Archive for August, 2010

Wednesday, August 25th, 2010

According to the Daily NK:

Kim Young Nam, North Korea’s Supreme People’s Committee Permanent Chairperson, nominally the head of state, has stated that the Workers’ Party is being returned to the forefront of state affairs, offering a further clue to the intention behind September’s Workers’ Party Delegates’ Conference.

Speaking at the “Commemorative Convention for the 50th Anniversary of the Leadership of the Military-first Revolution”, Kim told assembled officials in Pyongyang Indoor Stadium on Tuesday, “Upon the opportunity of the historical Delegates’ Conference of the Chosun Workers’ Party, we will reinforce the function of our Party, which is the headquarters of the Military-first revolution, organizer and fugleman of the victory of our people,” according to Chosun Central News Agency.

A number of experts have predicted that North Korea plans to reinforce the function and authority of the Workers’ Party through the delegates’ conference. However, this is the first time that a high North Korean official has spoken publicly on the matter.

Kim additionally emphasized, “All Party projects should be carried out in accordance with the ideology and intention of the Party, based on the line and policies of the Party and by reinforcing the leadership role of the Party in revolutionary construction.”

However, Kim was keen to stress the logical correctness of Kim Jong Il’s Military-first line. “Comrade Kim Jong Il, who has opened the prosperous era of the Workers’ Party by wisely leading military construction and revolutionary projects based on Military-first politics, by viewing military business and Party business together as the keys, has achieved great historical innovations in the construction of the strong and prosperous fatherland by advancing the Military-first achievements of the Juche idea,” he explained.

On August 25, 1960, while Kim Jong Il was studying at Kim Il Sung University, he joined his father for an on-site inspection of Ryu Kyung Su No. 105 Tank Unit. In 2005, the North Korean authorities declared that day the first day of the Military-first leadership and have organized commemorative events annually ever since. 

Read the full story here:
North Korea Speaks Out on Workers’ Party Role
Daily NK
Kim Yong Hun


Sinuiju flooded

Wednesday, August 25th, 2010

North Korea has been hit with some serious flooding this year.  First came this report from August 5. Now KCTV and Xinhua are broadcasting footage of the flooded Yalu/Amnok River.

According to KCNA:

Planes of the air force and warships of the navy of the Korean People’s Army rushed to the area of Sinuiju, North Phyongan Province, hit by sudden torrential rain and successfully conducted an emergency operation on August 21 to rescue the inhabitants who were at the crossroads of life and death.

Unprecedented downpour hit the northeastern area of China on August 19 and 20, causing flooding in rivers. This also adversely affected the northwestern area of Korea.

5,300 cubic meters of water rushed into the River Amnok per second from a river of China, causing the water level of the river to rise suddenly from 0:00 on August 21. As a result, the river swelled in a minute, leaving even Sinuiju City inundated. This paralyzed traffic and did damage to many objects.

Hardest hit by flooding were Sangdan-ri, Hadan-ri, Taji-ri, Soho-ri in Uiju County, Ojok Islet and Maksa Islet in Sinuiju City. They were completely submerged and single-story houses went under water.

The flood victims were at a loss on the roof tops of buildings and hills.

The institutions concerned took emergency measures to rescue the victims but the damage was so serious that they proved unsuccessful. Upon hearing this, General Secretary Kim Jong Il ordered KPA units to immediately launch rescue operations.

Air force units sent dozens of planes and navy units warships and various types of means and succeeded in evacuating at least 5,150 flood victims to safe areas in close touch with officials of party and power organs and people’s security organs in the flood-hit areas.

The inhabitants in the flood-ravaged areas and servicepersons who were mobilized for the rescue operations noted in excited tone that the socialist system in the DPRK is the most advantageous and benevolent one as the life and properties of people are protected by servicepersons and Kim Jong Il is the greatest father as he provided this land of bliss for the people.

