Archive for February, 2021

Continuity and change in North Korea-China relations

Tuesday, February 23rd, 2021

By: Benjamin Katzeff Silberstein

The recent appointment of Ri Ryong Nam as North Korea’s ambassador to China hints at ambitions for greater economic exchange with China, as reported here. As Ri has a strong background in institutions in North Korea related to foreign trade, not least as the country’s trade minister and, later, vice premier in the country’s cabinet.

Above all, the appointment of Ri is interesting as a sign of continuity rather than change in North Korea’s external economic relations. At the moment, cross-border trade is in its deepest lull in many, many years, as a result of the North Korean government’s self-imposed border shutdown to protect against Covid-19. This border shutdown came on top of already harsh and heavy sanctions.

But this border shutdown, like other measures around the world related to Covid-19, has an expiration date. There’s been rife speculation that the border may reopen soon. And when it does, business will likely, at some point, return to the old normal of China being North Korea’s only meaningful source of economic exchange. The appointment of Ri is one data point to suggest this, but there are many other data points that show an increasingly close relationship between China and North Korea since 2018, after a lull in the preceding years of frequent North Korean missile tests and other destabilizing action. For example, North Korea and China and started expanding 12 of its 13 road or rail crossings only in 2020, despite the pandemic.

While all this may only amount to business as usual, it is interesting and noteworthy for several reasons. For one, North Korea’s previous five-year economic strategy, launched in 2016 and subsequently abandoned, reportedly sought trade diversification away from China as one of its main objectives. North Korean publications have long lamented overt dependence on one single country for foreign trade, noting that it easily translates to political dependance as well.

At the same time, North Korea’s trade dependence on China has actually increased over the past few years. Xi Jinping has long since promised Kim Jong-un that China would fund cross-border infrastructure refurbishment and special economic zones along the border. For all the talk of the potential for economic exchange between North and South Korea back in the heyday of inter-Korean diplomacy between Moon and Kim, the fact remains that if any party is likely to expand its economic ties and influence in North Korea, it’s China.

So the recent appointment of Ri as ambassador to China should be seen as a sign of continuity, not change. Given the dire state of the economy, and the economic policy retrenchment drive as of late, North Korean policymakers are likely to stay cautious and safe in economic measures for some time to come. That is precisely the sort of move that strengthening ties and trade with China would be.

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North Korean government continues state control push

Tuesday, February 23rd, 2021

By Benjamin Katzeff Silberstein

I’m not able to find the original article online at the moment, but Yonhap recaps an article from yesterday’s Rodong Sinmun stressing the importance of respecting government officials in the economic sector. This sounds like a fairly clear message to actors within the economy who might cause complications as plans for increased state control over the economy are implemented in practice: 

“We must respect economic officials in the administration and establish an orderly administrative system … so that administrative orders can be delivered down and accurately implemented without hesitation,” the Rodong Sinmun, the official newspaper of the ruling Workers’ Party, said in an editorial.

“The performance of this year’s goals depends heavily on how economic officials organize and carry out their work,” the paper added.

The paper also called on party officials to play the role of a “rudder” in economic projects, while urging them to strive to “possess expertise” in economics and technology.

North Korean state media have stressed the central role of the Cabinet in achieving the North’s economic goals since the recent party congress.

(Source: “N.K. paper stresses ‘respect for economic officials’ to achieve new objectives,” Yonhap News, February 22nd, 2021.)

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North Korean electricity supply and the coal mystery

Wednesday, February 17th, 2021

By: Benjamin Katzeff Silberstein

Kim Jong-un recently complained that North Korea’s electricity production is too low, and that goals and targets in the sector aren’t ambitious enough. On the face of it, this is puzzling. At least in the early days of “maximum pressure”, electricity supply was reportedly increasing and becoming cheaper. With less coal to export, more could be used (for cheaper) inside the country in coal-powered electrical power plants.

