North Korean Economy Watch

According to KCNA:

Pyongyang Spring Int’l Trade Fair to Open

Pyongyang, May 7 (KCNA) — The 13th Pyongyang Spring International Trade Fair will take place at the Three-Revolution Exhibition from May 17 to 20.

It will bring together more than 270 companies of the DPRK, China, Russia, Germany, Mongolia, Brazil, Switzerland, Singapore, Australia, Austria, Italy, Indonesia, Thailand, Cuba, Poland and Taipei of China.

Exhibits will include more than 85,000 products of over 5,000 kinds such as CNC machine tools, electrical machinery and equipment, electronic and light industrial goods, foodstuffs, daily necessities, medicines and vehicles.

Koryo Tours is offering a unique travel experience:

At long last we are proud to bring you news of our brand new tour, on a route that no other company offers and that Koryo Tours has spent great effort pioneering. From June 30th to July 10th this year we are offering a 3 country, 3 cultures, 3 time zone tour in an area you may well have never heard of before – we’re calling it the “Tuman Triangle” and if you’re interested in learning more then please hit the following links to download our brochure and itinerary for this remarkable journey:

Information Brochure – click here

Full Itinerary – click here

In brief, this tour travels from Beijing up to the North East Chinese city of Yanji from where we enter North Korea’s Rajin-Sonbong free trade zone, we then journey into DPRK-proper and the industrial city of Chongjin and the stunning and remote Chilbo mountains before heading back up the coast and crossing into Russia by train, visiting some remote areas and then heading by boat to Vladivostok from where we fly back to Beijing having seen a vast variety of sites, experienced several distinct cultures and seen places and things that almost no western tourists have ever been anywhere near.

Simon Cockerell will accompany this tour and we have a mere 20 spaces open for this first time trip, if you’d like to know more then please get in contact with us and we hope you can come along with us, this is the first time such a tour has ever been offered by anyone. Be a part of regional tourism history!

Best regards from Beijing,

Koryo Tours

Andrei Lankov writes in the Korea Times:

So after months of rumors and a couple of false reports, Kim Jong-il finally departed for China. This time his visit produced a palpable irritation in Seoul. Suspicions about Pyongyang’s involvement in the Cheonan disaster are mounting, so some South Korean politicians saw China’s willingness to invite the North Korean leader as a sign of tacit support for Pyongyang’s policy. This led to an outpour of critical statements, which are certain to have no impact on China’s actions, of course.

To start with, China ― in spite of all rhetoric of “eternal friendship” ― is no admirer of Kim Jong-il’s regime and is frequently annoyed by the North Korean antics. China does not want Pyongyang to go nuclear, since nuclear proliferation threatens China’s own privileged position of a “legitimate” nuclear power. China also worries that North Korea’s nuclear program might trigger a nuclear arms race in East Asia, producing a nuclear Japan and perhaps, a nuclear Taiwan. Moreover, China rightly sees the North Korean economic system as irrational and wasteful.

Nonetheless, China supports North Korea. Throughout the past few years when South Korean and U.S. aid dried up, famine in North Korea was prevented, above all, by free or subsidized shipments of grain from China. China is the largest investor in and trading partner of North Korea. Why do Chinese continue to invest money into supporting the regime which they do not particularly like and do not see as their reliable ally?

From time to time some people in Washington and Seoul express their hope that China can be somehow persuaded to stop its support of the North or to use its supposed leverage to influence Pyongyang policy (like, say, pressing North Korea into denuclearization). After the second North Korean nuclear test in 2009, China chose to support the U.N. sanctions and there were statements that China finally was “in the same boat as the United States.” Alas, this is wishful thinking. China is not in the same boat, and will never be. There are good reasons why China supports the North, and these reasons are likely to remain valid for the foreseeable future.

Yes, China does not want a country in its neighborhood to acquire nuclear weapons. Neither it is happy about military provocations of any kind. However, there are two other concerns which are far more important for China to keep the region stable and to keep Korea divided.