And according to the Daily NK:

Faced with rising waters in the Yalu River, the North Korean authorities issued an evacuation warning at around 8 P.M. on the 20th, but most residents did not place much faith in it and stayed at home, so the number of flood victims increased when the river burst its banks at dawn on the 21st, according to a Daily NK source.

The source explained on the 22nd, “At 3 A.M. yesterday, downtown Shinuiju started flooding and houses got submerged. The day before yesterday at around 8 P.M. the authorities released a broadcast telling people to evacuate to South Shinuiju, but the majority of residents ignored it.”

He went on, “In Majeon-dong, since the sound of water was so loud at dawn, only then did people evacuate their places to an elementary school in the neighborhood which was on higher ground. Some of them could not leave, so presumably there were victims.”

He added, “I heard there might be deaths, although there has been no official report yet.”

If people also ignored the evacuation warning in other regions, there is a high possibility that damage in Sangdan-ri, Hadan-ri and Daji-ri in Shinuiju, places in which Chosun Central TV reported 100 percent of houses and farms had been flooded, might have been much more significant than in Majeon-dong.

The source explained the reason why people did not listen to the warning, “Since the middle of this month there have been a few warnings, but nothing serious happened. Therefore, people did that.”

“Cadres living in apartments were busy carrying their stuff to upper floors, but those who don’t have any property have nothing to damage, so it can’t have been that. There might have been some who stayed at home in order to keep a few domestic animals or a small amount of land,” he added.

Chosun Central News Agency (KCNA) reported on Saturday, “From 12 A.M. to 9 A.M. on the 21st, due to more than 300 mm of heavy rain falling around the Supung Dam, 100 percent of houses, official buildings and farms on the Yalu River were flooded and Sangdan-, Hadan-, Daji-ri in Shinuiju and Seoho- and Eojeok-ri in Uiju were also flooded.”

Meanwhile, another source has reported to The Daily NK that while airplanes and helicopters were rescuing trapped people, one helicopter crashed, killing the crew.

The source explained, “The helicopter was approaching Sangdan-ri alongside the Yalu River in order to rescue isolated residents, but it crashed into a rice paddy. The two pilots died.”

Although Chosun Central TV reported the fact that helicopters had been sent to the rescue project on the orders of Kim Jong Il, there was no word of the crash.

According to the source, people rescued by other helicopters were sent to Dongrim, North Pyongan Province.

The KCNA reported that some 5,000 residents were evacuated to high ground.

The clean-up has been underway since the 22nd, and will continue for three days. Shinuiju residents are taking part.


Bermudez publishes KPA Journal No. 1, Vol. 7

Monday, August 23rd, 2010

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

Click here to download the full issue (PDF).

Topics include: The KPA Mechanized Infantry Batallion, BTR-60 in KPA Service, Han-Gang Briges, P’okpoong Main Battle Tank

You can find all of the previous issues of KPA Journal here.


Chinese investment blurb

Monday, August 23rd, 2010

According to an article in the Korea Times:

Approximately 100 small Chinese companies out of 150 that have investments in North Korea are based in Jilin and Liaoning Provinces near the northeastern border with the North.

Read the full story here:
Investments in NK limit China’s policy choices
Korea Times
Kang Hyun-kyung


DPRK military stealth techniques

Monday, August 23rd, 2010

The image above comes from the Boston Globe and demonstrates the DPRK’s “stealth” tactics described below.

According to the Choson Ilbo:

The North Korean military has developed various kinds of camouflage materials like stealth paint and set up fake facilities and equipment to cheat state-of-the-art reconnaissance satellites and aircraft, a confidential field manual obtained exclusively by the Chosun Ilbo shows.

The manual was smuggled out of the North by a source through a Christian organization called Caleb Mission.

So far information about the North Korean military’s camouflage tactics trickled out only piecemeal through testimonies of North Korean defectors, but this is the first time a confidential military field manual with details has been revealed.

The manual, printed in 2005, quotes leader Kim Jong-il as saying, “As I’ve said several times, modern warfare is stealth warfare. We can say that victory or defeat will be determined by how we carry out stealth warfare.”

