally certified brand, acquiring the international standard quality certificate ISO 9001 in 2008, the state media added. The certificate acknowledges it has reached the global standard in 10 categories such as hygienic security, alcohol quality and purity.

The beer brand has also succeeded in developing rice beer and black beer, the KCNA reported, enabling it to satisfy various customers’ needs and preferences.

The beer, which allegedly has a mild and pure taste due to its high degree of fermentation, is popular among North Koreans, it said.

I am aware of a couple of bars in Pyongyang, so if you happen to see one, please let me know where it is.

The Taedonggang Beer Factory is located at  38°59’41.07″N, 125°48’28.14″E and was shipped to the DPRK from the UK, where it was known as the Ushers Brewery.

DPRK demands USD$65 TRIllion!
According to the Associated Press:

North Korea blames the 1950-53 war on the United States and on Thursday said the moneterary [sic] cost for North Korean suffering from the conflict amounted to $65 trillion — five times the U.S. national debt.

According to the Daily NK:

Japan’s Supreme Court has ruled that Chongryon headquarters are a legitimate Chongryon asset which may be seized and auctioned as part of proceedings to recover loans made by a defunct credit union to the organization, Japanese broadcaster NHK reported on Tuesday.

A collection agency recently took over a number of bonds issued by the bankrupt Joeun Credit Union, which loaned around $700 million to Chongryon, the organization of North Koreans in Japan. The agency then announced its intention to pursue collection by putting Chongryon headquarters land and buildings in the Chiyoda district of Tokyo up for auction.

However, since the land and buildings are registered under a separate firm, Chosun Central Hall Management Association, the collection agency was required to file a lawsuit to get the necessary recognition of its right to seizure.

The court initially dismissed the collection agency’s claim on the grounds that the assets are held by a separate entity, but accepted, “It is possible to seize (the assets) if they can be shown to be actual Chongryon assets.”

Therefore, the collection agency filed a separate lawsuit to ask for recognition of the Chongryon headquarters estate and buildings as such an asset, and the Supreme Court has now ruled in its favor.

If the judgment is allowed to stand, the collection agency will be able to legally seize the estate and buildings of the Chongryon headquarters, adding to the organizations mounting woes.

Read the full story here:
Chongryon HQ on Block after Ruling
Daily NK
Yang Jung A
6/30/2010

For those of you who have recently visited the DPRK or who spend too much time perusing Elufa.net or reading KCNA, you are undoubtedly aware of the DPRK’s recent emphasis on something called “CNC”.  I had no idea what CNC was, so I began collecting as much information as I could find on the net and I have posted it below.

Here is the Wikipedia page for CNC.  For those of you in China, here is what it says:

Numerical control (NC) refers to the automation of machine tools that are operated by abstractly programmed commands encoded on a storage medium, as opposed to manually controlled via handwheels or levers, or mechanically automated via cams alone. The first NC machines were built in the 1940s and ’50s, based on existing tools that were modified with motors that moved the controls to follow points fed into the system on paper tape. These early servomechanisms were rapidly augmented with analog and digital computers, creating the modern computed numerically controlled (CNC) machine tools that have revolutionized the design process.

In modern CNC systems, end-to-end component design is highly automated using CAD/CAM programs. The programs produce a computer file that is interpreted to extract the commands needed to operate a particular machine via a post processor, and then loaded into the CNC machines for production. Since any particular component might require the use of a number of different tools—drills, saws, etc.—modern machines often combine multiple tools into a single “cell”. In other cases, a number of different machines are used with an external controller and human or robotic operators that move the component from machine to machine. In either case, the complex series of steps needed to produce any part is highly automated and produces a part that closely matches the original CAD design.

That description is not nearly as helpful as this video on CNC: Click here (Might not work for readers in China).

