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‘Yellow Spring’ in North Korea…Similiar To The Food Shortage in 1998

Sunday, May 28th, 2006

Daily NK
Kim Young Jin
5/28/2006

North Korea is facing the hardest “yellow spring” right now. ‘Yellow Spring’ means the hardest time of the year in North Korea. “Yellow spring” originates from how the sky looks yellow because of starvation.

Mr. Lee Hyun Soo (46) who crossed the Tumen River on 15 May said, “It is hard to endure day by day”.

Mr. Lee, head of a household of four said, “Rumors of people going to China and South Korea go around. I tried not to cross the border, but I did because of my family members who are starving”. He complained, “The government have been acting like they would give us food for a long time, but they deceived us”.

Recently, North Koreans who cannot make their ends meet like Mr. Lee started to cross the Tumen River again. The reporter met 5 North Koreans including Mr. Lee. They met with the reporter at a secret place in Yanji, and expressed strong discontents about the situation of food shortage in North Korea and the policy regarding food distribution system.

Mr. Choi Young Nam (37) said, “I have been waiting since the 1st of April. I know that there are even less rice in spring, so where would the rice come from? They cannot deceive us like this”. Mr. Choi said. “In January and February, rice for 2~3 days were given to the old and supporting families. After that, we bought the rice at Jangmadang price at the distribution center”.

The official price of rice is 45won($0.015) for rice and 25won($0.0083) for corn. After North Korea resumed its food distribution system, the government regulated the rice transaction at Jangmadang while selling rice at 950 won($0.32) and corn at 350 won($0.12), which is same as Jangmadang price. Recently, price at Jangmadang went over 1300 won($0.433) and the price at distribution center went up accordingly.
“Similar To The Situation At The End Of Food Shortage In 1998”

They say, “Family of those who work at the government, police and national security agency store up food for one year. People who work at powerful organizations such as Office #5 (foreign currency earning office under office #39 under the Party, loocated at each city and province) receive food, but other workplaces do not distribute food anymore”.

After the 7.1 Economic Management Improvement Measure in 2002, policy which orders each organization to provide for their workers has been adopted; workplaces with power can feed the workers, while poor factories cannot. People generally have an attitude that does not care if others can eat or not.

Mr. Park who was involved in ‘suitcase business’ with Chinese said, “Everyone is involved in trade, and I could not even break even because I could not sell the goods at fair price”.

Mr. Park who is employed at a steel factory in Hoeryong has three family members to support. Mr. Park crossed theTumen River to earn money by farming in China, because it seemed hopeless and difficult to live in North Korea. Following is what Mr. Park said.

“The situation is similar to the situation at the end of food shortage in 1998. The number of people who come to China will increase soon. People at the border area know that why they are so poor because they are involved in trade with Chineses. All they have in their heart is anger”.

“Living By Grassroots and Porridge, The Old and The Sick Are Dying Of Starvation”

Mr. Hyun Joo Hoon (50) who sold goods in Pyongan and Hwanghae Province says, “People in Pyongan Province are worse off than those in border area”.

People in Pyongan Province and at border area both do not receive food from distribution system, but people in provinces without the capital to start business began to eat grassroots and porridge for meals. Mr. Hyun said, “I ate corn porridge because I only received five day worth of food”. Mr. Hyun said, he had seen the sick and the old dying of starvation at Soonchun and Dukchun in South Pyongan Province.

Mr. Hyun said, “It is because the government regulated the outflow of food to other provinces as the government ordered the regional governments to distribute food on their own”. In the fall of last year, North Korean government has regulated the outflow of food by placing posts at highways connecting different cities and districts.

Mr. Lee added, “People in the inner provinces believe the propaganda of the North Korean government that the reason for the poverty is the economic sanction by imperialists, even when they are dying. Unless their thoughts change, they cannot even resist”.