The 80-odd-page booklet gives detailed instructions on how to make and apply stealth paint that absorbs radar waves and build various kinds of fake facilities, such as command posts, foxholes, runways, fighter jet and naval bases, and cave strongholds.

The manual also describes how to conceal real facilities or equipment and to make military units look as though they are moving when they are not to deceive South Korean and U.S. reconnaissance.

A South Korean intelligence expert who reviewed the manual said, “I was surprised to find that the North Korean military has done more intensive and careful research into stealth tactics than we thought. This is a useful piece of information that will be of great help to our military stepping up preparedness against the North.”

And according to the AFP:

North Korea has developed camouflage materials such as stealth paint to hide its warships, tanks or fighter jets from foreign reconnaissance satellites and aircraft, reports said Monday.

A confidential field manual used by the communist North’s military showed the isolated regime has also built a network of foxholes and caves, the Chosun Ilbo newspaper reported.

The newspaper said the manual quoted North Korean leader Kim Jong-Il as saying: “Modern warfare is stealth warfare. We can say that victory or defeat will be determined by how we carry out stealth warfare.”

The handbook, printed in 2005, was smuggled out of the North by a source through Caleb Mission, a South Korean Christian organisation.

It gives detailed instructions on how to make and apply the stealth paint, which absorbs radar waves, Chosun Ilbo said.

The South’s defence ministry confirmed the North’s military had used the manual for years.

“We have already acquired a copy of the manual and are fully aware of the North’s tactics,” a ministry spokesman told AFP, declining to give details.

The manual describes how to conceal facilities or equipment and how to make military units look as though they are moving when they are not, to deceive South Korean and US reconnaissance.

Chosun Ilbo quoted an unnamed intelligence expert as saying he was surprised to find that the North’s military has done “more intensive and careful research into stealth tactics than we thought”.

Yonhap news agency carried a similar report.

The handbook describes concealing long-range artillery equipment by applying radar-reflective materials, it said.

The North’s military was also ordered to pave fake aircraft runways to deceive foreign prying eyes, Yonhap said.

Read the full stories here:
N.Korea’s Stealth Warfare Manual Revealed
Choson Ilbo

N.Korea develops camouflage tactics


DPRK unveils “Storm Tiger” tank

Sunday, August 22nd, 2010

According to Strategy Page:

North Korean TV recently showed video of a new tank, called the Storm Tiger. South Korean officials call it the M2002, after the year they first became aware of it. The new North Korean tank appears to be based on the Russian T-62, an unsuccessful design that North Korea produced under license. The M2002/Storm Tiger was apparently developed in the 1990s, based on 1980s technology. It appears to be a 40 ton vehicle, a little longer than the T-62 and may have some modern electronics (beyond a laser range finder.) The North Koreans describe the vehicle as “modern”, but even if they have modern fire control (which China or Russia won’t give away and which North Korea cannot really afford to buy), they are several decades behind Western (and South Korean) tank technology. North Korea has about 4,000 tanks, most of them based on 1950s and 60s technology. About half of them are Russian T-62s (or North Korea variants of that design). Against modern tanks, the North Korea vehicles perform more as targets than adversaries.

North Korea imported 500 T-62s in the 1970s. Then, in the 1980s, North Korea produced 1,200 lighter and modified versions of the T-62 (as the Chonmaho). There were five different models, with later ones having the ERA (Explosive Reactive Armor) and laser range finder.

Most Chonmaho tanks have since died of old age and lack of spare parts, with about 500 still available for service. This vehicle weighed 40 tons, had a four man crew, a 115mm gun (plus a 14.5mm and 7.62mm machine-guns) and added ERA. Top speed was 50 kilometers an hour and range on fuel carried was 450 kilometers. The original T-62 was an improved T-55, weighed 41.5 tons, entered service in 1961. Over 22,000 were eventually built, when production ended in 1975. There have been many improvements since. It is a simple tank, and over a thousand remain in service around the world. Russian T-62s most recently saw combat two years ago in Georgia. The T-62 can trace its design back to World War II. That’s because the T-54, which the T-62 evolved from (via the T-55), was developed in 1944. The basis for the T-54 was the T-44, an advanced model of the legendary T-34. The T-62, however, was the end of the line, in more ways than one.