The Asia Times ran a story which included a short history of CNC in the DPRK:

The name of the game is CNC – Computer Numerical Control – machine tools that have revolutionized the design process and said to be developed in the DPRK and already exported, for example, to China. Top exponents are the Korea Ryonha Machine Tool Corporation and the Taean Heavy Machine Complex. CNC billboards are all over Pyongyang. Inevitably CNC has its own dedicated patriotic song (no music video yet). Here are the lyrics, as translated by Andray Abrahamian, a doctoral candidate at the University of Ulsan in South Korea:

If you set your heart on anything
We follow the program making the Songun era machine technology’s pride
Our style CNC technology

(chorus)

CNC – Juche industry’s power!
CNC – an example of self-strength and reliance!
Following the General’s leading path
Breakthrough the cutting edge

Arirang! Arirang! The people’s pride is high
Let’s build a science-technology great power
Happiness rolls over us like a wave

So the narrative of building a “socialist paradise” is now being supplanted by the narrative of developing and producing state-of-the-art technology to, as the Pyongyang Times indelibly put it, “improve the people’s living standard on the word level”. This is how the DPRK is mobilizing its people to “open the gate to a thriving nation in 2012”. South Korea, watch out.

By way of luck, I managed to obtain a copy of the DPRK’s CNC song. You can download the MP3 by right clicking here.

UPDATE: A reader did find this DPRK karaoke version of the CNC song complete with lyrics (in Korean).  Watch it here.

UPDATE 2: A reader also sends in this acoustic version of the CNC song (YouTube).

If you are itching to know what the DPRK’s CNC machines look like, here is one display at the Three Revolutions Museum in Pyongyang:

Click images for larger versions

And here is some CNC propaganda that has appeared around Pyongyang:

Click images for larger versions

UPDATE: here is an additional photo taken by an anonymous tourist:

UPDATE: Here are some CNC postage stamps:

UPDATE: And CNC made part of the 2010 Mass Games (You Tube at the 1:25 mark). See a photo here.

KCNA has published plenty of news stories about CNC.  You can see them here courtesy of the Stalin Search Engine. CNC was first first mentioned on January 15, 2002 (KCNA) .  One phrase that is frequently mentioned is that thanks to innovations like CNC the DPRK is “Pushing back the frontiers of science”.  Indeed North Korean economic policy seems hell-bent to do just that.  Hopefully we will soon see them change their policies to “push back the frontiers of ignorance”.

CNC machines are produced by the Ryonha Machine [Tool] Factory (KCNA) and they have been widely promoted in the official media (here, here, here, here, and here for example).  It appears also that the Ryonha Machine Tool Factory has partnered up (with someone) to form a JV company which focuses on international trade, the Ryonha Machinery Joint Venture Corporation. Here is a PDF flyer of their products taken from the KFA web page, and some of the items they are selling can be seen here and here.

They Ryonha Machine Joint Venture Company, however, seems to have a history that might scare away many potential customers.  According to the US Treasury Department:

The U.S. Department of the Treasury today designated eight North Korean entities pursuant to Executive Order 13382, an authority aimed at freezing the assets of proliferators of weapons of mass destruction (WMD) and their delivery vehicles.  Today’s action prohibits all transactions between the designated entities and any U.S. person and freezes any assets the entities may have under U.S. jurisdiction.

“Proliferators of WMD often rely on front companies to mask their illicit activities and cover their tracks,” said Stuart Levey, the Treasury’s Under Secretary for Terrorism and Financial Intelligence (TFI).  “Today’s action turns a spotlight on eight firms involved in WMD proliferation out of North Korea.  We will continue to expose and designate these dangerous actors.”

Today’s action builds on President Bush’s issuance of E.O. 13382 on June 29, 2005.  The Order carried with it an annex that designated eight entities – operating in North Korea, Iran, and Syria – for their support of WMD proliferation.  The President at that time also authorized the Secretaries of Treasury and State to designate additional entities and individuals proliferating WMD and the missiles that carry them.

Korea Mining Development Corporation (KOMID), which was designated in the annex of E.O. 13382, is the parent company of two of the Pyongyang-based entities designated today, Hesong Trading Corporation and Tosong Technology Trading Corporation.  These direct associations meet the criteria for designation because the entities are owned or controlled by, or act or purport to act for or on behalf of KOMID.

