North Korean Economy Watch

Hankyoreh
Lee Yong-in
4/16/2007

The Gaeseong (Kaesong) Industrial Complex is a gauge of conditions on the Korean peninsula. Operations there were nearly stopped outright in the wake of the North Korean nuclear and missile tests. Yet now, thanks to the February 13 agreement on the North’s denuclearization forged at the six-party talks as well as the South Korea-U.S. free trade agreement (FTA), operations have picked up at the industrial park.

In particular, the FTA negotiations have brought the industrial complex new interest from around the world. The agreement reached opened up the possibility of products manufactured at Gaeseong being exported to the U.S ., albeit only after the North meets certain conditions. Whether or not Gaeseong goes beyond spurring North-South economic cooperation and becomes a pillar for peace in East Asia remains to be seen.

The Hankyoreh went on location from March 27 to 30 to take a closer look.

GAESEONG INDUSTRIAL COMPLEX – March 29, 6:45 a.m. Before the dawn clears, the rush to work begins. At the intersection that divides the factory buildings, three or four buses stop in front of a sign reading “Gaeseong Industrial Zone” and North Korean workers pour out. There are approximately 80-100 workers on each bus. Shown to the press for the first time since operations began two years ago, the scene resembles the crowded morning commute on Seoul subway line No. 2.

The clothes worn by the female workers are similar to those worn by the women in Pyongyang, as witnessed during a visit last October. Some even wear the long coats now fashionable in the South. Yellow, pink and checkered, the clothes they wear are of all colors and patterns. Wearing makeup and linking elbows as they walked, their smiling faces were as graceful as the flowers of fall. The streets and buildings were sparkling, as well. The chromatic coloring of the complex contrasts clearly with that of the achromatic Guro Digital Complex in the early 1990s in Seoul.

There are more than 1,200 North Korean laborers working in the 22 factories that have so far set up shop at Gaeseong during the complex’s preliminary and first stages. Ninety percent of them commute to work by bus. As the start of operations nears at 7:10 a.m., the workers flood the sidewalks and streets before entering their respective factories. Their paces were hurried and nimble.

“Welcome! I’m glad you’re here!” Four South Korean employees greet the North Korean workers at the gate to Shinwon’s factory. Regardless of rain and snow, they have been there to give their morning greetings to the workers. Among them stands director Hwang U-seung, who recalled “I was most happy when the North Korean workers expressed their gratitude to me for greeting them here every morning.”

As the time of dividing among interested companies the remaining 530,000 pyeong site of the first project draws near (one pyeong is 3.3 square meters), the commute to work promises to become only more complicated. The reason is that after the end of the first stage of development – around the first half of next year – some 7,000 to 10,000 North Korean workers will take up work at the site.

Currently, it is logistically impractical to transport over 10,000 workers every morning by the current 49 buses to meet the start of operations, which is between 7:10 and 8:10 a.m. In particular, in order to meet the 7:10 bell, the women workers must wake up between 4:30 and 5 a.m. so as to make breakfast, walk 20 minutes to the city bus stop, and ride the bus for 20-30 minutes to work.

The Gaeseong Industrial District Management Committee is rushing to find a solution to the commuting problem. There is a plan to build housing within the complex so that 20,000-40,000 workers can commute by foot. Furthermore, if the two Koreas restore the railway line between Seoul and Pyongyang, a project currently being discussed, there is also talk of adding a special commuter train between the workers’ lodgings and Gaesong on the line. In addition, negotiations are underway with the industries present over purchasing more buses or increasing bicycle use.

March 28, 10:00 a.m. The Gaeseong management committee grew hectic. Word came that former Minister of Unification Jeong Dong-yeong’s entourage would arrive in one to two minutes. This reporter jumped into a car so that he would not disturb Minister Jeong’s visit, and drove over to a factory built by the South Korean shoemaker Racere, where he took turns experiencing the work of a typical Gaeseong laborer.

At the factory, seven North Korean workers, their work clothing on and their sleeves rolled up, were gluing the soles of shoes. This reporter also changed into the work clothes and rolled his sleeves up.