Pak Pong-ju rehabilitated

Saturday, August 21st, 2010

According to Yonhap:

North Korea’s former Premier Pak Pong-ju appears to have returned to power with the Workers’ Party, more than three years after he was ousted due to his economic reform drive, according to a Pyongyang broadcast report on Saturday.

The North’s Korean Central Broadcasting Station introduced Pak as the “first deputy director of the Central Committee of the Workers’ Party of Korea,” reporting on the 50th foundation ceremony of Pyongyang’s flagship Okryu Restaurant held Friday with a number of senior officials and workers.

There is no other known figure with the same name among the North Korean power-holding elite.

Pak, a long-time industry technocrat and pragmatist, was named premier of the North’s Cabinet in September 2003. He spearheaded the North’s so-called July 1st Economic Measure reform drive toward market economy, which aimed to give more autonomy to state firms and gradually reduce state rationing of food and daily necessities.

But his strong initiative triggered a backlash from the party and the military that resulted in his dismissal. Pak was suspended from duty in June 2006 on charges of fund apprehension and was fired in April the following year. Kim Yong-il, then land and marine transport minister, replaced him.

Pak is believed to have been demoted to a managerial post at a clothing factory outside Pyongyang.

Cho Myung-chul, a senior researcher at the Korea Institute for International Economic Policy who has defected from North Korea, viewed Pak’s reinstatement as a signal of a shifting North Korean economic policy toward pragmatism, following its failed currency reform last year.

“Pak is an emblematic figure of the July 1st Economic Measure that promoted pragmatism. His reinstatement could be connected with an economic policy shift back to pragmatism after the anti-market currency reform failed.”

In a bid to curb the burgeoning merchant class and strengthen its socialist system, North Korea implemented a surprise currency reform in November, knocking two zeros off its denominations. But the move backfired, worsening food shortages and triggering social unrest.

Apparently taking responsibility for the botched reform, Premier Kim Yong-il was replaced by Choe Yong-rim in June.

The broadcast report on Saturday did not specify which department of the Workers’ Party Pak joined, but it is likely that he was posted to the light industry department, considering the ceremony involving a restaurant and the fact that he was the department’s first deputy director in 1993.

Pak is believed to be a close confidante to Jang Song-thaek, vice chairman of the National Defense Commission and brother-in-law of North Korean leader Kim Jong-il. Jang is seen as the central figure in grooming Kim’s third and youngest son, Jong-un, as the next leader.

Japan’s Mainichi Shimbun reported on Aug. 15, quoting multiple sources, that Pak and about 20 other figures close to Jang had been reinstated within the past two years. The report also said Pak has risen to the second highest spot in the party’s light industry department, which is headed by Kim Kyong-hui, Kim Jong-il’s sister and Jang’s wife.

According to the New York Times:

He is the latest among senior North Korean officials whose sudden banishment and equally unexpected reinstatement have sparked outside speculation about Mr. Kim’s intentions. Mr. Pak appeared to have fallen from Mr. Kim’s favor when he was fired from the premiership in 2007 and sent to work as a factory manager in a provincial town.

“His reinstatement could signal the return of pragmatists and reformists,” said Cheong Seong-chang, a North Korea analyst in the Sejong Institute south of Seoul. “We may be able to see him push the economic reform and openness he had once championed.”

Analysts in Seoul say that few North Korean officials wield much individual influence in Mr. Kim’s government. But they say that they can infer Mr. Kim’s plans from the way he punishes and rewards officials identified with various policy approaches.

“Pak’s reinstatement indicates that North Korea is shifting back to market reforms, even if grudgingly, after its botched attempt to re-enforce state control on the economy,” said Baek Seung-joo, the head of North Korea research at the government-financed Korea Institute for Defense Analyses in Seoul.