Posted in Agriculture, Black markets, China, Economic reform, Emigration, General markets (FMR: Farmers Market), Price liberalization | Comments Closed

Moody’s pessimistic on DPRK reform

Wednesday, May 24th, 2006

Will this have repercussions in the south’s credit rating?

From the Daily NK:

On May 22, an official of Moody’s Investor Service, a Credit Rating Agency, announced that despite Kim Jong Il’s visit to China early this year, North Korea did not show indications for internal economic reformation.

On May 22, Vice-president Thomas Byrne of Moody’s Investor Service rated the possibility of North Korea towards economic reformation negative in the North Korean Economic Outlook Symposium held by Institute for Corean-American Studies(ICAS) in the Rusell Senate Building.

Vice-president Byrne estimated that North Korea failed to adjust its currency and exchange rate, and its trade environment was not improved, so that rather its economic situation was worse. Plus, he emphasized that North Korea did not show any signs of internal economic reformation.

He said about Gaesung Industrial Complex that, “If 5 more complexes like Gaesung Industrial Complex develop, we can see North Korea be in the economic reformation’s process, yet the Complex is no more than a symbol”. He emphasized that if North Korea has a strong resolute for economic reformation, “it should follow the economic model of South Korea because the way to Seoul is easier than the train to Shanghai for it”.

Vice-president Byrne warned that if South Korea would continue to support North Korea economically, it would face economic crisis soon.

While saying that, “The difference between the approaches of South Korea and the U.S is not great enough to make an impact on the credit rating of South Korea”, he stated, “Due to North Korea, South Korea always gets a lower credit rating than its original rating”.

Meanwhile, a special correspondent informed that North Korean-Chinese trader Lee Dae Kil(pseudonym, 49) who recently came back from North Korea showed a negative opinion about North Korean economy.

Mr. Lee said that, “There has been little profit in spite of trades with North Koreans for a few years”, and “North Koreans buy and sell only for living, not for investment for profits. He said that, “The North Korean government does not show even such efforts”,.

Mr. Lee said that, “After it was known that the U.S blocked banks banking with North Korea, dollar transactions sharply decreased”, and “There were people who even asked me about what happened outside”.

Posted in Banking, China, Economic reform, Fiscal & monetary policy, Foreign direct investment, International trade, Price liberalization, South Korea, Special Economic Zones (Established before 2013), USA | Comments Closed

9th Pyongyang International Trade Fair news (5/2006)

Friday, May 19th, 2006

PYONGYANG ― In a rare visit to this reclusive communist country, a group of South Korean government officials, journalists, businessmen and economic experts attended a series of investment promotion events arranged this week by the North Korean government.

At a trade fair, South Koreans toured bustling booths set up by North Korean and foreign firms, and witnessed North Koreans buying goods there with U.S. dollars in their hands ― an indication that Pyongyang’s limited foray into capitalism, which began in 2002, is slowly progressing in the North’s strictly controlled economy.

The delegates on Wednesday visited the 9th Pyongyang International Trade Fair, where 196 companies from 12 countries set up booths. The delegates were allowed to look around the fair freely. Of the participating firms, 21 were from North Korea and the rest came from 12 other countries, including China, Russia, Spain, Sweden, Syria, Italy and Thailand.

At the fair, Jeil Trust Bank, a North Korean bank, advertised its savings account programs for foreign currency deposits. Cars, bicycles, tires and machinery made in the North were also displayed.

About 1,000 Pyongyang residents and North Korean businessmen also attended the fair, and most flocked around the sales booths of Chinese appliances. Some North Koreans purchased handbags, pots and other goods, making payments with dollars.

The 72-member delegation also visited a glass manufacturing facility southwest of Pyongyang on Wednesday. Daean glass factory, completed in October, was built with a $20 million investment from China. About 30 Chinese technicians are also training North Korean workers at the plant.