After a glance of encouragement from the North Korean laborers, I started to apply glue to the shoes, as well. I was nervous and embarrassed due to my misapplication of the glue. Smiling, the North Korean forewoman Kim Gyeong-sun (45) said, “It looks easy, but it’s really difficult. That’s why newcomers have to be strictly trained.” Kim then taught me in detail the method of holding the brush, the amount of glue to use, and the way of coating the bottoms of the shoes. As if taking on the role of teacher, an animated expression danced across her face.

But after about 30 minutes, the brushes began to harden. Noticing this, a laborer brought me a new brush. “It is a bad brush that is hindering you work,” the North Korean teased, smiling. Asked whether two of the workers had boyfriends, one worker responded, “you think I’d want to marry so soon?” At this, coworkers Jo Jeong-hui and Kim Eun-gyeong, both 19, grinned widely.

As the atmosphere became lighter, Kim Gyeong-sun began bragging about her children. Her 20-year-old eldest son was in the military, and her second son, 18, was studying hard at a mining college, she reported. Aware that their mother was working at Gaeseong, they expressed their support for her “good work.” Asked whether her salary was sufficient to get by, she responded, “More than the money, I feel pride at the fact that North and South are working together.” A model answer, to be sure.

At 12, the lunch bell rang. As she was leaving, a worker offered to make me into “an honorary worker” there, urging me to come back to visit often.

March 28, noon. I joined for lunch the workers of a factory built by South Korean shoe maker Racere. After finishing the meal, I peeked at the North Korean cafeteria. The North Korean workers seem to bring their own rice to supplement the soup provided. When Gaeseong first opened, the North Korean workers were reluctant to visits by the Southerners in their cafeteria during lunchtime. But as the months passed, the atmosphere changed. Now, the South Koreans who sometimes pay a visit to the North Korean cafeteria are now met with warm greetings by the workers.

March 28, 5:00 p.m. The Shinwon workers head home after a day of work. At one corner of the factory, there is a “general meeting” where production totals are compared with goals. The North Koreans are used to performing such checks two to three times a day. The workers change into their regular clothes and sign out using their personal ID cards. As they scan their cards, a picture of them as well as their personal information flashes on the monitor. Those working into the evening gather for a simple supper of ramen and rice in the cafeteria.

At seven in the evening, twilight comes to Gaeseong Industrial Complex, which glows beneath the stars. Nearly all of the factories keep their lights bright, and the streetlamps gently light up the surroundings. Those working into the night that day numbered over 6,000, just about half of the entire Gaeseong workforce.

New York Times
Michael R. Gordon
4/15/2007

The Ethiopian government has denied that it violated United Nations sanctions by carrying out a secret purchase earlier this year of military equipment from North Korea.

The Central Intelligence Agency reported in late January that an Ethiopian-flagged ship had left a North Korean port and that its cargo probably included tank parts and other military cargo, according to American officials.

The purchase of tank parts would violate restrictions on dealings with North Korea imposed by the United Nations Security Council in a resolution adopted in October. The Security Council acted less than a week after North Korea tested a nuclear device.

The Bush administration decided not to press Ethiopia to reject the shipment, and the vessel was not inspected after it took its cargo to a port in Djibouti for overland transport to Ethiopia. Some American officials said the shipment was most likely a Security Council violation.

In a statement issued Friday, the Ethiopian Foreign Ministry acknowledged that it had received a cargo shipment from North Korea on Jan. 22, but asserted that it did not include prohibited items like tank parts.

“This shipment contained spare parts for machinery and engineering equipment and raw material for the making of assorted ammunition for small arms,” the Ethiopian statement read. “The United States Embassy in Addis Ababa might have been aware of Ethiopia’s importation of the said cargo from North Korea. “However, the fact is that Ethiopia did not purchase arms or any other item covered by Resolution 1718 under the contractual agreements,” the statement read, referring to the Security Council measure. Ethiopia said the shipment was carried out under the terms of several contracts that were signed with North Korea in June and was paid for in advance.

The State Department has declined to comment on the details of this episode.