Korea Ryonbong General Corporation, also named in the annex, is the parent company of the remaining six Pyongyang-based entities designated today.  These entities include Korea Complex Equipment Import Corporation, Korea International Chemical Joint Venture Company, Korea Kwangsong Trading Corporation, Korea Pugang Trading Corporation, Korea Ryongwang Trading Corporation, and Korea Ryonha Machinery Joint Venture Corporation.

As subsidiaries of KOMID and Korea Ryonbong General Corporation, many of these entities have engaged in proliferation-related transactions.

I have been unable to locate the Ryonha Machine Tool Factory on Google Earth. If anyone has any pointers, please let me know.

Here is a list of factories the DPRK claims to be using CNC technology:

Amnokgang Daily Necessities Factory (KCNA)
Amnokgang Gauge and Instrument General Factory (KCNA)
Cholima Steel Complex (KCNA, Naenara)
Chonma Electrical Machine Plant (KCNA)
Feb 8 Vinalon Complex (KCNA)
Hamhung Wood Processing (KCNA)
Huichon Machine Tool Plant (KCNA)
Kangdong Weak Current Apparatus Factory (KCNA)
Kanggye General Tractor Plant (KCNA) (Underground)
Kanggye Knitted Goods Factory (KCNA)
Kanggye Wine Factory (KCNA)
KimChaek Iron and Steel Complex (KCNA)
Kusong Machine Tool Factory (KCNA)
Kwanmobong Machine Building Plant (KCNA)
October 10 Factory (KCNA)
Pukjung Machine Complex (KCNA)
Pyongyang Cornstarch Factory (KCNA)
Rakwon Machine Complex (KCNA)
Ryongsong Machine Complex (KCNA)
Sinuiju Spinning Machine Factory (KCNA)
Suphung Bearing Factory (KCNA)
Sungri Motor complex (KCNA)
Taean Heavy Machine Complex (KCNA)
Taedonggang Brewery (KCNA)
Tahungsan Machine Plant (KCNA)
Unsan Machine Tool Factory (KCNA)

I know the locations of many of these factories but not all.  If anyone has any information on their coordinates, please let me know.

Bradley Martin, author of Under the Loving Care of the Fatherly Leader, writes in the Global Post:

Now that food shortages reportedly have forced North Korea to reverse its crackdown on capitalist-style markets, more systematic reforms for its collapsed economy may not be far behind.

The markets policy reversal came May 26 in directives issued by the cabinet and the ruling Workers’ Party to subordinate organizations, according to a report by the Seoul-based newsletter North Korea Today, which gets its information from officials and ordinary citizens inside the North. “The government cannot take any immediate measures” to relieve a food shortage that is “worse than expected,” the newsletter quoted one of the directives as saying in explanation for the policy change.

The same authorities only late last year decreed a sudden currency revaluation that crippled the “anti-socialist” markets, where stallholders had been trading for individual profit, by confiscating the traders’ wealth. The new decrees bless and deregulate what’s left of the markets, which have shrunk and in some cases closed completely in the interim, in the hope that market trading will keep people from starving. And the directives instruct managers of state-run enterprises to pursue lucrative deals — especially in foreign trade — that could help feed their employees.

This could all turn out to be the big event that finally pushes the very reluctant leadership into a multi-year campaign of serious reforms of the sort that began decades ago in Vietnam and China, according to Felix Abt, a Swiss involved in North Korean joint ventures in pharmaceutical manufacturing and computer software.

“Given an industrial stock and an infrastructure beyond repair, and the impossible task of maintaining a huge army, economic reforms appear unavoidable in the very near future,” Abt, a former president of Pyongyang’s European Business Association, wrote in an email exchange.

“It looks intriguing and it reminds me of Vietnam’s history of reforms,” said Abt, who did business for years in Vietnam before going to Pyongyang and recently has moved back to Vietnam while maintaining his involvement in North Korea.

