Archive for the ‘China’ Category

The North Korean Economy: Between Crisis and Catastrophe

Thursday, May 3rd, 2007

American Enterprise Institute Book forum
4/17/2007

A couple of weeks ago, I had the opportunity to attend a book forum at the American Enterprise Institute on Nicholas Eberstadt’s new book, The North Korean Economy: Between Crisis and Catastrophe.  It was very informative to hear three different perspectives on the direction of North Korea’s economic reform.

Panelists included:

Nicholas Eberstadt, AEI
Andrei Lankov, Kookmin University
Deok-Ryong Yoon, Korea Institute for International Economic Policy

In summary, Mr. Eberstadt and Mr. Lankov are pessimistic about the North Korean leadership’s desire to enact reforms–knowing that information leakages will undermine their political authority.  As Mr. Lankov pointed out, the North Korean nomenklatura are all children and grandchildren of the founders of the country who are highly vested in the current system.  They have no way out politically, and as such, cannot reform.

They argue that the economic reforms enacted in 2002 were primarily efforts to reassert control over the de facto institutions that had emerged in the collapse of the state-run Public Distribition System, not primarily intended to revive the economy.  Lankov does admit, however, that North Korea is more open and market-oriented than it has ever been, and  Mr. Yoon was by far the most optomistic on the prospects of North Korean reform.

Personally, I think it makes sense to think about North Korean politics as one would in any other country–as composed of political factions that each seek their own goals.  Although the range of policy options is limited by current political realities, there are North Koreans who are interested in reform and opening up–even if only to earn more money.  In this light, even if the new market institutions recognized in the 2002 reforms were acknowledged only grudgingly, they were still acknowledged, and their legal-social-economic positions in society are now de jure, not just de facto.  The North Korean leadership might be opposed to wholesale reform, but that is economically and strategically different than a controlled opening up on an ad hoc basis–which is what I believe we are currently seeing. Anyway, dont take my word for it, check out the full commentary posted below the fold:

(more…)

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Cash Bribes for North Korean Authorities By Chinese Merchants

Monday, April 16th, 2007

Daily NK
Kang Jae Hyok
4/16/2007

In commemoration of the anniversary of Kim Il Song’s 95th birthday (Apr. 15), North Korea has been preparing various spring festivities including the “Arirang” performance.

The number of foreigners visiting North Korea during this time is also expected to escalate.

Recently, the DailyNK confirmed through Chinese merchants that bribery and gifts had been exchanged between North Korean authorities. It is these during these seasons of Kim Il Song and Kim Jong Il’s birthday and the founding of the Workers Party and the Republic that bribes are most favorable.

For the past 4 years, Ma Il Su (pseudonym, 43) a Chinese merchant living in Jilian has been importing North Korean agricultural produce and herbal medicines to sell in China. In a telephone conversation with the DailyNK, he informed on the 12th, “I have prepared a special gift to give to North Korean authorities for when I enter the country on the 14th.”

He said, “On the whole, anyone trading with Chosun (North Korea) also offers gifts to them… The best offering is in the form of money.”

“Offering cash to the nation is the best but there are times when electronic goods are also given” he said.

Ma continued, “In order to trade in Chosun, you need the cooperation of authorities on your side” and said, “To charm the hearts of authorities, gifts must be given frequently. The best way to do this is by offering gifts at times of Kim Il Song and Kim Jong Il’s birthday.”

“You should go to the People’s Committee and offer the gifts to the chairman directly saying, ‘I sincerely pray for the Great Leader’s health and Chosun’s growth.’ Then they (the North Koreans) become ecstatically excited they do not know what to do” he said.

When asked whether or not gifts had to be offered to individual authorities Ma said, “You cannot trade if you do not offer bribes to authorities… Officials prefer cash as well as watches or electronic goods such as widescreen TV’s. In particular, they like watches made from South Korea.”

“I have already arranged for sheets of Chinese currency to give to individual authorities in timing with Kim Il Song’s birthday” he said and added, “Nowadays, offering bribes has become a norm in North Korea. There would be chaos if a gift was not offered.”