Ethiopia purchased $20 million worth of arms from North Korea in 2001, according to American estimates, and American officials say this pattern has continued. Ethiopia has an arsenal of Soviet T-55 tanks and other Soviet-style equipment. The United States has sought to persuade Ethiopia to wean itself from its longstanding reliance on North Korea for inexpensive Soviet-era military equipment.

The United States has had close ties with Ethiopia. American officials say that Ethiopia was provided with American intelligence about the location of Islamist forces before its recent offensive in neighboring Somalia. On Jan. 7, American AC-130 gunships launched two strikes on terrorist targets from an airstrip inside Ethiopia, according to American officials. Ethiopia has said such reports are a fabrication.

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Yonhap
4/15/2007

North Korea has launched a month-long mass gymnastics show as part of festivities to mark the 95th birthday of its late founding leader Kim Il-sung, the country’s new agency reported Sunday.

The Arirang Mass Games opened at Pyongyang’s May Day Stadium on the evening of Saturday, with hundreds of dancers and gymnasts performing against a gigantic backdrop of mosaic pictures formed by thousands students holding up colored panels, the Korean Central News Agency (KCNA) said.

North Korean leader Kim Jong-il did not attend the opening show on the eve of his late father’s birthday, the agency said.

The show was held in 2002 and 2005, but was cancelled last year due to floods, causing hundreds of U.S. and Western tourists to cancel their planned trip to one of the world’s last remaining communist state.

This year’s show, which runs about 80 minutes starting at 8 p.m. every day except for Sunday, is expected to continue until May 20, Western tour organizers said.

This year’s show carries special meaning for North Korea, as it will celebrate the 95th anniversary of the birth of the late leader who died of heart failure in 1994. This year also marks the 62nd anniversary of the Korean Peninsula’s liberation from Japan’s colonial rule and the founding of the North’s ruling Workers’ Party.

The first version of Arirang, named after a famous traditional Korean folk song, was held for nearly five months in 2002, with about 100,000 students and ordinary people participating.

At that time, North Korea staged a promotional campaign for the festival, calling it a “once-in-a-millennium” event. Some viewed it as an effort to gain publicity at the time of the World Cup finals co-hosted by South Korea and Japan the same year.

Daily NK
Han Young Jin
4/13/2007
 
There are big three holidays falling in April at the same time: the 95th Kim Il Sung’s birthday (Apr. 15), the 75th foundation anniversary of the People’s Army (Apr. 25) and the 15th anniversary of Kim Jong Il’s ascension to the throne (Apr. 20). According to DailyNK sources, all North Korean cities are busy to preparing for Kim Il Sung’s birthday events, along with Army preparation for a large scale military parade in Pyongyang.

From mid-April to mid-May, the mass-performance “Arirang” will feature 100,000 students participating in the 25th “Spring Friendship Spring Festival” and other memorial events for Kim Il Sung. Other events will include the release of a documentary movie, “Being with the great military-first Leadership”, to commemorate the 14th anniversary of Kim Jong Il’s inauguration as the Chairman of the Defense Committee of North Korea.

Designed to inspire popular nationalism, the April events will occur on an unprecedented scale and will include the participation of the General Federation of Trade Union, the Kim Il Sung Socialist Youth League, the Union of Agricultural Working People, and the Union of Democratic Women.

The Choson Sinbo of Chongryon (the General Association of North Korean Residents in Japan) is creating a cheerful atmosphere through the release of an article, “the Solar Holiday (Kim Il Sung’s birthday, Apr. 15) in this year is the great fest for the winners.”

North Korean authority intends to take a triumphant stance due to the thaw in U.S. relations, the resumption of six party talks, and perceived diplomatic victories after the nuclear test. The 1998 national slogan, “The Construction of the Strong Prosperity Nation” is believed to have been accomplished this year because of the test.

Previously, military parades were used to emphasize tension between the U.S. and North Korea. However, the upcoming parade is intended to be a victory celebration of a win in confrontation against the U.S. In the past when North Korea has been the beneficiary of positive world opinion, it capitalized by strengthening its domestic surveillance and political education systems. The April events are in furtherance of their strategy to maintain military tension while simultaneously whipping up nationalistic, nuclear pride. 

