North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
NK Brief No. 07-11-8-1
11/8/2007

According to the November 6th issue of the Chosun Shinbo, a newspaper published by the General Association of (North) Koreans in Japan, North Korea has taken an opportunity at the “National Meeting of Secretaries of Cells of the Workers” Party” (Pyongyang, October 26~27), the first held in the last 13 years, to shift the focus of the Workers’ Party to “building a great economic nation”. North Korea also specifically reported the policy goal of building the North into an economic powerhouse by issuing reports through each of its media outlets. In the October 23rd edition of the Workers’ Party newspaper, Rodong Shinmun, Party officials called for a “struggle to create a great economic nation.”

According to the Chosun Shinbo, “By tasking the highest organs of the Party with focusing on the realization of economic policy, we are effectuating a shift in operations to cope with a new era,” and, “at this conference, the construction of the Party’s great economic nation was organized, and the project and plans for increasing the role of Party cells were discussed.”

Party cells are the smallest units of the Workers’ Party, and these cell secretaries are responsible for the front line of Party policy implementation. The Workers’ Party Central Committee’s congratulatory address at the conference stressed the need for a “united march to construct a great economic nation and improve the lives of the people,” and stated that the Party understood that economic issues were at the heart of Party cell concerns.

In the conference report, it was stressed that it was Kim Jong Il’s firm determination and will that “through Military-First politics, not only are the country and military number one in our ideology, but that we make economics number one as well, in order to live well without feeling envious of others.” According to the newspaper, “As the political environment surrounding North Korea is changing, when this conference’s decision to stress the goal of building a great economic nation is carried out by the highest organs of the Party, it will be an important shift in all Party undertakings.”

Yonhap
11/7/2007

Bilateral trade between the two Koreas increased by 23 percent in the first 10 months of the year due mainly to an increase in shipments of goods produced at the South Korea-built industrial complex in the communist North, the Unification Ministry said Wednesday.

The two-way trade volume jumped to nearly US$1.44 billion in the January-October period, up from $1.16 billion from a year earlier, according to the ministry.

“The rise mainly comes from a 48 percent increase in the amount of goods shipped from Kaesong,” a ministry official said, adding trade in some other areas, such as minerals and fisheries, increased by nearly 50 percent year-on-year.

Exchanges in non-commercial areas, however, dropped by 18 percent, according to the ministry official.

Seoul hopes cross-border trade will continue to increase over the coming years as the sides are about to launch a second development plan to expand the Kaesong industrial complex, where about two dozen South Korean companies are currently employing some 10,000 North Korean workers.

The joint industrial complex is expected to house over 2,000 South Koreans businesses and employ as many as 500,000 North Koreans when it is fully developed by a target year of 2012.

President Roh Moo-hyun and North Korean leader Kim Jong-il have also agreed to develop the North’s western Haeju area as a special economic district in the second-ever inter-Korean summit held in the North Korean capital of Pyongyang early last month.

Daily NK
Yang Jung A
11/7/2007

Although the North Korean economy has been growing since late 1990s, it is hard to say that the economy has growth on its own.

A senior researcher at the Korea Institute for National Unification, Choi Su Young, released a paper titled “the Latest Tendency of the North Korean Economy” in the October “Finance,” which is issued by Korea Federation of Banks. He pointed out in the paper that “North Korea’s economic reliance on China is getting serious and cited the state’s 1.7 billion dollars in trade with China.”

He explained “On one hand, North Korea exports to China in 2006 increased to 72.7% compared with exports in 2002; on the other hand, imports from China increased to 163.8%. This resulted in a recorded deficit of 760 million dollars. The rate of North Korean trade reliance on China was 48.5% in 2004, and it reached 60% last year.”

He relayed that “In the production industry, North Korea has to rely systematically on China’s raw materials, energy, facilities and parts. North Korea is importing its entire amount of petroleum for transportation and production. Chinese influence on the North Korean economy is so absolute that 70-80% of consumer products are made in China.

Mr. Choi insists that “Although foreign aid and South-North economic cooperation were expanding and its reliance on the influx of foreign currency was great, North Korea was staying in low-growth status, which means North Korea does not have the economic foundation for development.