“In early 2000, North Korea decided to shut down all its glass factories, and decided to build a new plant,” Pak Jong-ung, deputy manager of the plant, said. “China learned about the plant and invested in it.”

The South Koreans also toured a ship repair plant in Nampo, South Pyeongan province. At the Yongnam factory, Cha Son-mo, senior North Korean maritime affairs official, gave a presentation. “Last year, we finished the second dock, capable of repairing a 50,000-ton ship,” Mr. Cha said. “Please use our facility to promote inter-Korean economic exchange.”

Jeong Nam-su, senior planning manager of STX Corporation, a South Korean ship maintenance firm, said the facility was better equipped than he expected. “It is also surprisingly modernized,” Mr. Jeong said. “I am considering asking the North Korean factory to repair one or two ships after I return to the South.”

On Tuesday, the group attended an investor-relations session hosted by the North’s Trade Ministry, with simultaneous translations into Chinese and English available. About 70 foreign investors attended. It is the first time South Koreans were invited to such an event. Rim Tae-dok, the trade ministry’s councilor, gave the presentation, promising tax benefits and land leases at low prices.

The delegation visited Kim Chaek University of Technology and Kim Il Sung University and toured Mount Myohyang. The group, which began its trip on Monday, will return to Seoul Saturday.

Posted in Banking, China, International trade, South Korea | Comments Closed

Chinese-DPRK border update

Thursday, May 18th, 2006

Froom the Daily NK:
5/18/2006

Approximately one million crossed the DPRK/PRC border back and forth during the food shortage. Today, the border area is where most recent, accurate information about North Korea can be obtained.

China stationed soldiers from Shunyang military district to the North Korea-China border three years ago. The border line of North Korea including Yalu River and Tumen River is 1,376.5 km. North Korea-China border is 1,360km, and North Korea-Russia border line is 16.5km.

North Korea has 100-110 thousand strong ground forces on the border area in order to control the inflow of information from outside and the illegal smuggling and border transgression of North Korean defectors. It means that each soldier guards 14m.
Ground Forces on the border increased rapidly after the treaty of friendship between China and South Korea

The reinforcement of the border in the 1990s has much to do with the change in international politics including the demise of the Cold War the growth of friendship between China and South Korea. Until the early 1990s when North Korea sustained the “blood alliance” with USSR and China, North Korea only focused on increasing the military power on north of the 38ty parallel.

Kim Jong Il said in regards to the treaty of friendship between South Korea and China, “38th parallel is outpost for the military power, while the [chinese] border is outpost for the ideology”. North Korea reorganized the military to reinforce the border control.

In 1992, the Department of Military Mobilization in various parts of North Korea recruited high school and middle school students, office workers and farmers to organize the border control.

In 1992, the responsibility for border control and coastal defense was delegated from National Security Agency to Border Control Command under Ministry of People’s Armed Forces. The Coast Guard was assigned under military base under Ministry of People’s Armed Forces in each district. Border Control Command was located in Ganggye, Jagang Province, but was moved to Pyongyang in 2002.
The Military Force of the Border Control

A North Korea defector Heo Yong Sun (43) who used to be a border guard says there are 4 Brigades, including Division 10 (located at Baeksa dong) in ShinEuiJoo, Brigade 32 in Chongjin, Brigade 37 in Jagang Province, Brigade 44 in Yanggang Province. Division 10 at ShinEuijoo has 14 battalions, which is qualified for division.

Mr. Heo says the border control brigades have 11 battalions on average. One brigade operates 4,000-5,000 soldiers and one battalion has 350 soldiers. There are 3 companies of 100 soldiers under battalions, and companies cover platoons and guard posts of 30 soldiers.

Mr. Lee Chul Young (34) who used to be a commander of a military district of Border Control and entered South Korea in 2004 says, “There are cavalry brigade and tank brigade under the Border Control Command, and the military force amounts to over 10~30 thousand soldiers. Companies have 250~300 soldiers and one battalion has more than 1,000 soldiers, which shows that the scale of military force is different from other People’s Armed Forces.