Columbia University Press, 2007
Victor D. Cha, government, Georgetown University
David C. Kang, government/business, Dartmouth College

The regime of Kim Jong-Il has been called “mad,” “rogue,” even, by the Wall Street Journal, the equivalent of an “unreformed serial killer.” Yet, despite the avalanche of television and print coverage of the Pyongyang government’s violation of nuclear nonproliferation agreements and existing scholarly literature on North Korean policy and security, this critical issue remains mired in political punditry and often misleading sound bites. Victor Cha and David Kang step back from the daily newspaper coverage and cable news commentary and offer a reasoned, rational, and logical debate on the nature of the North Korean regime.

Coming to the issues from different perspectives—Kang believes the threat posed by Pyongyang has been inflated and endorses a more open approach, while Cha is more skeptical and advocates harsher measures—the authors together have written an essential work of clear-eyed reflection and authoritative analysis. They refute a number of misconceptions and challenge much faulty thinking that surrounds the discussion of North Korea, particularly the idea that North Korea is an irrational nation. Cha and Kang contend that however provocative, even deplorable, the Pyongyang government’s behavior may at times be, it is not incomprehensible or incoherent. Neither is it “suicidal,” they argue, although crisis conditions could escalate to a degree that provokes the North Korean regime to “lash out” as the best and only policy, the unintended consequence of which are suicide and/or collapse. Further, the authors seek to fill the current scholarly and policy gap with a vision for a U.S.-South Korea alliance that is not simply premised on a North Korean threat, not simply derivative of Japan, and not eternally based on an older, “Korean War generation” of supporters.

This book uncovers the inherent logic of the politics of the Korean peninsula, presenting an indispensable context for a new policy of engagement. In an intelligent and trenchant debate, the authors look at the implications of a nuclear North Korea for East Asia and U.S. homeland security, rigorously assessing historical and current U.S. policy, and provide a workable framework for constructive policy that should be followed by the United States, Japan, and South Korea if engagement fails to stop North Korean nuclear proliferation.

Press in Yohap:

N.K. likely to jump in growth if under open-minded regime: U.S. scholar
Yonhap
4/13/2007
Lee Dong-min

North Korea, once it adopts a normal political system, has the potential for 10 percent annual economic growth, an American scholar said Thursday.

The North’s economic openness, however, in the long run can create a contention between Seoul and Washington on how to deal with such growth, Prof. David Kang said.

Given the “inherent dynamism” in the region, North Korea would be able to achieve high growth, he said in a forum hosted by the South Korean embassy in Washington.

Kang is adjunct professor at Dartmouth University’s Center for International Business. He is a co-author of “Nuclear North Korea: A Debate on Engagement Strategies,” which he wrote with Victor Cha, currently director for Asia at the National Security Council.

“If North Korea can get rid of this horrible political regime, you have to guess the natural rate of growth for North Korea over the next generation… you have to put at 10 percent a year,” the professor said.

The task is to how best to take advantage of this national strength existing in the region in terms of education and development, Kang said, and an ideal situation is for a slow integration to weaken the psychological shock from embracing capitalism, he argued.

But once North Korea’s opening gets fully under way, coordination problems may arise between South Korea and the United States, according to Kang.

One example is Kaesong industrial complex, an inter-Korean pilot economic project, he said.

Located just north of the South-North border established at the end of the 1950-1953 Korean War, the complex houses manufacturing plants with capital from the South and cheap labor from the North.

Seoul tried to get Kaesong products covered under a free trade agreement (FTA) concluded with Washington earlier this month, which would have allowed them to be exported to the U.S. The two countries compromised by agreeing to consider establishing “outward processing zones” on the Korean Peninsula in the future.

Kaesong was able to be “papered over” because it is not yet a lucrative effort, Kang said.

“But it shows potential for conflicts on what to do if North Korea slowly begins to open up,” he said.

“What’s going to happen to those goods under the FTA? What would the U.S. think about it? We really have some coordination problems to get over.”

The professor also questioned the general assumption that North Koreans, should their regime collapse, would welcome South Koreans as their “liberators” and accede sovereignty.

Nationalism and outside pressure often strengthen the internal bond, he said.