According to the report, the scale of exchange between the South and the North was rapidly increasing through the annual provision of South Korean rice and free fertilizer supporting and South Korean enterprises’ activities at the Kaesung Industrial Complex.

With the exception of South Korea and China, there are no countries willing to invest in North Korea. Most developed countries turn away from North Korea because the standard and environment related to North Korean investment are significantly inferior to the norm.

He explained that “The North Korean investment environment is inconvenient for foreign investors due to obsolete infra-structures, high distribution costs and limited markets. It is unnecessary to mention the international policies related to North Korea.”

Mr. Choi added that “The scale of North Korean foreign trade was 2 billion dollars in 2000 and reached 3 billion dollars in 2006. Exports amounted to 950 million dollars and imports came to a total of 2.05 billion dollars.”

According to the Koryo Tours website, the DPRK will once again be performing Arirang in 2008.  This time around, American tours have been extended by a full day.  Where as previous tours ran from Saturday to Tuesday, now they will run from Tuesday to Saturday (matching the days that Air Koryo flies to Beijing).

I saw the Mass Games in 2005 with Kim Jong Il himself (official coverage, Simon’s coverage).  It was quite an experience.  You will never see anything like it.

Traditionally the Mass Games have only been held on big holidays (typically on notable anniversaries: 10,15, 20, etc.)  This is now the fourth year in a row that Arirang will be performed (2005, 2006, 2007, 2008), a show that was first performed in 2003 (I think).

To the Americans out there: it is not illegal and will not put you on any kind of watch list.

Warning: flooding in October has interrupted trips the last two years!

Daily NK
Moon Sung Hwee
11/7/2007

A source inside North Korea reported on November 5th that the North Korean Ministry of Education lately directed every school to stress the importance of the Korean language education and to encourage the use of the mother tongue.

In a phone interview with DailyNK, the source said, “At workplace, there are those who read out to the workers a handbook titled ‘Let’s maintain our superior morals and actively promote the use of our mother tongue!’”

In the March 2007 edition of “Learning Culture & Language,” Jong Soon Ki, the most well-known linguist in North Korea and a professor at the Institute of Linguistics of Social Science Center, urged the public to stop admiring English and Chinese language, saying, “The difference of our mother tongue between North and South Korea has been getting larger since the division of Korean.”

The source said that the North Korean authorities started to place high importance on the native tongue in an attempt to stop the surge in the use of the Chinese and foreign languages which have been spread to the country through the circulation of South Korean soap operas since 2000.

After the food crisis in the mid-1990s, the number of defectors, border traders, and Chinese businessmen investing in North Korea have increased, which helped the Chinese culture spread into the country. Many young North Korean began to display interest in Chinese movies, Chinese products and the Chinese language. It became popular among them to read out the brand names of Chinese products in Chinese.

In North Korea, people use the Chinese words “yaoyunji (搖運機)” or “yaoyun (搖運)” for a remote control. They do not use its Korean name “wonkyuk-jojonggi,” translated and adopted by the North Korean authorities.

As for a cell phone, people use its Chinese name “Dakeda (大可大)” or “Souji (手機)” rather than its North Korean name “Sonjeonhwa (literally meaning a handphone).” Blue jeans are called “Niuzaiku,” in the border areas, a refrigerator is called its Chinese name “Bingxiang (冰箱)” and VCD “Woicidie.” Indeed, many products or medical supplies are called their Chinese names such as “Kouhong” for a lipstick.

The use of foreign languages has become more prevalent across the country especially since 2003 when the frenzy over Chinese culture was replaced by its South Korean counterpart. It is particularly noticeable that North Korean people no longer call South Korea “South Chosun” as they used to but call it “Hankuk (meaning the Republic of Korea).” In these days, the young people in Pyongyang look down on those who still use the old name, “South Chosun.”

The source said, “South Korean culture is taking over the Chinese one, and the demand for the South Korean films and products is increasing. People learn new words from South Korean soap operas and these words are becoming popular.”
The source added, “I guess this is because South Korea is better off than China, and people have a sense of homogeneity towards South Korean people.”

“Nowadays, when people go to restaurants, they do not use the words “siksa annae” or “siksa pyo,” a Korean name for a menu. Instead, many people just call it “menu” as it is pronounced in English and widely called so in South Korea,” said the source.