“The Vietnamese economic situation looked dire at the beginning of the 1980s,” he explained. “Nguyen Van Linh, party secretary in Ho Chi Minh City, favored moderate economic reforms. He tried too early, lost his job and left the political bureau in 1982.

“Le Duan, secretary general of the Communist Party, was categorically against any economic reforms. He died in 1986, the year of the five-year party congress which brought Nguyen Van Linh back and elected him as his successor. The new party secretary general immediately launched the Doi Moi policy — ‘reforms.’”

Abt ventured the lesson that triggering reforms “takes something big like the death of a leading politician” in Vietnam — or, in North Korea, a “ruinous” currency revaluation.

Not every foreigner who has had firsthand economic dealings with North Korea is convinced the recent events constitute that trigger. Some worry that U.S.-led sanctions could nip any flowering of capitalism in the bud.

“The problem is still U.S. Treasury’s attitude,” said one such foreigner, who asked not to be identified further. Treasury Department officials began working several years ago to take North Korea “out of the international banking system,” discouraging trade, he noted.

Some U.S.-sponsored sanctions subsequently were eased in an effort to persuade Kim Jong Il to negotiate away his nuclear weapons capability, but after those talks went nowhere — and especially after North Korea allegedly torpedoed a South Korean warship earlier this year — enthusiasm for compromise cooled. Recent reports say Washington is moving toward aggressively strangling cash flow into the country.

There is also the argument that Kim believes he cannot afford to reform the economy because it would let in information and influences that would undermine his family’s rule by letting his isolated subjects learn that the rival South Korean system works much better.

According to Abt, one answer to both concerns could be China, which “will provide all the support necessary to the DPRK party and government to enable economic reforms without regime change.” He used the abbreviation of Democratic People’s Republic of Korea, the country’s official name. “The DPRK may expect support from other quarters, for example, the European Union, too,” he said.

“I think the dilemma of the leadership — economic upsurge versus the inflow of ‘subversive’ system-destabilizing information and ideas, particularly regarding the South — can be overcome with the necessary Chinese support,” Abt said. “Though the division of Korea can only be compared with that of Germany before 1990, China’s division — capitalist Hong Kong, capitalist Taiwan — was a sort of challenge to Deng Xiaoping and successors, too, but they learnt to manage that quite well.”

Read the full the story here:
Analysis: Kim Jong Il, the reformer?
Global Post
Bradley Martin
6/24/2010

According to KCNA:

WPK Conference to Be Convened
Pyongyang, June 26 (KCNA) — The Political Bureau of the Central Committee of the Workers’ Party of Korea on June 23 released a decision on convening a conference of the WPK.

The decision says:

All the Party members, servicepersons and people are now waging a dynamic general offensive full of conviction of certain victory and optimism to glorify this year marking the 65th anniversary of the WPK as a year of great changes to be specially recorded in the history of the country with the great pride and self-confidence of holding General Secretary Kim Jong Il in high esteem at the highest posts of the WPK and the revolution.

The WPK founded by President Kim Il Sung and led by Kim Jong Il has steered the sacred Korean revolution to one victory after another in its annals for more than six decades, building a socialist power, independent in politics, self-supporting in economy and self-reliant in national defence, on this land and ushering in a new era of prosperity.

We are now faced with the sacred revolutionary tasks to develop the WPK, organizer and guide of all victories of the Korean people, into an eternal glorious party of Kim Il Sung and further increase its militant function and role to glorify the country as a great prosperous and powerful socialist nation.

The Political Bureau of the WPK Central Committee decides to convene early in September, Juche 99 (2010) a conference of the WPK for electing its highest leading body reflecting the new requirements of the WPK and the developing revolution in which decisive changes are taking place in the efforts to accomplish the revolutionary cause of Juche, the cause of building a prosperous and powerful socialist nation.