Stability is a keyword for the Chinese policy. China concentrates on economic growth and needs a peaceful and predictable environment in order not to be distracted from this goal. Hence, any crisis in the vicinity of China is an anathema for the Chinese strategists and should be avoided at all cost.

Another, arguably less important, goal is to keep Korea divided. Taken into consideration the current balance of power, unification is likely to lead to absorption of the impoverished North by the rich South. For China it might mean the emergence of a stronger U.S. ally ― or, at least, another “unruly democracy” ― right on its border. China can survive such a turn of events, to be sure, but it would prefer to maintain North Korea as a strategic buffer zone.

Alas, in order to really influence North Korea’s behavior, one has to play hardball. Subtle measures will not work, since the North Korean government does not care that much about economy or even about survival of its own population. In order to have an impact, China would have to virtually close the border completely and stop all trade with the North. A senior South Korean diplomat described this problem in a private conversation by a good allegory: “China does not have leverage when it comes to dealing with the North. What China has is a hammer.”

But China must have a mighty good reason to wield this hammer since such extreme pressure can easily lead to a system collapse. This collapse will make the situation very volatile. Crowds of refugees, the nuclear weapons and material getting to the black market, numerous diplomatic complications ― those are not the problems China is eager to deal with. Finally, collapse is likely to produce a unified Korea which is not China’s most preferable outcome.

Therefore, China prefers to spend some resources keeping the North Korean regime afloat in order to maintain the status quo and prevent or, at least, postpone a major crisis. It also wants to minimize the risk of North Korea being involved in excessively dangerous actions, but this goal is of secondary importance.

At all probability, this time we will see another repetition of the old game. Chinese will insist that North Korea should come back to the six-party talks (Beijing’s pet project), and also should restrain itself. Kim Jong-il will claim his sovereign rights to run his state as he pleases while inquiring how much aid he is going to get for some minor concessions. The Cheonan affair is unlikely to be discussed at all ― even if Chinese bring up the question, the North will deny responsibility, claiming that all accusations are results of the “smear campaign waged by the South Korean warmongers.”

And what will be the net result? Perhaps, we can see the contours of a likely deal: North Korea will promise to go back to the six-party talks while China will reward Pyongyang for this by aid and subsidized trade. So, China will be satisfied with maintaining both its international prestige and stability in its neighborhood while the long-delayed six-party talks will finally restart, to continue for a while, until the next crisis. Will the talks ever produce their intended result ― the “complete and verifiable elimination of North Korea’s nuclear weapons programs?” Of course, not. But has that not been clear for years?

Read the full story here:
Why does China continue to support North Korea?
Korea Times
5/6/2010

According to Yonhap:

North Korea has recently deployed about 50,000 special forces along its border with South Korea, a source here said Wednesday, as tension rises on the divided peninsula over a suspected deadly North Korean attack on a South Korean warship.

“North Korea recently completed the frontline deployment of seven light infantry divisions, which is something it had been pushing for since two to three years ago,” the high-level source said, adding each division consists of about 7,000 troops.

North Korea has in recent years increased the number of its special forces to 180,000. Defense officials here say the troops would infiltrate South Korea and try to throw its defense into confusion if another war broke between the two countries.

The frontline deployment of special forces comes as South Korean increasingly suspects a North Korean submarine sank one of its warships along their tense western sea border on March 26.

Forty died and six went missing in the sinking that has sparked national mourning and led President Lee Myung-bak to vow a stern response to those responsible.

North Korea denies its involvement in what has become one of South Korea’s worst naval disasters, but it is coming under growing suspicion because its history of attacks.

The latest attack took place in November last year, when a North Korean patrol boat shot at a South Korean one and retreated in flames after taking heavy fire.

South and North Korea remain technically at war after the 1950-53 Korean War ended in a truce, not a peace treaty.

Read the full story:
N. Korea has deployed 50,000 special forces along frontlines: source
Yonhap
5/5/2010

Joseph Bermudez, military analyst for Jane’s Intelligence Review and author of The Armed Forces of North Korea, has published the fourth issue of his very fascinating KPA Journal.