It seems, however, that a lack of spare parts and equipment for the country’s power plants is a major part of the problem. Moreover, the government is having a difficult time charging for electricity, since people tamper with the outdated watt-meters in their homes. Daily NK:

North Korea has apparently continued to illegally export coal even since 2017, when UN Security Council Resolution 2371 placed a complete ban on exports of North Korean coal. However, export totals have reportedly fallen compared to what they were prior to the sanctions.

Because of this, the authorities are calling for the use of “idle” coal in electricity production. However, even if they boost supplies of coal, actually increasing electricity production commensurate with that increase in supply will not be easy due to obsolete power generating equipment.

Acknowledging this problem, the authorities have also reportedly included in their electricity policy an order for the Cabinet to take responsibility for outdated equipment at the nation’s thermoelectric and hydroelectric power stations and immediately repair it.

Given that the party has issued an order to repair the equipment as quickly as possible, work on the repairs will likely begin. However, in the current situation with the border closed, the source told Daily NK it is uncertain whether North Korea can domestically produce or import the equipment it needs.

Moreover, it appears the authorities will strengthen the Cabinet’s monitoring of electricity production numbers. This is because the policy included a call for the Cabinet to start receiving quarterly reports on total electricity production – calculated based on total distribution by province.

(Source: Jang Seul Gi, “North Korean authorities issue new policy for electricity generation,” Daily NK, February 16th, 2021.)

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The economy in the Central Committee Plenum (February 2021)

Tuesday, February 16th, 2021

By: Benjamin Katzeff Silberstein

During the recent (2nd) plenary meeting of the Korean Worker’s Party Central Committee, several remarks were made that focus on the economy. Most seemed to follow the statements during the Party Congress, both in tone and focus. Emphasizing the role of legal measures seems to be a way to regularize and formalize the orders set out at the congress. Legal supervision, after all, is something continuously ongoing, unlike rule by decree. It’s unclear what “irrational elements” means in the KCNA summary, but my sense is that it may be about semi-legal and highly dubious (from the state’s point of view) practices of essentially private entities partnering with and using the bureaucratic cover of state-owned companies for business purposes.

Here’s an excerpt of the KCNA coverage from the third day, with my emphasis added in bold:

The General Secretary in his report suggested important tasks for firmly ensuring the implementation of the national economic plan by law and channeling all Party works into the fulfillment of this year’s economic tasks.

The report stressed the importance to strengthen the legal supervision and control over the establishment and executive process of the national economic plan, the order of the Party and the law of the state.

It called upon the legislation sector to remove irrational elements becoming stumbling blocks to the implementation of the national economic plan and enact and perfect new laws for every sector which help promote the efficiency of the production and construction.

It said that legislative bodies including the prosecution organ should increase their role to make sure the national economic plan is properly distributed and correctly executed, and in particular, stage a strong legal struggle for checking all kinds of illegal practices revealed in economic activities, adding that all sectors and units should obey them unconditionally.

Analyzing that the faults revealed in the economic work in the last period are caused by the party organizations which failed to fulfill their responsibilities and role as organizers and standard-bearers in carrying out the Party’s policies, the report proposed tasks of the party organizations for intensifying the party guidance and political guidance from the standpoint of holding full responsibility for the result from the implementation of this year’s economic task.

It referred to the ways for the party organizations at all levels to positively play the role in properly steering the implementation of the national economic plan while giving priority to the organizational and political work for arousing the masses to the accomplishment of this year’s goal.

It also suggested tasks calling upon the party organizations of ministries and national institutions to properly grasp and guide the execution of Party’s economic policy by enhancing the level of the Party work in line with the characteristics of their units in charge of important portion in the overall work of the state and to strengthen the direction of the party life of public service personnel.