The smallest unit of Border Control is a platoon. One platoon is in charge of 3km, and one platoon has 12 guard posts. Guard posts have round of inspections during the day, and at nights, 2~3 soldiers are on a stakeout. They are on guard in three shifts a day.

For night time guards, 3~4 soldiers are mobilized including the commander of the platoon, and one agent from National Security Agency is included. A post for the stakeout is a half-underground cave where the soldiers can have a 120 degree view on China.

Border guards are equipped with AK Automatic Rifle-58 and 68. A commander and high level soldiers are equipped with cartridge and low level soldiers are supplied with blank cartridge. On the border, gunfire is preferably restricted, and when someone wanted by the National Security Agency intrudes the border line, gunfire is allowed.

One advisor from National Security Agency was assigned for each platoon since 1999. However, the advisors encouraged illegal border transgressions with bribery, which caused the Ministry of People’s Armed Forces to assign one advisor at each company since May 2002.

Border guards aim to “Earn Three Hundred Thousand Won” causing costs to rise for transgressions.

The biggest wish for the border guards is to make money while in the military. They are on the lookout for border transgressors rather than protecting the border from intrusion of spies. Until 1990s, the soldiers tried to “earn thirty thousand Won”, but it changed to three hundred thousand won because the currency depreciated.

Border Control Command shifts around the border guards at Pyongan, Yanggang and Hamkyung Province every two years in order to prevent frequent corruption of the soldiers. It is understood that two years is enough time for the soldiers to get down to cooperating with the locals to receive briberies.

Mr. Lee Chul Young said, “On fortunate days, it is possible to earn couple hundred thousand won. Commanders are involved in smuggling through Foreign Currency Earning Organizations, and lower officials make small money through controlling the border transgressors”.

The cost for border transgression rose after the order to control the border. In 2004, the transgressions cost 300 Yuan($40), but it rose to 500 Yuan ($65) and to 800 Yuan ($120) now.

North Korean defectors who crossed the Tumen River recently said, “You have to pay 500~1,000 Yuan for lower officials and more than 1,000 Yuan for the Commanders (Generals)”.

Transgression in the winter is the cheapest. However, around March when the ice melts on the river, the border guards have to go through the difficulty of wearing rubber pants and helping the transgressors cross the river, which costs more than 1,000 Yuan.

Posted in China, Illicit activities, Military | Comments Closed

North Korea and China to build powerplants

Tuesday, May 16th, 2006

From the Joong Ang daily:

North Korea and China have agreed to jointly build two hydroelectric power plants on the Amnok River, also known as the Yalu River in China, on the border between the two countries, Chinese media reported yesterday. The site is where the ruins of a 2,000-year-old walled city and 2,360 “massive tombs” of Korea’s ancient Goguryeo kingdom were recently found.

According to the local newspaper Jilin Daily, North Korean delegates from the Ministry of Power and Coal Industries and China’s central government, along with Jilin provincial officials, signed the agreement at Changchun, the capital city of Jilin province, on Sunday.

North Korea and China had planned in 1995 to construct the two power plants. According to the accord, China and North Korea will each build a dam with a power plant.

China will begin construction on its dam as early as late this year, Chinese media said. The North is expected to build its dam about 16 kilometers south of the Chinese power plant.

Posted in China, Dams/hydro, Energy, Foreign direct investment | Comments Closed

China makes a claim on Mt. Pektu

Wednesday, May 10th, 2006

It will be interesting to see if the DPRK takes this laying down. After all, this sacred mountain is the birthplace of the Dear Leader.

From the Donga:

The Japanese daily Mainichi Shimbun reported on May 9 that a private airport will be completed by the end of next year in Baisan, Jilin Province, the area with access to Mt. Baekdu (Chang Bai Shan in Chinese) located between China and North Korea.