Mr. Pak, a lifetime technocrat, was best known as the architect of “Measures to Improve Economic Management Order.” Issued on July 1, 2002, they indirectly acknowledged the failure of the North’s ration system by instructing factories, collective farms and other economic units to provide their own daily necessities and give incentives for workers.

In September 2003 Mr. Pak was made prime minister, a post in charge of carrying out economic policies.

His reforms were necessitated by the collapse of the centrally planned economy after a famine in the mid-1990s. But they also coincided with — and fueled — the spread of private markets, which quickly emerged as a key source of food and other necessities for North Koreans.

But Mr. Pak’s reform programs irked the government’s old guard, especially in the hard-line military, which had grabbed the lion’s share in trade under the old system. The markets facilitated the influx of DVDs and other smuggled goods the government considered a capitalist threat.

Around 2005, North Korea began controlling markets. Its attempt to reinforce state control on the economy peaked late last year when it replaced its banknotes with a new currency, shut down markets and ordered people to buy goods only from state-run stores. The currency reform was aimed at stifling the markets by drastically reducing traders’ personal wealth in the old currency.

The moves quickly backfired. Inflation surged as traders hoarded their goods and government stores failed to meet demand. Sporadic protests were reported. Earlier this year, Pak Nam-gi, head of finance and planning who led the failed currency reform, was executed, according to South Korean news reports. North Korean markets began coming back to life, according to recent defectors.

Pak Pong-ju, the former prime minister, returns as North Korea prepares for a party caucus early next month. Officials and analysts in Seoul say they will monitor the meeting for changes in the cabinet and party leadership that might provide clues to Mr. Kim’s plans to hand over power to his third son, Kim Jong-un, who is in his late 20s.

Mr. Pak’s reinstatement adds to the growing influence of Jang Song-taek, Mr. Kim’s brother-in-law, said Mr. Baek, the researcher.

In June, Mr. Kim presided over a session of the rubber-stamp Supreme People’s Assembly where Mr. Jang, a potential caretaker for his son, was elevated to the No. 2 post in the ruling hierarchy. In the same meeting, Mr. Pak’s successor as prime minister, Kim Yong-il, who reportedly made a rare apology in February for the botched currency reform, was fired.

Mr. Pak, as first deputy director, is believed to report directly to Kim Kyong-hee, Mr. Kim’s younger sister and Mr. Jang’s wife, who works as party director in charge of the North’s light industries, Mr. Cheong said.

Read the full stories here:
N. Korean ex-PM Pak Pong-ju appears to be back in power

North Korea Reinstates Market-Oriented Official
New York Times
Choe Sang-hun


Daily NK on the life of a pilot

Friday, August 20th, 2010

Story 2: The Inauspicious Life of Pilots
Daily NK
Yoo Gwan Hee

…In North Korea, pilots receive top class treatment alongside submariners and the missile corps. They live above the law in many ways. For instance, if a pilot murders someone in society and then returns to their unit, M.P.s cannot arrest them.

While the top choice of middle school graduates is to work in the No.5 Department of the Central Committee of the Party, that which oversees every aspect of Kim Jong Il’s life, pilot is a popular second choice. The primary condition for selection is family background.

Until the 1980s, offspring of normal workers could be selected if they had a good academic record and enough physical strength. However, any person whose family had committed a political crime was excluded. Also, if a family member had sided with South Korea or went missing during the Korean War, they would be excluded, too.

Until this period, the occupation of pilot was deemed to be a dangerous job and children of the elite did not consider it as a career. However, as the economic crisis began in the 1990s, this view changed. Many of the children of elite officials now choose to become pilots.

Currently, pilots still receive ‘special treatment’ in North Korea; however, it is not particularly special any more. Compared to Party officials, who make money in business, the feeling of deprivation which pilots feel has increased a lot.

Pilots are still bound to the state for their living, while the elite increase their wealth and authority through foreign currency earning and market business.