Click here to download the full issue (PDF).

Topics include: Noto-Hanto infiltration, Pokpoong main battle tank, DPRK intelligence agencies.

Previous issues of KPA Journal can be downloaded here.

Here are some articles about it:

North Korea’s Kim Jong Il arrives in China, amid internal, external tensions
Washington Post
Lauren Keane
5/4/2010

Kim Jong-il Arrives in China
New York Times
Choe Sang-hun
5/3/2010

North Korean leader in China seeking cash, clout
Los Angeles Times
Barbara Demick and John M. Glionna
5/3/2010

North Korea’s Kim seeks lifeline in China
Reuters
Royston Chan
5/3/2010

Kim Jong-il Stops Off in Chinese Boomtown
Choson Ilbo
5/5/2010

Who Is with Kim Jong-il on His China Trip?
Choson Ilbo
5/4/2010

North Korea’s Kim ‘visits China’
BBC
5/3/2010

Here are some photos of his train.

According to Bloomberg:

United Nations food aid to North Korea will run out the end of next month following a drop in international donations after the country detonated a nuclear device, the World Food Program said.

“We have resources to carry us through to June,” Lena Savelli, a Beijing-based spokeswoman for the UN agency, said in a telephone interview today. “We quite urgently need more donors to come forward and give us resources.”

The agency is in talks with donors on how to extend the program as it seeks to continue operations, she said. Kim Jong Il’s regime has relied on outside aid to feed its 24 million people since the mid-1990s when famine caused by floods, drought and economic mismanagement is estimated to have killed as many as 2 million people.

The aid shortfall may put further pressure on Kim following a botched currency revaluation late last year and tougher UN Security Council sanctions after a second nuclear test in May 2009. The Council should also consider the totalitarian regime’s human rights violations to force changes, Vitit Muntarbhorn, UN special rapporteur on North Korea’s human rights, said in a May 1 interview in Seoul.

“It’s a very helpless situation, sadly, for the people,” he said. “Given that the Security Council is the law- enforcement organ of the United Nations, it’s incumbent upon them to take it up,” said Muntarbhorn, 57, whose six-year term as the official for North Korea, expires in June.

Read the full article here:
North Korea’s Food Aid Will Run Out Next Month, UN Agency Says
Bloomberg
Bomi Lim
5/3/2010

According to Reuters (via the Washington Post):

North Korea’s health system would be the envy of many developing countries because of the abundance of medical staff that it has available, the head of the World Health Organization said on Friday.

WHO Director-General Margaret Chan, speaking a day after returning from a 2-1/2 day visit to the reclusive country, said malnutrition was a problem in North Korea but she had not seen any obvious signs of it in the capital Pyongyang.

North Korea — which does not allow its citizens to leave the country — has no shortage of doctors and nurses, in contrast to other developing countries where skilled healthcare workers often emigrate, she said.

This allows North Korea to provide comprehensive healthcare, with one “household doctor” looking after every 130 families, said the head of the United Nations health agency, praising North Korea’s immunization coverage and mother and child care.

“They have something which most other developing countries would envy,” Chan told a news conference, noting that her visit was a rare sign of the communist state’s willingness to cooperate with outside agencies.

Chan’s comments marked a significant change from the assessment of her predecessor, Gro Harlem Brundtland, who said in 2001 that North Korea’s health system was near collapse.

Chan, who acknowledged that countries that she visits always try to look good while pointing to where they need help, met a series of North Korean officials, visited several hospitals, and also talked to Pyongyang-based diplomats, United Nations officials and representatives of the Red Cross.

The authorities acknowledge there is a problem with malnutrition, she said, but things have become better since famine in the 1990s and a series of natural disasters in 2001.

“Nutrition is an area that the government has to pay attention (to) and especially for pregnant women and for young children,” Chan said.

NO SIGNS OF OBESITY

Chan spent most of her brief visit in Pyongyang, and she said that from what she had seen there most people had the same height and weight as Asians in other countries, while there were no signs of the obesity emerging in some parts of Asia.