The source continued, “We can see how rapidly the South Korean culture has spread into the country by the fact that many people no longer use the Chinese name for a cell phone, Shouji (手機) and instead use the name ‘Hyudaephone’ as it is called in South Korea.” The source said, “At Jangmadang (markets), people casually say the names of South Korean products as they are such as “Cuckoo (rice cooker)” or “Color TV.”

When asked about the popular words adopted from South Korean culture, he listed following words: “diet,” “wellbeing,” “music video,” “sausage,” “single,” “wife,” “dress,” “pop song,” and “fast food.” (See that all of them are English words. In South Korea, people use many English words like the one listed here in everyday life)

32-year old Kim Kyung Wuk (pseudonym), who defected from Kyungsung county of North Hamkyung Province and recently came to South, also confirmed this phenomenon.

Kim said, “In the past when people feel distressed, they expressed their feeling using the word, ‘uljukhada’. But now many young people use the words ‘jajeong’ or ‘stress’ as South Korean people do.” Kim added, “The North Korean people did not know the word ‘stress’ when they first heard it from South Korean movies they watched only three years ago. But now even the old people know the new word.”

Many defectors say that many new words adopted from South Korean TV dramas are being spread into the country especially among the young people such as “miss-Korea (a beautiful woman),” “show (fake),” “ssonda (I will treat you),” “hwakeun (passionate),” “single” and “wife.”

Kim said, “Those who watch South Korean dramas and listen to its music take a great interest in everyday language of the South, and try to adopt it as long as they could escape the state’s regulation.”

Defectors said that the current phenomenon illustrates that North Korean people admire the South Korea and greatly hope for reforms and open-door policy.

Lee Chul Min, the operating manager at the Association of the North Korean defectors said, “For those who live in a closed society, exposure to foreign cultures can be a really fresh experience. It is natural of them to admire more advanced societies and cultures.” Lee added, “The current frenzy over South Korean culture will help bring a change into North Korea and overcome the differences between two Koreas.”

Korea Herald
11/7/2007

Beginning in April next year, South Korean tourists will be able to climb Birobong, the highest peak of Mount Geumgang in North Korea, Hyundai Asan officials said yesterday.

According to the South Korean tour operator in North Korea, Hyundai Asan officials will meet North Korean officials later this month to discuss the specifics.

Company officials said that the Birobong course will be an extension of the current Naegeumgang course, which allows tourists to go hiking on the inner part of the mountain. This course opened in June of this year.

The popularity of this course has shot up since Hyundai Asan lifted the number of maximum visitors from 150 per week to 150 per day, company officials said.

Birobong is 1,638 meters high; the mountain itself is 40 kilometers wide, east to west, and 60 kilometers long, north to south.

Institute for Far Eastern Studies (IFES)
NK Brief No. 07-11-6-1
11/6/2007

Following the economic turmoil of the early 1990’s, the North Korean Workers’ Party adopted the slogan of ‘salvation through our own efforts’ for its economic revival campaign. Recently, signs of change in that campaign have been apparent.

On October 30, the Rodong Sinmun, the DPRK socialist party’s newspaper, printed an editorial headlined, “Let’s hold the ‘salvation through our own efforts’ banner even higher and go forward,” in which it explained, “Our strengthening of the [campaign] in no way means building the economy while ignoring the relationship with the international economy.”

In the past, the economic campaign encouraged the mobilization of outdated technology and methods in areas that were seen as lacking, but without fail, to do so independently. Now, the campaign has shifted toward being based on ‘modern science and technology’ and ‘utility’.

The article emphasized, ‘turning our back to science and technology and not relying on science is tantamount to not revolutionizing,” and “if you make world-wide vanguard technology your own and actively use it, that is ‘salvation through our own efforts.”

The newspaper highlighted childrearing, excavation, and mobilization as the three most important areas in which science and technology would play a role as the foundation the newly defined economic revival campaign. The latest twist came when the article purported that utility would be the new foundation for the campaign. “The future [campaign] for the 21st century is a [campaign] based on utility,” and, “economic projects in which the people can see no virtue, and which can give no benefits to the nation are absolutely meaningless.”