Until the early 1990s, “No. 4 supplies,” which are given to pilots, were free and extras were sold to their families if necessary. Also, since North Korea was worried about the pilots’ mental states, they took care of family issues and distributed supplies to their families once a month.

Even during “The March of Tribulation” in the mid-1990s, normal food distribution was given to families of pilots. However, as the atmosphere in society changed, their stress is increasing. Children of pilots are becoming a target in schools; teachers demand much of pilots’ children first.

Air Force Units receive a relatively good coal supply, however, since the absolute quantity is still lacking, they need to prepare firewood on their own, too. Until the early 1990s, if one or two packs of cigarette, soybean oil, and beer were given to workers on a farm in the surrounding area or a forest ranger, firewood might come in return. However, the times have changed.

Wives of pilots also have to enter the battle. Wives sell distributed supplies to wholesalers or sell them directly in farming villages in the surrounding area.

However, even in the situation where a lot of workers receive not even a single grain of rice from the nation, the supply for pilots is still special. However, since pilots do not have the authority to use it for business and bribery like other officials; their practical standard of living is not very different from a person who sells home appliances in the market.

The biggest stress which North Korean pilots feel is their concern for their old age. Currently in North Korean society, the treatment you receive in active duty and that of the retired are very different.

Until the 1990s, North Korea praised pilots as a “treasure of the nation” and promised them lifelong care. But after 2000, the retired were completely abandoned. The national pension is worth less than a price of one kilogram of corn.

Usually in other countries, the rising generation has more discontent toward the government compared to the mature group, but in North Korea it is the opposite and this is the reason for the phenomenon. When retired, they need to farm or do business in the market, but retirees are short of market experience and strength. Current pilots, observing the lives of their former comrades, cannot feel comfortable about it.

Now we are in an era where even a pilot receiving “top” level treatment from North Korea attempts an escape, and this is not surprising anymore.

Story 1: Pilot Privileges Fade into History
Daily NK
Yoo Gwan Hee

…[S]pecial employees, such as air force pilots or submarine captains, belong to a class which is treated as the most exceptional in North Korea (notwithstanding officials or members of elite organizations). Before the start of the 21st century, pilots enjoyed considerable privileges. The North Korean state paid special attention to cultivating pilots, showering them with preferential treatment. Goods provided to pilots and their family members were entirely free and a separate compensation-based ration system applied to the whole group.

So, in the North, the closest thing to a “summer vacation” as enjoyed by the people of the free world would inevitably be the “recreation” of pilots. In North Korea, pilots and their family members were permitted vacation once a year and once every two years, respectively. Submarine captains were entitled to similar terms.

Some of the recreation centers used by pilots and their families include the “Galma Recreation Center” in Wonsan, the “Sokhu Recreation Center” in South Hamkyung Province, and the “Jooeul Recreation Center,” among others. All are located near the ocean, and are unparalleled in terms of scenery. In the case of the Galma Recreation Center, there are two buildings housing bedrooms for the visitors standing side-by-side in a shady area, while a separate dining hall and indoor gymnasium can also be found.

Usually, three to four singles and four to five married households from one unit (regiment level) could use the recreation center at any one time.

Single and family rooms are separate. In the former, there are four single beds and in the latter, two double beds. According to regulations, only two children per family are permitted; those who need to bring three or four children have to work out an arrangement with the management office.

In the centers, there is no designated work, but meals and sleeping times must be strictly kept. Breakfast begins at 7:30 A.M., lunch at 12:30 P.M. and dinner at 6 P.M.; naps can only be taken between 2 and 4 P.M. Bedtime is fixed at 10 P.M. Guests have to strictly adhere to these times.

Besides these restrictions, the visitors have the freedom to spend time as they want. Some people play Chinese chess (janggi) and others cards while the rest may choose to head for the beach.

The menus for the week are displayed next to the windows from which the food is served. Soup and bowls of rice are distributed per person and up to four side dishes are distributed to each table (a table consists of two groups).