As a result, competition will become intense between China and the two Koreas to attract tourists to the mountain and boost the image of the mountain as their own territory.

China seeks to take the upper hand in the development of Mt. Baekdu tourism by constructing the airport. South Korea, for its part, is rushig to kick off Mt. Baekdu tours via North Korea.

There is a growing concern in South Korea that Mt. Baekdu, a symbol of Koreans, might be registered as cultural heritage of China because China wants to put Mt. Baekdu on the list of World Heritage sites before the 2008 Beijing Olympics.

Posted in China, Tourism | Comments Closed

DPRK coal to China

Wednesday, May 10th, 2006

from NK zone:

Yanbian Taida has agreed to import 50,000 tonnes of North Korean coal, and plans to increase this if there is market demand, according to a yet another Chinese report. The company had imported 1,820 tonnes by March 7, worth $41,860, under a first such deal with Hunchun customs involving “concentrated customs declarations” (not sure what that is) which has relieved pressure at the Shatuozi border post. The coal came from Gogeonwon mine, just 17 km from the border.

Posted in China, Coal | Comments Closed

South publishes 2005 DPRK trade figures

Monday, May 8th, 2006

From the Associated Press and Yonhap:

North Korea’s trade volume with foreign countries, excluding South Korea, rose marginally last year to reach its highest figure since 1991. Trade is up 5% to $3 billion. The figure doesn’t include inter-Korean trade, which is considered “exchanges between the same ethnic group,” KOTRA said.

The [southern] Bank of Korea claims the DPRK’s economy has grown for six straight years. Modest economic reforms since 2002 have encouraged some private enterprise, allowing the limited emergence of an entrepreneurial class with money to spend on imported goods.

North Korea recorded a trade deficit of $1 billion last year, up 23%. Imports increased 9.1 percent to $2 billion, but exports fell 2.1 percent to $998 million, the agency said.

The trade agency attributed the drop in exports to plummeting overseas shipments of fisheries goods, one of the North’s key exports, and a 20% annual decrease in shipments to Japan.

The North’s imports grew on rising inbound shipments of energy-related natural resources as well as food from China. The neighboring nation’s increasing investments in the North also triggered a rise in machinery imports into the country, the agency said.

The rankings of the DPRKs trading partners remains unchanged: 1. China, 2. Thailand, 3. Japan and 4. Russia

CHINA: Trade with China is up 14% from 2004 at $1.58 billion, 52.6% of North Korea’s total exports and imports last year. Two-thirds of that trade was made up of North Korean imports, which grew 35.2% to $1.08 billion, much of it food and energy.

“North Korea has to depend on China for most of its food and energy resources,” KOTRA said. “China has also been rapidly increasing its investment in North Korea in recent years, which leads to an additional boost to the amount of trade between the two countries.”

JAPAN: Imports and exports between North Korea and Japan fell 23% to $194 million in 2005–the fourth straight year of decline since Pyongyang acknowledged abducting Japanese citizens in the 1970s and 1980s.

South Korea: Trade between the two Koreas reached an all-time high of $1.05 billion in 2005, boosted by commercial activity at a joint industrial complex in North Korea, KOTRA said. Including trade with South Korea, the North’s trade volume stood at $4.06 billion last year, with trade between the two Koreas accounting for 26% of the total, it said.

Posted in China, International trade, Japan, South Korea | Comments Closed

The role of China in DPRK liberalization

Thursday, May 4th, 2006

From the Daily NK:

The chief researcher of the SeoJong Institute, Yang Un Chul, presented his report entitled ‘The Political Economic Implications of Chinese Economic Cooperation with North Korea, ‘ and revealed that, “Recently North Korea has been isolated from the international community because of its nuclear weapons development program. This isolation has led to North Korea’s economic dependence on China. It has also caused some people to worry about the possible economic subornation of North Korea to China. However, this is just an unlikely scenario.”

