China building new railway lines to DPRK border

According to the Wall Street Journal:

On a vast construction site outside this northeastern Chinese city, engineers are working around the clock on a project that could transform the economic—and geopolitical—dynamics of the region: a 223-mile, high-speed rail link to the North Korean border.

The $6.3 billion project is one of three planned high-speed railways designed to bring North Korea closer into China’s economic orbit, even as Beijing supports sanctions aimed at Pyongyang. China is also sinking millions of dollars into new highways and bridges in the area, and the first cross-border power cable.

China’s vision for closer economic integration with North Korea runs counter to a U.S. strategy aimed at piling pressure on Pyongyang to abandon its nuclear-weapons program and refrain from further threats.

Analysts say that helps explain why there is little prospect of a breakthrough on North Korea when President Barack Obama meets China’s new leader, Xi Jinping, in California this week, though U.S. officials say the subject will be high on the agenda.

Beijing’s rhetoric conveys exasperation with the neighbor it continues to prop up. Some U.S. officials say China is showing signs of willingness to use its clout to restrain Pyongyang.

Facts on the ground suggest the opposite: China is pressing ahead with ambitious plans to expand trade, investment and infrastructure around its North Korean border as part of a strategy to prop up a buffer against U.S. forces in Asia, and to provide incentives to Pyongyang to maintain stability and, ultimately, launch Chinese-style market reforms.

When it is finished in 2016, the railway under construction near Yanji will cut the journey between the Chinese city of Jilin and the remote border town of Hunchun to just over two hours from almost eight, according to the project’s plans. By 2020, it is expected to boost Hunchun’s population to over one million from 200,000 today thanks to an influx of migrants seeking to profit from border trade.

Work is also continuing on a rail link between the Chinese cities of Shenyang and Dandong—the busiest border crossing—and another connecting Dandong to the Chinese port of Dalian is also due to be finished this year, according to state media. A new $356 million bridge over the border at Dandong is also proceeding as planned.

China’s strategy is also reflected in its customs figures, which show that its oil exports—the main source of North Korea’s energy—rose 8.2% in March and remained steady in April following a decline to zero in February that diplomats and analysts say was due to cyclical seasonal factors.

Several companies in Yanji and other border towns said they had reduced business with North Korea during the recent crisis—some of their own volition, others because they were told to by local authorities—but many said they were now returning to normal.

Party insiders say Chinese leaders are indeed frustrated with Pyongyang, and have shown that by backing new U.N. sanctions, tightening rules on cross-border banking, and allowing an unusual level of criticism of North Korea in Chinese state media since it conducted a third nuclear test in February.

But even as it takes such steps—which analysts say will have little effect on North Korea’s nuclear program—China is doubling down on a strategy it now considers more necessary to offset the U.S. pivot toward Asia. It is based on hopes it can plug North Korea into its infrastructure network and gradually integrate it as a source of mineral resources and cheap labor and a transport hub for exports, Chinese analysts say.

It also sends a clear signal that China doesn’t want to see a complete collapse of the North Korean economy, which most analysts and officials have long assumed would lead to reunification with the U.S.-backed South.

“The Chinese are clearly sending messages to North Korea and they’ve been putting up less of a fight on North Korea’s behalf, but the preference still is to do big-ticket economic cooperation,” said John Delury, an expert on China and North Korea at Yonsei University in Seoul. “From an American government point of view, that’s in contradiction to the main strategy.”

The U.S. would welcome greater economic openness in North Korea, but fears that without stringent conditions attached, Chinese business links with Pyongyang only prop up the regime and encourage it to develop nuclear arms.

U.S. officials said they believed Beijing has been taking stricter measures against Pyongyang since February.

Still, many U.S. lawmakers and analysts are skeptical.

At the construction site outside Yanji, workers Monday said they had resumed work last month after a winter break. “We build things quickly in China,” said one. “Ten years ago there was nothing here. In a few years, this will be finished.”

The World Bank, which partly funded the railway, confirmed it wasn’t affected by the recent crisis. Binyam Reja, transport-sector coordinator for the bank in China, said it could be a “launchpad” for cross-border trade, though it was designed primarily to facilitate migration and urbanization in China’s far northeast, and wouldn’t carry freight.

In China’s eyes, however, the three high-speed rail links are an integral part of a strategy that is explicitly linked to North Korea.

After North Korea tested its first nuclear weapon in 2006, China protested publicly. But after the second test in 2009, China shifted tack, promising to increase aid, investment and trade if Pyongyang opened up its economy and returned to multilateral talks.

Beijing’s strategy has had little effect on North Korean policy. But it has transformed the Chinese side of the border and swollen the number of North Koreans engaging in border trade.