“Often, it becomes us against them,” not unlike what is occurring in Iraq, said Kang, and without North Korea’s receptiveness, the situation “could become ugly very quickly.”

“As we start to think (through) these assumptions, it becomes far more complex,” he said.

Yonhap
4/14/2007

A festive mood was pervading North Korea Saturday as the birthday of the communist state’s late founder drew near, with a series of exhibitions and gatherings being held, the North’s state media reported.

Pyongyang has staged art, sports and dance events annually for the birthday of Kim Il-sung, which falls on April 15, and is also known as the Day of Sun. Kim died of heart failure on July 8 1994 at the age of 82, and his son Kim Jong-il took power afterward.

Art troupes from China, Russia, Japan, Kazakhstan, India and Indonesia staged performances in Pyongyang on Saturday, the third day of the country’s April Spring Friendship Art Festival, according to the North’s state media.

A flower exhibition for “Kimilsungia,” an orchid named after Kim, was opened Friday with the North’s and foreign officials in attendance. The exhibition will be run until Thursday.

The festive mood is expected to culminate when the North stages the pro-unification Arirang festival Sunday through May 20. It is one of the North’s major gymnastics events and is popular among both Western and South Korean visitors.

Foreign delegations also have arrived Pyongyang to celebrate Kim’s birthday, the state media reported.

An Indonesian delegation made a visit to the North’s Mansudae Assembly Hall on Friday and conveyed a present to the incumbent North Korean leader via Kim Young-dae, the North’s No. 3 leader. It also toured Mankyongdae, the birthplace of the late founder in a rural village near the North Korean capital.

A Russian delegation also paid homage to a Kim Il-sung statue at the Mansudae Assembly Hall, while a Mongolian delegation paid visits to art exhibition halls and other sites to commemorate the birthday.

Science Magazine
Vol. 316. no. 5822, p. 183
DOI: 10.1126/science.316.5822.183
Richard Stone
4/13/2007

In a dramatic new sign that North Korea is emerging from isolation, the country’s first international university has announced plans to open its doors in Pyongyang this fall.

Pyongyang University of Science and Technology (PUST) will train select North Korean graduate students in a handful of hard-science disciplines, including computer science and engineering. In addition, founders said last week, the campus will anchor a Silicon Valley-like “industrial cluster” intended to generate jobs and revenue.

One of PUST’s central missions is to train future North Korean elite. Another is evangelism. “While the skills to be taught are technical in nature, the spirit underlying this historic venture is unabashedly Christian,” its founding president, Chin Kyung Kim, notes on the university’s Web site (www.pust.net).

The nascent university is getting a warm reception from scientists involved in efforts to engage the Hermit Kingdom. “PUST is a great experiment for North-South relations,” says Dae-Hyun Chung, a physicist who retired from Lawrence Livermore National Laboratory and now works with Roots of Peace, a California nonprofit that aims to remove landmines from Korea’s demilitarized zone. To Chung, a Christian university is fitting: A century ago, Christianity was so vibrant in northern Korea, he says, that missionaries called Pyongyang “the Jerusalem of the East.”

The idea for PUST came in a surprise overture from North Korea in 2000, a few months after a landmark North-South summit. A decade earlier, Kim had established China’s first foreign university: Yanbian University of Science and Technology, in Yanji, the capital of an autonomous Korean enclave in China’s Jilin Province, just over the border from North Korea. In March 2001, the North Korean government authorized Kim and his backer, the nonprofit Northeast Asia Foundation for Education and Culture (NAFEC), headquartered in Seoul, to establish PUST in southern Pyongyang. It also granted NAFEC the right to appoint Kim as PUST president and hire faculty of any nationality, as well as a contract to use the land for 50 years.

NAFEC broke ground in June 2002 on a 1-million-square-meter plot that had belonged to the People’s Army in Pyongyang’s Nak Lak district, on the bank of the Taedong River. Construction began in earnest in April 2004. That summer, workers–a few of the 800 young soldiers on loan to the project–unearthed part of a bell tower belonging to a 19th century church dedicated to Robert Jermain Thomas, a Welsh Protestant missionary killed aboard his ship on the Taedong in 1866.