Until the early 1990s, the most popular food among those served at the recreation centers was bread made in the former Soviet Union. Every morning, a Russian bread called “Khleb,” on which butter or powdered sugar could be put, was provided. The fruit which was given to each person at lunchtime was also popular with the visitors.

The period of recreation enjoyed by pilots was usually 20 days. However, some families, rather than using up all of their days, left the recreation centers in a hurry to visit parents or relatives in their hometowns. Usually, an additional 15 days of vacation was added unto the 20 recreation days, during which many people take trips to their hometowns.

Some diligent wives would continue to work even while in the centers. Surrounding the Galma Recreation Center, located on the shore of the East Sea, or the Sokhu Recreation Center are heaps of seaweed which are washed ashore with the tides. The wives, after washing the seaweed in the ocean water, dried it on the seashore.

Two or three 50-kg bags are barely sufficient for that much dried seaweed. Wives sent these to their in-laws or families with satisfaction.

However, such extravagant levels of recreation for pilots began to disappear in the mid-1990s with the March of Tribulation. Now, even when the state issues recreation permits, people tend to take off for hometowns, not to recreation centers.

Further, with the decline in the national esteem of pilots in recent years and due to the fact that the items which are provided as rations tend to be sold in the markets for additional income, the luxurious lives of the special class are becoming less impressive all the time. Recently, some pilots have even been selling their cigarette rations (one month’s worth) in the jangmadang.

Corruption also afflicts pilots to no small extent. Schools request additional money and products from the children of pilots, due to the popular image of affluence they command.

The sense of deprivation among pilots and family members, who are supposedly among the most revered people in North Korea, has been growing. Their status has indeed decreased over the years; one cannot ignore the fact that the standard of living of private merchants or foreign currency earners has now outpaced that of pilots, who are dangerously dependent on rations for their survival.


First half of 2010 sees record inter-Korean trade

Thursday, August 19th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No 10-08-19-1

Despite the ongoing inter-Korean tensions, and the stand-off over the Cheonan incident in particular, the first two quarters of 2010 saw an all-time record of 980 million USD-worth of inter-Korean exchange. However, with the South Korean government ceasing all inter-Korean trade outside of the Kaesong Industrial Complex in reaction to the investigation results finding North Korea responsible for the sinking of the South Korean naval corvette Cheonan, cross-border trade between the North and South has fallen and is expected to remain approximately 30 percent lower during the second half of the year.

According to South Korean customs officials, inter-Korean trade in the first half of the year was worth 983.23 million USD, with ROK imports worth 430.48 million USD and exports worth 552.75 million USD; a 122.27 million USD trade surplus. This is a 52.4 percent rise over last year’s first two quarters of trade, worth 645 million USD. In the first six months of 2009, South Korea exported 259.91 million USD (66%)-worth of product, and imported 385.1 million USD (44%) in goods. This year’s trade volume was nearly 100 million USD higher than the previous record, set in 2008, of 884.97 million USD. It was also around six times more than the 161.63 million USD recorded in 1999, when inter-Korean trade first became significant.

In 1999, North-South trade totaled 328.65 million USD. Despite rocky inter-Korean relations at the time, cross-border trade continued to grow, and with the expansion of the Kaesong Industrial Complex and other projects, first topped one billion USD in 2005, squeezing above the marker at 1.08872 billion USD. This growth continued in the latter half of the decade, hitting nearly 1.38 billion USD in 2006, 1.795 billion USD in 2007, and 1.82 billion USD in 2008. Repercussions from the North’s second nuclear test in 2009 caused trade to fall off to 1.666 billion USD in 2009.

On May 24, the South Korean government announced that all inter-Korean trade outside of the Kaesong Industrial Complex would be halted due to North Korea’s sinking of the Cheonan. If this trade ban continues, cross-border trade during the second half of the year is expected to be down 30 percent. The inter-Korean project in Kaesong makes up 70 percent of inter-Korean trade, so that other individual projects add up to only about one third. It is the suspension of these projects that is lowering North-South exchanges by 30 percent.