But she said conditions could be different in the countryside.

News reports said earlier this year that North Koreans were starving to death and unrest was growing as last year’s currency revaluation caused prices to soar.

Chan, who described her visit as “technical and professional” — in other words avoiding politics — said the North Korean government’s readiness to work with international agencies, such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, was encouraging.

The Global Fund requires countries it works with to provide sound data, account for resources contributed and allow access by officials, she noted.

“I can confirm that at least in the area of health the government is receptive to engagement with international partners,” she said.

“They are receptive to requests for increasing transparency — have a better quality data — and being held accountable for the resources flowing into the country to improve health.”

North Korea, whose human rights record has been strongly condemned by U.N. experts, is refusing to return to six-party talks about its nuclear program, which has led to U.N. sanctions being imposed after a nuclear test in May last year.

Tension is increasing with South Korea, with which the North fought a war in 1950-53, after the sinking of a South Korean naval vessel last month for which Seoul increasingly suspects Pyongyang.

But Chan praised a joint project between North and South Korea to improve women’s and children’s health, which she said was promoting dialogue and trust between the two rivals.

Last month, the WHO said North Korea has reduced deaths from surgery and among women in childbirth under the South Korea-funded program.

The Wall Street Journal calls out Ms. Chan:

Greetings, comrades. World Health Organization Director-General Margaret Chan has returned from Pyongyang with wonderful news. The Democratic People’s Republic of Korea is making great strides in health care, with one “household doctor” for every 130 households. Thanks to on-the-spot guidance from Dear Leader Kim Jong Il, North Korean doctors selflessly choose not to emigrate and have even conquered the decadent West’s problem of obesity!

All right, we exaggerate. But only the part about the Dear Leader. Ms. Chan’s surreal statements last Friday, as reported by several wire services, really did include praise for North Korean health care and the lack of obesity. “They have something which most other developing countries would envy,” the global health administrator gushed. In her guided tours, she saw few signs of malnutrition, and the people in Pyongyang were the same height and weight as other Asians.

That’s hardly consistent with the reports of other visitors, or the accounts of North Koreans fleeing starvation—a trend on the upswing again after a poor harvest and harsh winter. Even Ms. Chan’s predecessor described the North’s health-care system as near collapse in 2001, and since then the North has continued to depend on foreign aid to feed one-third of its population. As for the abundance of doctors, the North’s declaration on the WHO website ought to arouse suspicion: “During the period 2001-2003, the number of doctors was increased by 104 percent, the nurses 125 percent and the midwives 107 percent.”

It appears Ms. Chan is either winking at the reality to maintain contact with the North or she allowed herself to be fooled. Her own organization’s doctors have described appalling conditions in North Korean hospitals, such as the lack of running water and electricity.

But then this is nothing new for the WHO. In the 1970s, the United Nations agency promoted Mao Zedong’s vision of “barefoot doctors” to serve the rural poor—even as China’s health-care system was collapsing, along with the rest of society, under the strain of the Cultural Revolution. Today the WHO has become a cheerleader for Cuban health care. As long as a totalitarian state gives plenty of poorly trained people the title of doctor, fudges its health statistics and takes visiting officials on tours of Potemkin hospitals, the U.N. seems happy to give its seal of approval.

Ms. Chan’s testimony can be read here.

Hat tip to a reader.

Read the full story here:
North Korea has plenty of doctors: WHO
Reuters
Jonathan Lynn
4/30/2010

According to the Daily NK:

The chairman of North Korea’s State Development Bank, Jeon Il Chun visited China on April 8, reportedly to try and bring Chinese investment to Daebong Mine, located near Hyesan, Yangkang Province.

Daebong Mine is one of North Korea’s major gold mines, managed under the auspices of the No. 39 Department of the Central Committee, a special department charged with raising funds for Kim Jong Il’s personal use. Jeon Il Chun is the person in charge of the No. 39 Department.