NAFEC’s fundraising faltered, however, and construction halted in fall 2004. The group intensified its Monday evening prayers and broadened its money hunt, getting critical assistance from a U.S. ally: the former president of Rice University, Malcolm Gillis, a well-connected friend of the elder George Bush and one of three co-chairs of a committee overseeing PUST’s establishment. “He made a huge difference,” says Chan-Mo Park, president of Pohang University of Science and Technology (POSTECH), another co-chair. South Korea’s unification ministry also quietly handed PUST a $1 million grant–more than it has awarded to any other North-South science cooperation project. This helped the school complete its initial $20 million construction push.

At the outset, PUST will offer master’s and Ph.D. programs in areas including computing, electronics, and agricultural engineering, as well as an MBA program. North Korea’s education ministry will propose qualified students, from which PUST will handpick the inaugural class of 150. It is now seeking 45 faculty members. Gillis and other supporters are continuing to stump for a targeted $150 million endowment to cover PUST operations, which in the first year will cost $4 million. Undergraduate programs will be added later, officials say. PUST, at full strength, aims to have 250 faculty members, 600 grad students, and 2000 undergrads.

PUST hopes to establish research links and exchanges with North Korea’s top institutions and with universities abroad. “It is a very positive sign,” says Stuart Thorson, a political scientist at Syracuse University in New York who leads a computer science collaboration between Syracuse and Kimchaek University of Technology in Pyongyang. “Key to success will be achieving on-the-ground involvement of international faculty in PUST’s teaching and research.”

Some observers remain cautious, suggesting that the North Korean military could use the project to acquire weapons technology or might simply commandeer the campus after completion. A more probable risk is that trouble in the ongoing nuclear talks could cause delays. At the moment, however, signs are auspicious. Park, who plans to teach at PUST after his 4-year POSTECH term ends in August, visited Pyongyang last month as part of a PUST delegation. “The atmosphere was friendly,” he says. “The tension was gone.” The Monday prayer group continues, just in case.

Daily NK
4/14/2007
Park Hyun Min

Changes to the North Korean Cabinet Ministry, Kim Young Il elected as the new Prime Minister, Kim Young Choon as Vice-Chairman of the National Defense Commission

At the 5th round of the 11th Supreme People’s Assembly announced on the 5th, the change in economic policies that would in future concentrate on the people’s livelihood and suspend the advancement of technological skills.

In the report, the deputy Prime Minister revealed that the major economic task for the upcoming year included light industries and agriculture, which had already been completed, and the improvement of the people’s livelihood. He said that the issue of social economic management had been discussed and that it would be resolved “our way.”

The 2007 report by the Supreme People’s Assembly proposed to, i) improve the basic standards of living in relation to agriculture and light industries, ii) enhance the manufacture of potential energy starting with the prioritizing the department into 4 divisions, iii) modernization of public economy and iv) manage sosicalistic economy through the our own.

Furthermore, foreign collaboration was proposed to further investments into advanced technology. In relation, the third phase proposal was made over a 5 year period (`08~`12) to improve technological skills such as the advancement of basic skills, high technology and software.

In contrast to last year, North Korea estimated an increase in revenue at 433.2bn won ($30.9bn, $1=141won). Last year, 5.9% were considered the public revenue, whereas this year, this figure was raised to 7.1%.

As for tax resources, national business gains tax was increased to 6.4%, cooperative organizations fund set at 4.5%, depreciation amount 9.6%, real estate fees 15.4%, and social welfare tax at 15.1%

Regarding expenses, science-technological skills among people’s economic expense increased to 60.3%, net business income is estimated to be 2% which will aid new measures to develop enterprise skills. In addition, proposals were made to increase agricultural expenses to 8.5%, light industries to 16.8%, energy, coal, metalwork and railroad to 11.9%

In relation to this, a South Korean governmental official revealed, “At this Supreme People’s Assembly, economic improvement proposal was mainly revealed without any announcement on foreign policies or sort of legislation of reform or openness.

Since last year, there have been rumors that a change in government would occur amidst the North Korean Supreme People’s Assembly. While Park Bong Joo stepped down from his position, Kim Young Il, formally in charge of transportation was elected as the new prime minister. It has been three and half years since Park Bong Joo first took his prime ministerial post at the first round of the 11th Supreme People’s Assembly in September 2003.