Ma said, “I am aware that my fellow tradesmen are offering gifts of similar nature” and estimated, “If we collect the amount of gifts offered by the Chinese, there should be quite a lot.”

Money given by Chinese merchants to the People’s Committee first reaches the respective local authorities of the Party → higher party authorities → central authorities in Pyongyang, and finally is offered as a bribe to Kim Jong Il. In the end, the money is donated into Kim Jong Il’s private fund and used for his personal pleasures.

Following the July 1st measures in 2002, North Korea-China trade has expanded significantly with hundreds of Chinese merchants filtering into North Korea everyday. In accordance with Ma, the number of people offering bribes to North Korean authorities seems to be considerably large.

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Festive mood grips N. Korea as late founder’s birthday nears

Friday, April 13th, 2007

Yonhap
4/14/2007

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

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

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

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

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

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

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

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

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China Investing Heavily in N.Korean Resources – Report

Thursday, April 12th, 2007

Choson Ilbo
4/12/2007

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

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

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

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

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

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

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

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Koreas agree to repatriate remains of independence fighter

Tuesday, April 10th, 2007

Yonhap
4/10/2007

South and North Korea on Tuesday agreed to dispatch a joint team to China to disinter and repatriate the remains of a prominent independence fighter buried there.

They will also push to organize joint commemorative events for the 100th anniversary of the death of the freedom fighter An Jung-geun in 2010, according to a statement released by the Unification Ministry.

The agreement came at the end of the one-day working-level talks held in the North Korean border city of Kaesong. The talks were resumed after a 13-month hiatus.

“The joint excavation team will be sent to China for about a month beginning in late April. We will work out details for the dispatch later at the truce village of Panmunjom,” the statement said.

An was executed in Dalian in 1910, a year after assassinating Hirobumi Ito, Japan’s first resident-general in Korea, on a railway platform in Harbin. His remains are still buried near a former prison run by Japanese authorities in Dalian.

An’s assassination of Hirobumi was an attempt to prevent Japan’s annexation of Korea, but the Korean Peninsula was formally colonized by Japan from 1910 to 1945.

During the Japanese colonial period, millions of Koreans are believed to have been killed or sent into forced labor, including sexual servitude for the Japanese military.

The South Korean delegation was headed by Lee Byeong-gu, director general of the Ministry of Patriots and Veterans Affairs, while Chon Chong-su, deputy bureau chief of the Committee for the Peaceful Reunification of the Fatherland led the North Korean team.

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Customs Officers “Losing Face” in Pursuit for Bribes

Monday, April 9th, 2007

Daily NK
Kang Jae Hyok
4/9/2007

Since the nuclear experiment last year trade between North Korea and China had dwindled. However, lately, business is prospering thanks to the friendly moods between the U.S. and North Korea. Nonetheless, the frequent change in customs officers and their unreasonable requests are disturbing the businessmen.

Some Chinese merchants travel into and out of North Korea everyday, or at the least every couple of days. One businessman, Han Chul Ryong (pseudonym, Korean-Chinese, 42) who had recently visited North Korea for business, expressed his feelings in a concerned voice in a telephone conversation with the DailyNK on the 6th.

Han currently lives in Jilian and has been trading goods with North Korea for 4 years now. With a 2.5 ton truck, he imports and sells North Korean seafood and herbal medicines in China.

Han said, “Nowadays, I don’t want to trade anymore because of the customs officers. They make our lives so difficult… It’s like they have some sort of steel plate over their faces or something. They have no dignity, nothing.”

He added, “Customs officers are so competitive and make so many demands that I cannot remember them all unless it is written down in a notebook. They request a variety of goods such as food, fruits, medicine and electronic goods. Alcohol and cigarettes are a must.”

Another tradesman, Kim Chan Joo (pseudonym) who was traveling with Han said, “Some customs officers go as far as demanding materials for home renovations such as cement, iron rods, window panes, windows, doors and nails.”