According to the New York Times:

The impending shuffle in the party leadership follows personnel changes in the military and the powerful National Defense Commission in the past year. The North’s rubber-stamp Parliament met this month to replace several cabinet members and appointed Mr. Kim’s brother-in-law, Jang Song-taek, to the No. 2 post at the defense commission. Mr. Jang is seen as a potential caretaker for Mr. Kim’s son.

According to the Choson Ilbo:

Key members of the North Korean Workers Party meet in September for the first time in 44 years, the North’s official Korean Central News Agency said Saturday. The meeting was called by the Politburo and has raised expectations that leader Kim Jong-il’s son Jong-un will be officially named as his father’s successor.

According to party regulations, leading members are to meet between regular party meetings, which are held every five years to decide on key policies, but the last time that happened was in 1980, when it appointed Kim Jong-il, then the heir apparent, as member of the standing committee of the Politburo, supreme member of the party and also its military committee, officially anointing him as successor to Kim Il-sung.

North Korean Leadership Watch has more.

UPDATE: The Bank of Korea has published a report in English.  You may download it here (PDF).  This has also been added to my “DPRK Economic Statistics” page where you can find Bank of Korea data from previous years as well as all sorts of other data sources. (hat tip to a respected reader)

ORIGINAL POST: According to the Assocaited Press:

North Korea’s state-controlled economy, already just a fraction of its southern rival, shrank last year as a severe winter decimated crops and shortages of raw materials and electricity hindered manufacturing.

South Korea’s central bank in a report released Thursday estimated that North Korea’s economy contracted 0.9 percent — the third time in the past four years the impoverished economy has gotten smaller. It grew 3.1 percent in 2008.

The bank said the North’s economy faced “many difficulties” amid strengthened sanctions and reduced assistance. North Korea is under heavy international sanctions related to its nuclear and missile programs.

The size of the North’s economy was estimated at 28.6 trillion South Korean won ($24.2 billion), or just 2.7 percent that of the South’s.

The Bank of Korea has published estimates of North Korea’s economic performance since 1991. Gauging the extent of activity, however, is difficult as the secretive country does not publish economic statistics.

Despite its troubles, the North has set an objective of achieving the status of a “powerful and prosperous nation” in 2012, the 100th anniversary of the birth of the country’s founder, Kim Il Sung, father of leader Kim Jong Il.

The two Koreas, which fought the 1950-53 Korean War, have taken divergent economic paths. The capitalist South embraces the free market and has grown to be world’s 15th-largest economy.

North Korea’s largely top-down, command-style economy has lagged far behind. The collapse of the Soviet Union, a key source of trade, and a series of natural disasters combined with economic mismanagement in the 1990s led the country to experiment in recent years with limited market reforms and to seek more foreign investment, mostly from China and South Korea.

But tensions over the country’s missile and nuclear programs, the shooting death of a South Korean tourist and the sinking of a South Korean warship that Seoul has blamed on Pyongyang have caused trade and joint economic projects with the South to wither.

A currency reform last year was seen by experts as a botched attempt to cool inflation. The move reportedly sparked anger among citizens stuck with piles of worthless bills.

“The negative economic growth in 2009 was mainly attributable to decreased agricultural production due to damage from particularly severe cold weather and sluggish manufacturing production owing to a lack of raw materials and electricity,” the Bank of Korea said.

North Korea, with its weak infrastructure, is highly dependent on the whims of Mother Nature. Good weather can boost agriculture output as it did in 2008 and contribute to growth. Bad weather, however, in the form of heavy rains and flooding, can prove disastrous.

The country has faced a chronic food shortage since natural disasters and mismanagement devastated the economy in the mid-1990s.

Agriculture, forestry and fisheries contracted 1 percent in 2009 primarily because of the cold weather, the BOK said. Mining output declined 0.9 percent, while manufacturing shrank 3 percent. Heavy industry output declined 3.5 percent.

On the positive side, construction increased 0.8 percent led by housing and civil engineering, according to the BOK.