Former Prime Minister Park is known to have ceased his duties since last year June. He has been suspected of transferring money from the agriculture’s oil funds. At the 20th High Level Cabinet Talks in Pyongyang in February, a South Korean representative did mention that Prime Minister Park had made a welcoming speech. However, it seems that he has been ousted from his position.

Additionally, with the death of Yeon Hyung Mook in October 2005, Kim Young Choon is known to have succeeded the position of Vice Chairman as well as taking on the role of military counselor.

Regarding, the new appointments, a governmental official said that the Cabinet’s Prime Minster, Kim Young Il would aim to solve the economic issue while Kim Young Choon as the new Vice Chairman would aim to organize the structure of the ministry and strengthen the military.

While Kim Jong Il did not attend the last round of meetings, the fact that he participated in the recent meeting has also gathered much interest.

Choson Ilbo
4/12/2007

Last year a Chinese company took a 51-percent stake in Hyesan Youth Cooper Mine in Yanggang Province, North Korea. Hebei-based Luanhe Industrial Group now has the right to develop the mine for the next 15 years.

North Korea also sold a 50-year development claim to the Musan iron mines, Asia’s largest open-air mine, to China’s Tonghua Iron & Steel Group. Since 2006, North Korea has sold the rights to develop more than 10 mines to Chinese firms.

KDB Research Institute, an affiliate of Korea Development Bank, has raised concerns with a report released Wednesday that details China’s intensive investment in North Korean natural resources. According to the report, since 2002 China has invested US$13 million (US$1=W932), more than 70 percent of its total investment in North Korea, in iron, copper and molybdenum mines.

The major investors come from the three northeast provinces of Heilongjiang, Jilin and Liaoning. They have moved the focus of their investment from small-scale, commercial opportunities to strategic deals to secure energy resources, the report said.

According to the report, China’s Wukang Group bought the rights to dig the Yongdeung mine, North Korea’s largest hard coal mine, and another Chinese company invested in a North Korean project to develop an oil field in the West Sea. The North has also allowed Chinese fishermen to fish off the coast of Wonsan, a North Korean port city on the east coast, in return for 25 percent of the catch.

Since North Korea lacks funds while China suffers from a shortage of natural resources the two are forming joint development projects, said KDB Research Institute researcher Chung Eui-jun, the writer of the report.

Andrei Lankov, a North Korea expert at Kookmin University in Seoul, said in the Wall Street Journal last July that the Chinese government seems to have made a strategic decision to encourage Chinese firms to invest in North Korea as a way to maintain its influence with its long-time ally in the post-Kim Jong-il era.

Korea Times
Lee Jin-woo
4/12/2007
 
North Korea’s legislature on Wednesday elected Transport Minister Kim Yong-il as the country’s new premier, the North’s state-controlled news agency reported.

He replaces Pak Pong-ju who has been accused of embezzling some of the national budget, the report said.

According to the Korean Central News Agency (KCNA), Kim was elected as the new premier in a plenary session of the North’s Supreme People’s Assembly (SPA), a rubber-stamp legislature of the Stalinist state.

Kim, 62, rose to his position after starting his bureaucratic career as a rank-and-filer in the Ministry of Land and Marine Transport. He is known to have expert knowledge in economic affairs.

He accompanied North Korean leader Kim Jong-il twice in 2005 on trips to government facilities, and led a delegation of ministry officials to China, Cuba and Syria over the last seven years. He visited Syria in 2005 to conclude a maritime transport agreement.

After graduating from Rajin University of Marine Transport, he served in the military for nine years beginning in 1961. He has served in the minister post for more than 10 years since the early 1990s.

The SPA also tapped Kim Yong-chun, chief of general staff of the Korean People’s Army, as the vice chairman of the National Defense Commission (NDC), a position that has been vacant since the death of Yon Hyong-muk in October 2005.

The SPA, which convenes once or twice a year at irregular intervals, is headed by Kim Yong-nam, the official president of the Presidium of the SPA. He also serves as the titular head of the communist state.