Actually, there was a decline in trade during the first six months of the year. In June, exports totaled 56.88 million USD, while imports were worth 66.18 million USD (total: 123.06 USD). This is 21 percent (33.31 million USD) less than in May. Exports were down 4 percent and imports dropped by 32 percent. Compared to trade prior to the ROK government’s measures, the trade of electric and electronic goods, transportation, and other capital goods actually raised from 19.31 million USD to 21.21 million USD, while mined goods and other consumables dropped from 76.81 million USD to 36.86 million USD.


Sinuiju Markets bustling

Thursday, August 19th, 2010

According to the Choson Ilbo:

North Korea’s markets appear to be coming to life again after a botched currency reform late last year laid waste to them. Footage obtained by the Chosun Ilbo’s Northeast Asia Research Institute from a North Korean source on Wednesday shows the Chaeha market in the border town of Sinuiju early this month bustling with trade. “The sprawling Chaeha market was set up in 2003 and is located in a wealthy neighborhood along the trade route with China,” the source said.

Images taken in March of a market in Onsong released by the Chosun Ilbo in April showed most of the stalls empty, but the market in Sinuiju is now overflowing with sundries, clothes, hardware, fruits and food.

Lack of State Control

The market is bustling with traders and customers. North Korean security agents used to patrol the markets before the currency reform, but none are to be seen in the video. The only semblance of state control is an official wearing an armband that reads “administrator” walking quietly past the vendors.

According to sources in North Korea, markets in the country were practically deserted until May, but the situation began to change in June. Now business is booming. Sources say the authorities have virtually stopped trying to control the markets after former premier Kim Yong-il apologized for the failed currency reform and Park Nam-gi, the former director of the North Korean Workers Party’s Planning and Finance Department, was executed.

North Koreans apparently protested vehemently when the government failed to provide food following the currency debacle and demanded they be allowed to buy and sell goods in the markets. These days, the traders apparently hurl abuse at any security agents attempting to crack down. A South Korean intelligence source said, “It looks like North Korean authorities have given up their fight against the markets again.”

Clandestine S.Korean Products

Chinese products stacked on the shelves range from plastic basins, porcelain dishes and thermos bottles to cosmetics, electric fans, rice cookers and even motorcycle helmets.

But the scene is quite different behind the stalls. The source who provided the footage said, “Vendors openly sell Chinese products, but they sell South Korean goods under the table.” “Cuckoo rice cookers, Samsung Anycall mobile phones and LG TV sets are very popular,” the source said. “South Korean clothes are brought in with their labels removed, but wealthier people prefer South Korean clothes over Chinese ones.”

The source said a large market which sells only South Korean products has also formed in the Chinese city of Dandong just across the Apnok (or Yalu) River.

The situation is apparently the same in other North Korean markets. One North Korean defector who used to sell goods at an open-air market in North Hamgyong Province, said, “We display Chinese cosmetics but tell customers we also have South Korean ones. When a customer wants South Korean cosmetics, we take them out from under the table and sell them in the backroom.”

The traders sell South Korean products because they fetch a handsome profit. “Chinese products usually have a set price tag and consumers try to haggle, but South Korean products go for a premium and there’s no haggling over prices, because they are considered top-notch products,” the source said.

South Korean DVDs and music CDs are also in high demand. North Korean movies and CDs, are on display, but the latest South Korean soap operas and American action movies are freely available under the table, according to the defector.

I am glad to see that market life in Sinuiju is bustling, but I do not believe this demonstrates how market activity has recovered in places like Onsong.  Sinuiju handles the bulk of the China/DPRK trade and wholesalers from across the country go there to do business.  I would like to see some current footage of market activity in Onsong and other “remote” places (i.e not Phyongsong, Hamhung, Chongjin, or Sinuiju) to have a better idea of how conditions have bounced back.

I believe this is the location of the Chaeha Market, but I am only guessing.  If you have a better idea, please let me know.

Read the full story here:
Footage Shows N.Korean Markets Bustling Again
Choson Ilbo