The strategy is also intertwined with China’s plan to promote development in its northeast by establishing road and rail-transport corridors to Mongolia, Russia and North Korea, and giving Jilin province access to the sea via the North Korean port of Rason, which is in a special economic zone.

Jilin is of particular concern because of its large ethnic Korean population, which Beijing fears could come under the influence of a united Korea, run by Seoul, if Pyongyang were to collapse.

China’s State Council, or cabinet, approved that plan in 2009 and has set a target of 19% average annual gross-domestic-product growth until 2020, according to government research reports on the project. Jilin’s government said in March it planned to increase trade with Russia and North Korea by 13% annually in the same period.

Key to the plan is Rason port, which Chinese experts say will allow companies in northeastern China to export coal and agricultural products to Japan, South Korea and southern China several days faster than it currently takes to transport them via the already overloaded Chinese ports of Dandong or Dalian. Chinese companies have leased two piers at Rason, and two more at another North Korean port, Chongjin.

“We hope to jointly promote completion of the development of Rason port, and construction of the harbor business district, and expand cooperation in finance, property and other wider areas,” Bayin Chaolu, Jilin’s governor, was quoted as saying in April in the Jilin Daily, the local government newspaper.

Another local newspaper quoted officials in May saying they would speed plans to connect Hunchun to North Korea by railway.

Hong Lei, a China Foreign Ministry spokesman, didn’t respond directly to a question this week about whether China was proceeding with plans to develop trade around the border. He repeated China’s call for peace on the Korean peninsula, and a return to “six-party” talks between China, Japan, Russia, the U.S. and North and South Korea.

Several other national and local government officials declined to comment. But Chinese experts who have studied the plans, and advised the government on them, said they had been unaffected by the latest crisis, and in some areas, had accelerated.

“We’re pushing it forward even faster,” said Professor Zhang Qi of the China Development Research Institute, which has studied the plans. “Our hope is to encourage North Korea to begin the process of reform and opening up.”

He said progress had been slow in recent years, partly because North Korea remains wary of opening its economy too fast, and partly because of the repeated political crises on the peninsula. But the first tarmac road between Hunchun and Rason was completed last year. It cut the journey time from about three hours to just 45 minutes, according to one person who has traveled on it recently.

China has also approved a plan to build a 61-mile transmission cable connecting Rason to China’s state electricity grid in Hunchun, according to a statement from the local government in March. That will be the first time China’s state grid has provided power directly to a foreign country, according to state media reports and Chinese experts.

Chinese analysts also say the plan has a powerful political patron in Sun Zhengcai, the former provincial party chief of Jilin who was promoted to the Politburo—the party’s top 25 leaders—in November and is considered a front-runner for a seat on the narrower Politburo Standing Committee in 2017 or 2022.

Mr. Sun, who was appointed last year as party chief of the western city of Chongqing, was among a small group of Chinese leaders who met Choe Ryong-hae, vice chairman of North Korea’s top military body, when he visited Beijing last month, according to diplomats and Chinese experts on Korean affairs.

Those people say it remains unclear whether Mr. Kim will be any more likely than his father to embrace Chinese style reforms, but they are encouraged so far by his uncle and key adviser, Gen. Jang Sung-taek.

Gen. Jang visited China in August as head of a North Korean delegation to discuss economic cooperation with China, according to Chinese and North Korean state media reports. During his visit, he hosted a business conference in Beijing to attract more Chinese investment. The same month, China announced the establishment of a 3 billion yuan ($490 million) fund to invest in North Korea.

China Overseas Investment Co., which runs the fund, posted details on its website in March of 20 North Korean projects that are seeking Chinese investment, including 17 mining concerns, and company officials are expected to travel to North Korea shortly to visit the sites, according to a person familiar with the fund.

Interest among Chinese firms is lackluster and mostly confined to businesses with government links in the northeast, according to Chinese experts. Chinese companies have often struggled to make money there because of the absence of any legal framework or business-oriented policies. Many complain of being defrauded.

Chinese businesses are also conscious that repeated attempts to establish special economic zones in North Korea since 1991 have foundered because of a lack of policy support in China and North Korea.

“This time it is different because the plans have the direct back of the central government in China,” said Sunny Seong-hyon Lee, who researches China’s links with North Korea and is a nonresident fellow of the Pacific Forum CSIS, a Hawaii-based think tank.

“North Korea’s behavior doesn’t make any difference to China’s overall strategy. What matters is what the U.S. does in the Asia Pacific.”

Read the full story here:
China Builds Up Its Links to North Korea
Wall Street Journal
Jeremy Page


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