In particular, “It is easy to rely on capitalist elements in the economic sector,” and, “if we do not have the will to overcome obstacles and move forward, strange, non-socialist factors will enter [our society] and shake the physical foundation of socialism.”

The article portrays the idea that even if, through inter-Korean economic exchange and transactions with the international community, capitalist elements of the outside world enter the North, ultimately they would not get in the way of bracing up the socialist system, and the current regime could be maintained by adopting a utilitarian economic revival campaign.

It would be difficult to interpret this Rodong Sinmun editorial as a green light for opening up North Korea. However, it does appear to indicate a decision to redefine the campaign to reach ‘salvation through our own efforts’ due to the recognition that the North cannot survive in isolation, and that outside assistance is necessary in order to revive the economy.

Poultry company looks North for land, workers
Joong Ang Daily
11/7/2007

A South Korean food company said yesterday it will start building a chicken farm in North Korea later this year as part of its efforts to produce chickens using the North’s cheap labor.

Maniker Company, the nation’s second-largest chicken processing company, said it agreed with North Korean officials last month to establish the farm in Kaesong, where an inter-Korean industrial complex is located.

“Construction will start later this year and the farm will be operational early next year,” said Choi Young-sam, a spokesman for Maniker, by telephone.

North Korea will provide the site and workers for the construction, Choi said, adding the project is partly supported by the South Korean government.

The agreement was reached at a meeting in Pyongyang when two executives of Maniker visited the North in late October, the spokesman said.

Details such as how much money Maniker and the South Korean government will spend on the chicken farm have yet to be fixed, Choi said.

In the Kaesong Industrial Complex, located 70 kilometers north of Seoul, 26 South Korean companies employ about 16,000 North Korean workers who produce garments, kitchenware and a number of other goods.

North, South Korea collaborate on strategy to end food shortage
Courier News (Via DPRK Forum)
11/6/2007

North Korea and South Korea have decided to start a jointly operated hog farm in the North’s capital to help alleviate the communist nation’s chronic food shortages, a South Korean official said Tuesday.

The agreement came as a follow-up to a wide range of accords reached by the leaders of the two Koreas last month.

The farm will run for a two-year trial period in Pyongyang and aim to breed 5,000 hogs, with the South providing the animals, feed, equipment and building materials, and the North providing the land, electricity, water and labor, South Korea’s Unification Ministry said.

Officials of the two countries negotiated the deal in talks in the North Korean border city of Kaesong on Monday and plan to meet again to map out details, such as when to open the farm, ministry spokesman Park Won-jae said in Seoul.

“The hogs are aimed at resolving the North’s food shortage problem,” Park said, adding that the animals would not be exported to South Korea or elsewhere.

North Korea suffers from chronic food shortages and has struggled to increase its grain production in recent years. The country was hit by famine in the mid-1990s that killed an estimated 2 million people.

In the second-ever inter-Korean summit in Pyongyang in early October, South Korean President Roh Moo-hyun and North Korean leader Kim Jong Il agreed on accords aimed at easing tensions and boosting cross-border economic exchange programs. The measures included the launch of cooperative farm programs.

The two Koreas are still technically at war, as their 1950-53 Korean War ended with an armistice, not a peace treaty.

Daily NK
Yang Jung A
11/5/2007

Forty-year old Park Sung Jin (pseudonym), a cloth merchant in Chongjin lately went to Tumun in Jilin Province, China under the pretext that he would visit his relatives there. He looked for Chinese business partners and tried to find items he can sell.

It took guts for Mr. Park to venture a trip to China. However, his efforts might turn out to be fruitless.

Mr. Park needed to get a border pass to go to China, and it costs him a great fortune. The pass allowed Mr. Park to visit his pre-determined destination only once. He paid 1 million North Korean won (approx. US$340) for the pass which he applied for in February, 2006 and received in August, 2007. If he wanted to have it within six months, he had to pay about 4,000 Yuan (approx. USD560).

Applicants for the pass also need to bribe the officials of People’s Committee and Security Agency because they are in charge of issuing visas to China. In fact, Mr. Park had to spend extra money on bribery to go to China for business.