Attempts to sell shares in a gold mine directly controlled by the 39 Department, Kim Jong Il’s own private safe, to China seem to indirectly imply that Kim is suffering from a debilitating foreign currency supply crisis.

One Daily NK source in China who is well-acquainted with North Korean affairs reported that while Jeon was in China, he met with the management of three or four Chinese enterprises which already have investments in North Korea, and suggested investment conditions under which the North could transfer some of its mineral rights to them and receive capital investments in return.

The source said, “For now, as far as I know, executive managers of the No. 39 Department have been in contact with Chinese enterprises. Since the Workers’ Party is trying to sell shares in a gold mine, it seems the funding of the Party might be serious.”

“It is not clear whether or not this attempt was done on Kim Jong Il’s instructions, but attracting foreign investment in a gold mine is not a commonplace affair,” the source pointed out, adding that an investor has not yet been put in place.

What is the Daebong Mine for?

The Daebong Mine is a relatively large gold mine on the border of Woonheung and Gapsan in Yangkang Province. Until 2001, a Yangkang provincial foreign currency earning enterprise and the foreign currency earning department of the People’s Safety Agency jointly managed it. However, in May, 2002, it became a No. 39 Department affiliated enterprise.

The No. 39 Department has been raising private funds for the leader and Party operations under the Finance and Accounting Department of the Central Committee since the mid-1970s. According to defectors, it has the highest authority and the largest funds of all North Korea’s foreign currency earning enterprises. Especially, it has the ability to mobilize tremendous financial resources since it manages and controls supplies of gold and silver and rare non-ferrous metals.

A source from Yangkang Province explained, “According to Chongjin University of Mining and Metals and Kim Chaek University of Technology, the purity of the gold from the Daebong Mine is more than 76 percent, while production from Hoichang and Eunsan in South Pyongang Province is 63 percent and 61 percent respectively. More than 150kg of solid gold is produced annually, so this mine is known as the ‘loyalty mine’.”

“People say that the government earns four or five million dollars a year through this mine. Neither Yangkang Provincial Committee nor Hyesan Municipal Committee is involved with the business of the mine.”

The source added, “Since the No. 39 Department deals with the mine, only those discharged soldiers with good family backgrounds are dispatched there by the Central Committee. In October of last year, around 200 discharged soldiers with good family backgrounds came to the mine.”

Almost all the gold produced in the Daebong Mine is stored in Swiss and Austrian banks in gold bars.

A Chinese company had a contract with the DPRK’s Musan Mine which has been canceled for an unknown reason.

Click here to see what I believe is the mine’s location.

Read the full article here:
No. 39 Department Hawking Shares in Key Gold Mine
Daily NK
5/3/010
Lee Sung Jin

According to the Korea Herald:

Twenty-four South Koreans — 18 employees of Hyundai Asan Corp. and six of its partner firms such as Emerson Pacific — returned home yesterday following 36 Chinese employees who left the resort on Sunday.

This leaves only 16 people to look after the resort — 12 Hyundai Asan employees and four of Emerson Pacific’s golf course.

North Korea last week told all but 16 employees of the South Korean companies operating in the Mount Geumgang resort to leave after announcing that it “seized” or “froze” South Korean real estate assets within the tourist zone.

The Seoul government has repeatedly said that it will take firm countermeasures against the North’s “illegal and unjust actions that are fundamentally detrimental to inter-Korean relations” in consideration of various circumstances.

…

The Seoul government is reportedly weighing several options including cutting inter-Korean trade or tightening control over goods entering the North.

North Korea last week attached “confiscation” stickers on facilities owned by the South Korean government and the state-funded Korea Tourism Organization such as the spa center and a building for reunions of families separated by the border.

They also “froze” tourism assets owned by private companies such as Hyundai Asan, sticking notes on the doors and keyholes of hotels, duty free shops and restaurants that have been dormant for nearly two years.

The Seoul government suspended tours to the Mount Geumgang resort after a South Korean tourist was shot dead there in July 2008.

Read the full article here:
S. Korean workers leave N.K. resort
Korea Herald
Kim So-hyun
5/3/2010