Concluding his report on the first agenda item made through three consecutive days, the General Secretary said that the plenary meeting was convened in the timely and necessary period in the sense that it helped rectify mistakes from the stage of planning this year’s work and newly decided on the great work for the people and also helped find out and correct the ideological maladies including passivism and self-protectionism latent in officials.

(Source: “Third-day Sitting of 2nd Plenary Meeting of 8th WPK Central Committee Held,” Korean Central News Agency February 11th, 2021.)

Here is an excerpt of the second-day coverage, again with emphasis added in bold. The bottom paragraph restates much of the language from congress a few weeks ago about increasing state control:

Saying that propping up agriculture is an important state affair that must be successful at any cost to solve the food problem for the people and successfully push ahead with the socialist construction, the General Secretary analyzed the achievements and experience gained in the agricultural field for the recent several years and set forth tasks of stably and steadily developing the agricultural production based on them.

Emphasized in the report were the issues of taking prompt state measures for supplying farming materials on which success or failure of farming for this year hinges for the present, pushing ahead with the work of providing a material and technical foundation for the agricultural production in a planned way and bringing about a decisive improvement in the Party work in the rural areas.

[…]

The General Secretary in the report evinced the militant tasks to be carried out by the People’s Army and the munitions industry this year for implementing the decisions set forth by the 8th Party Congress, and the direction of future action to be taken by the sector in charge of affairs with south Korea and the sector in charge of external affairs, before underscoring the need to thoroughly carry them out without fail.

The report noted that the success or failure in this year’s economic work depends on the capability and role of the state economic guidance organs in the main, and made clear the issue that the Cabinet and state economic guidance organs should restore the function peculiar to them as economic organizer and their controlling function to improve the guidance and management over the whole economy, the one of improving the role of non-permanent economic development committee and other important practical issues for consolidating the Cabinet-centered system, Cabinet-responsibility system.

(Source: “Second-day Sitting of 2nd Plenary Meeting of 8th WPK Central Committee Held,” Korean Central News Agency, February 10th, 2021.)

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Fertilizer factory shutdown and goods shortages

Monday, February 8th, 2021

Benjamin Katzeff Silberstein

KITA has a new briefing paper out about some developments relating to North Korea’s domestic economy and external trade. If true, the shutdown of the Namhung Youth Chemical Complex (청년화학연합기업소) is one of several examples of how the border shutdown due to Covid-19 is hurting basic industries through a shortage of spare parts. Goods such as cooking oil are also reportedly in short supply on the markets, and local government incomes from market stall fees are also reportedly dropping. As always with this sort of information, none of it is fully confirmed.

You can find the report here (in Korean), below is an excerpt from a summary by Nikkei:

The Namhung Youth Chemical Complex, north of Pyongyang, produces fertilizer and coal gas using anthracite mined in the area. North Korean leader Kim Jong Un visited the site in 2013.

High-pressure valves and jet sprays at the complex have become too worn for continued use, according to reports the Korea International Trade Association received from North Korea in January. Without replacement parts, it is unclear when the plant can resume work.

The suspension hinders North Korea’s push to lift its meager agricultural output. Kim last year ordered a boost in fertilizer production and attended a completion ceremony for a separate fertilizer plant. Coal gas also serves as a valuable industrial energy source for the country, which faces an oil embargo in response to its nuclear and missile testing.

[…]

The resulting shortages also have struck North Korea’s jangmadang informal markets, which have flourished under Kim’s tenure. At one market in the city of Pyongsong, the volume of available flour and cooking oil has halved. Many stalls that used to sell Chinese-made apparel and appliances have shut down as well.

The slowdown of the jangmadang is eating into the coffers of North Korea’s regional authorities. South Pyongan Province, home of the Namhung plant, made about half as much from overseeing these markets in the last quarter of 2020 as in the year-ago period, heavily impacting provincial spending, the KITA report says.

(Source: Yosuke Onchi, “Key North Korea factory shuts down from COVID-19 parts shortage,” Nikkei Asia, February 8th, 2021.)

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