Yang explained, “Recently the trade between North Korea and China has sharply increased. In 2004, its trade with China amounted to 40% of its total trade. As for Dandong, an advance trading partner with North Korea, in 2005 frontier trade grew dramatically enough to record a 26.5% growth rate.” Yang explained the concern over this this growth rate: “Due to such increasing support and investment, some people fervently insist that China is trying to economically transform and colonize North Korea into a fourth Northeast Chinese province (Jilin, Liaoning, Heilongjiang and North Korea).”

In his research, Yang points out, “The exceptional incidence that one country is in subordination to another country can only occur in a situation of very limited market availability.” He went on to explain that, “The fact that North Korea is dependent on China for food, energy and other necessities, is a result of North Korea’s choice to source only from China, despite the availability of resources from other markets.”

It is Yang’s assertion as well that, “The excessive precaution against China or even the exaggeration of China’s influence over North Korea, actually works against North Korea’s economic recovery.” Likewise, he states, “Since China currently has relatively more influence over North Korea than we do, its penetration of the North Korean economy – promoting liberalization and true economic reform – could be an effective way to promote North Korean economic development.”

Yang emphasized that, “Unlike in the past, the Chinese government is no longer able to control North Korea’s economic activity to serve Chinese interests. Instead, the Chinese government now faces the responsibility of trying to help North Korea develop a certain level of economic independence.”

“China knows that if North Korean economic cooperation could be established with the U.S. and South Korea, China’s burden would be more manageable and North Korea could reform more quickly,” Yang explained. However, he also noted that the reality of this level of international cooperation is highly unlikely, stating, “The problem is that since North Korea does not trust the intentions of the U.S. and South Korea, China cannot help but face the difficulty of taking on North Korea alone.”

Yang’s research contends that Chinese-style economic reforms are not the most efficient way to develop North Korea’s economy, however, they may be the only effective option at this time. He stated, “China’s main goal for assisting Norh Korea is simply to maintain the stability of the Northeast region. At the same time, China acknowledges the fact that it is unlikely North Korea will normalize relations with the U.S., and therefore North Korea, by default, will turn to China for economic guidance. The price of implementing the same style of reforms that has shaped 3 of China’s most backward provinces will be high, but the market growth and gradually increasing international influence over the North Korean economy that Chinese-style reforms can offer, are still the second best option for North Korea.”

On the other hand, Yang insisted that “It is not necessary to worry about Chinese companies occupying North Korea, as some South Koreans have raised concerns over.” Instead, he explained that companies are bound to carve out lucrative markets through investment and marketing, and that “Currently, due to the unique North-South relations, and the difficulty of investing in North Korea, Chinese companies should actually be encouraged to enter, invest in and sell commodities to North Korea; activity that will benefit both countries’ economies.”

Subsequently, Yang explained, “China’s influence over North Korea can be effective in teaching North Korea about international labor divisions and the principles of market economies. If China can bring about the concepts of reasonable pricing, and market and income redistribution, China’s intervention could be instrumental in discarding North Korea’s planned economy, and finally allowing a market economy to emerge.”

Posted in China, Economic reform, International trade | Comments Closed

North Korea gets Chinese aid to fight bird flu

Wednesday, May 3rd, 2006

from the AFP:

North Korea received aid from China to help its fight against bird flu which has hit the impoverished state in recent years.

The Chinese aid, which included test kits, “will help prevent the spread of bird flu in the country via its border and trading ports,” the Korean Central News Agency said.

North Korea has recently launched public awareness campaigns against the avian influenza virus and has focused its efforts on isolating chickens and ducks from wild birds. No bird flu case has been reported so far this year.

The PDRK reported virus outbreaks in 2004 and 2005.

Early this year, a Japanese human rights activist said a North Korean woman had been infected in December. But Pyongyang has yet to confirm the case.

Posted in Avain Flu, China | Comments Closed

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