When asked what kind of privileges customs officers give after receiving bribes, Kim responded, “Of courses there are privileges… Sometimes they reduce taxes or place a blind eye to goods that should not pass through.”

He said, “There is a saying, ‘A cow fed also gives dung.’ A customs officer who has been fed bribes cannot possibly enforce strict control” and added, “Though customs officers have helped increase trade, as time goes by, the standard of their demands are also rising.”

“That’s not the only annoying problem. After going to all that trouble developing friendly relations with customs officers, they are replaced by new ones and hence there are many losses… It takes double time and money to acquire friendly relations with newly replaced customs officers,” Kim said.

Being a customs officer is considered one of the upper middle-class jobs in North Korea. Unlike an average office worker, customs officers are treated similar to the army. The National Safety Agency is even in charge of some of the customs officers.

Often these people are greedy to accumulate funds for retirement or for their children and as a result, try to gather as much as they can while in office. Even in a chaotic North Korea society, the position of customs officer is considered the yolk of an egg. Consequently, officers go to all means to confiscate as much money as they can from Chinese tradesmen and relatives visiting family.

North Korean authorities are strengthening control over customs officers, however it is difficult to obliterate the problem as it is so deeply rooted. Rather, than the situation dying out, it seems that their unreasonable attitude will increase.

If a customs officer makes receives too many anonymous complaints, he/she is given a warning or penalty. When the situation worsens, the customs officer is then demoted to a different office or in the worse case, dismissed from duty.

Recently, it seems that North Korean authorities have become more aware of the situation and are making efforts to enforce control. One method is removing the officers who are dependent on this corrupt system to different locations.

Han said, “If customs officers don’t do this, it is hard for them to eat and live… Though the demands by Chosun customs officers are increasing by the day, in order to trade there is no other way.”

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Mobilizing Transnational Korean Linkages for Economic Development on China’s Frontier

Saturday, March 31st, 2007

Japan Focus
Outi Luova
1/1/2006

China’s coastal regions have received impressive financial and organizational resources through overseas Chinese networks and international capital generally. China’s land borders are also linked to transnational communities, thanks to the networks of ethnic minorities who live there. This article introduces the mobilization of the Korean minority’s transnational ethnicities in the service of local economic development. China’s well-established structure for the utilization of overseas Chinese resources serves as a frame of reference. The analysis focuses on foreign investment, donations, and remittances—resources that are widely regarded as the most important development input provided by the overseas Chinese. The regional focus is on Yanbian, a Korean autonomous prefecture in Jilin Province in Northeast China, which has enjoyed a measure of success in attracting Korean investment in step with burgeoning China-South Korea economic and political ties. But it has also faced significant challenges.

The Yanbian Koreans and the Transnational Korean Community in Northeast Asia

The current Korean population in China is of rather recent origin. A wave of migration from the Korean Peninsula began in the 17th century. However, most of the migrants arrived during the tumultuous decades between the middle of the 19th century and the end of the Second World War. Northeast China was first a refuge for poor peasants and later a base for Korean nationalists, who fought against the Japanese colonial rulers in the period 1910–45. After Japan annexed Northeast China in 1931, hundreds of thousands of Koreans migrated to the new Japanese-dominated state of Manzhouguo, including many forcibly sent to work in factories and mines. However, the vast majority of migrants from Korea came allured by the promise of land.

When Japan was defeated in 1945, there were 1.7 million Koreans in Northeast China. When the People’s Republic of China was established in 1949, some 600,000 Koreans returned to the Korean Peninsula, while 1.1 million remained in China. China’s ethnic Korean minority presently totals roughly two million people. Most live in Northeast China, with a dense Korean population in Yanbian on the North Korean border. The number of ethnic Koreans in Yanbian is about 200,000, 38 percent of the prefecture’s population. An estimated 80 percent of the Yanbian Koreans have their roots in contemporary North Korea, and 20 percent have their roots in South Korea.