I have only been able to locate the report in Korean.  You can download a PDF of it here. I have added it to my DPRK Economic Statistics page.

The Bank of Korea web page is not very user friendly and I have no idea how to link directly to the report.  However, if you would like to download your own verision from there, look for this link on the main page: 2009년 북한 경제성장률 추정결과-보도자료.  This will take you to the report.

Read the full story here:
Bank of Korea: NKorean economy shrank in 2009
Associated Press
6/24/2010

According to Radio Free Asia:

North Koreans who can afford to save their money are ignoring a new currency brought in by the ruling Workers’ Party in the isolated Stalinist state in favor of the more trusted renminbi yuan from China.

“Our [North Korean] money is now called ‘the commoners’ currency,’ used only as a means of exchange when goods are purchased, but not as a means of saving,” a resident of Chungjin city in the northern province of Hamgyeong said.

“North Koreans [still] hold their savings in Chinese money,” the resident said.

On the country’s black markets—the chief source of essential goods for many under a planned economy in which products are scarce and often monopolized by the country’s elite—any buyer offering to pay in yuan can expect a large discount, residents say.

“Nowadays even children look for Chinese money, knowing that a hefty discount may be available if Chinese money is used in an exchange,” another source said, speaking during a visit to relatives in the northeastern Chinese city of Dandong, which borders North Korea.

The renminbi—known in North Korea simply as “B”—is strongly preferred to the local currency, as it can buy anything, the second source added.

Purported crackdown

North Korean authorities including the state security department claim to be cracking down on the use of the yuan for transactions, he said.

“But because high-ranking officials are the first to hold their savings in Chinese money, the implementation of such crackdowns is half-hearted at best, and mostly ineffective,” the source said.

“North Korean officials won’t even touch the domestic currency.”

Other sources said they fully expect the North Korean currency to collapse once enough yuan are in circulation to fuel the country’s black markets.

“It is obvious that the North Korean currency will collapse once more money enters circulation,” a third North Korean said.

That source, who like the others spoke on condition of anonymity, said the apparent stability in the North Korean currency is an illusion caused by the fact that not enough money is in circulation for it to devalue domestically.

The tight money supply partly results from nonpayment of salaries by the government, the country’s only official employer.

“In Sinuiju, only 25 percent of the people have received their salaries,” the third source said.

“Workers and those employed at manufacturing facilities received the appropriate pay only during the month after the currency reform was implemented, and then started missing paychecks,” the third source said.

Devaluation crisis

The South Korea-based Web site “Daily NK,” which publishes North Korean news, said North Koreans who use domestic currency, rather than Chinese yuan or U.S. dollars, have to pay about 10 percent more for their purchases in open markets.

North Korea issued its revalued won last December, dropping two zeroes off the old won.

At the time, the North Korean central bank put strict limits on the amount of old money that could be exchanged for the new won.

At the old rate, U.S. $1 was equal to 135 North Korean won.

The move sent shockwaves through North Korea, with reports of citizens rushing to black-market moneychangers to cash in their won for more stable U.S. dollars and Chinese yuan.

North Korean citizens were threatened with “merciless punishment” for defiance of the new currency rules and were told they had only a week to exchange a maximum of 100,000 won (U.S. $690 at the official rate, but less than U.S. $40 according to black market rates) per person of the old currency for new bills.

NGOs in Seoul reported that in response to widespread anger, those limits were raised to 150,000 won in cash and 500,000 won in bank notes.

A leading expert on the North Korean economy has said that the economic system is split between the concerns and needs of ordinary North Koreans and the country’s political elite, which runs a “royal palace economy.”

Kim Kwang Jin, visiting researcher with the U.S. Committee for Human Rights in North Korea, said the scale of Kim Jong Il’s “royal palace economy” is in the hundreds of millions of dollars a year, while the much less significant “people’s economy” doesn’t exceed a few million dollars a year.

Read the full story here:
North Koreans Shun New Won
Radio Free Asia
Sung Hwi Moon
6/23/2010