Since it was Mr. Park’s first time to apply for the visa, he went through a relatively simple visa procedure. As for those who apply for the visa more than once, more complicated procedure is waiting. They are asked to state what they had done during their first visit to China.

If Mr. Park is issued a passport by any chance, he can go to many places for long periods of time. Unfortunately those over the age of 45 are more likely to get a passport (Mr. Park is forty). Moreover, the eligibility for the issue of a passport is much more complicated and it costs big fortune to get one. For instance, those who apply for the issue of a passport are supposed to pay $40 for application fee. However, the applicants need to spend extra money on bribes and other things, and for the most time end up spending more than $500 to get a passport.

Mr. Park is now busy visiting relatives and business partners. He is determined to make money as much as possible during his stay in China so that he can get his money’s worth upon his return home.

There are more theft incidents in Hoiryeong than ever

Lately, 45-year old An Myong Sook, a resident in Hoiryeong city, never hangs out the wash to dry outside. She tells her 15-year daughter not to forget to lock the doors when she leaves home because there are so many thieves in her neighborhood.

Since last year, the construction of apartments and roads has been underway around her area in order to commemorate the 90th birthday of Kim Jong Suk (the late mother of Kim Jong Il). For the construction, many outside workers came to her area, and some of them have broken into neighboring houses.

After having repaired the road laid behind the statue of Kim Jong Suk, the workers have started building the road between Hoiryeong and Chongjin since June. Many workers came to Hoiryeong from Rajin, Chongjin, Kilju, and Hamheung.

However, ever since the outside workers came to Hoiryeong in June, the number of households which lost their belongings or livestock has increased. The local people of Hoiryeong are increasingly complaining that the increase in rice price and theft has to with the presence of the outside workers.

Accordingly, the North Korean authorities have strengthened the punishment for theft. In the past, stealing was considered as a petty misdemeanor. Nowadays, that guilt of theft is sent to labor training facilities. The authorities confiscate all stolen items sold to the third person.

However, it is difficult to get back basic supplies such as clothes once they are stolen, and therefore every household in Hoiryeong is on the alert for theft.

Daily NK
Yang Jung A
11/5/2007

In North Korea where free education is espoused, the number of students dropping out of school due to economic issues has been continuously increasing.

An North Korean aid organization, Good Friends, said in an informational material distributed on the 31st of October, said, “In Wonsan, Kangwon Province, there are a lot of children who do not even get to attend elementary school. They stop out of school due to difficulties in living and follow their parents to the market or sustain an existence from digging medicinal herbs from mountains and fields.”

In the midst of such a reality where the students’ attendance rate is increasingly falling, the source relayed that “At such a rate, voices of complaint among some officials of Kangwon Province that have said that all of Kangwon Province will become illiterate are high.”

”When actually walking around the streets or in the market of Wonsan, one can easily meet children who are selling water. It is easier to meet children in the markets than in schools.”

The source also relayed, “In a high school in Pohang District in Chongjin, North Hamkyung Province, three objects worth 2,000 won per person, among the list of notebook, writing utensils, winter vest, belt, and winter socks, are required under the pretext of classroom decorations.”

”In elementary schools in Hoiryeong, 500g of sunflower seeds per person were collected for Kim Jong Il’s birthday preparation on February 16th of next year. In other regions, elementary schools and middle schools are collecting each kind of products and upper-levels students are required to bring 20kg of scrap iron, 4 strips of rabbit leather and 1kg of white peace seed and the lower-levels 500g of scrap-iron, 500g of peace seed and 200g of castor-bean.”

It added, “Students whose family situations are difficult cannot keep up with school education. The number of students who do not go to school due to the shortage of funding are increasing.”

Further, “teachers prefer children who come from well-to-do families and give up on the children from poor families. Before, teachers would visit the homes of every student and try to persuade the families to allow the children to return to school, but nowadays, no one takes that kind of an initiative.”

The source also revealed that starting last October, street beggars have been increasing in the vicinity of the Chongjin markets.

The source stated, “Around the market area, young beggars daily fighting for the food that the restaurants have thrown away can be seen daily. During the day, they ask for alms near the market or look for things to eat in the garbage dump and in the winter, since the weather is cold and there are no places to sleep, people gather near steel mills, so they end up being completely covered with dust and dirt.”