While the current Korean-Chinese population mainly originated in these recent waves of migration, both Chinese and Korean kingdoms earlier ruled and fought over the area that is now Yanbian. The historical dispute over the area continues even today among historians and politicians: Both South Korea and China claim historical antecedence with respect to the Kingdoms of Gaoguli (Chinese)/Goguryeo (Korean) and Bohai (Chinese)/Balhae (Korean), which ruled over the area from 37 BCE to 926 CE. Another historical dispute concerns the region of Jiandao (Chinese)/Gando (Korean), which is roughly congruent with contemporary Yanbian. Some Korean nationalists continue to demand that Jiandao, which they regard as a part of Korea, be restored to Korea. [1]

Yanbian has two pools of Korean resources abroad: Koreans, and Korean-Chinese who possess Chinese citizenship. The Koreans include, from a Chinese point of view, Koreans living on the Korean Peninsula and the some 3.7 million people of Korean origins residing throughout the world, mainly in Japan, the United States, and the former Soviet Union. There are three overlapping categories of overseas Koreans who maintain relations with Yanbian: The first group comprises Koreans (including people of Korean origins) with relatives and acquaintances presently living in Yanbian. A second group is comprised of Koreans whose life history is linked to Yanbian; these Koreans, or their parents, were born or lived part of their lives in Northeast China. Many who left China in 1945 have ties to the region where they, or their parents, lived; however, compared with the overseas Chinese, their linkages are more tenuous, since their ancestral homeland is on the Korean Peninsula, and Yanbian can be seen to have constituted only a temporary home. Finally, the third and broadest category of overseas Koreans who maintain ties to Yanbian consists of all overseas Koreans whose sympathy and interest in Yanbian is rooted in blood ties, ethnicity, and culture. Overall, Overseas Koreans remain critical to Yanbian attempts to mobilize transnational Korean resources.

As for overseas Korean-Chinese, there are currently over 150,000 living in various parts of the world. Besides Yanbian, Korean-Chinese from other parts of Northeastern China have migrated to South Korea. Han Chinese migrant workers in South Korea in 2001 included more professionals than did Korean-Chinese (638 versus 268) but fewer trainees (8,629 vs 13,243) and undocumented migrants (38,000 vs 57,000). [2] An estimated 50,000 Yanbian Koreans live in South Korea, including professionals, workers, trainees, students, and wives of South Korean men.

The Opening Up of Yanbian

Direct trade between China’s coastal provinces and South Korea flourished starting in the late 1980s, despite the lack of official relations between the two countries. Indirect trade began around the time of the Asian Games, which took place in Seoul in 1986; China’s participation in the games signalled a changed attitude towards South Korea. South Korean investments were soon directed toward southern China, the region then most open to foreign investment. Following the Seoul Olympics in 1988, direct trade between the two countries began, and South Korea investments moved northward, mainly to Shandong and Liaoning provinces, which are closest to South Korea.

Jilin’s border and barter trade with North Korea were restored in 1982, having been frozen since 1970 in the aftermath of the radical period of the Cultural Revolution. The first direct South Korean investment in Northeast China was made in Heilongjiang as recently as 1989 and in Jilin in 1990, and direct trade with South Korea was restricted to these provinces until 1990. Hence, despite the presence of an ethnic Korean population, Yanbian did not receive much South Korean investment in the 1980s. A partial explanation lies in particular features of the economy and history of China’s northeast. Conservative party officials had sought to limit foreign economic penetration there, in part to protect inefficient state-run industries. Economic cooperation was also restricted for political reasons. In particular, Japanese and South Korean investments evoked concern; Japanese investments revived memories of colonial domination of an earlier area, and South Korean investments were a sore point for China’s ally North Korea. Thus, while allowing trade to expand elsewhere in China, the central government prevented the northeastern provinces from drawing closer to South Korea. For Yanbian, with its close political and ethnic relationship with North Korea, it became particularly important to keep its distance from South Korea. Beijing used Yanbian as a political card to assure North Korea of China’s support.

In the latter part of the 1980s, the Yanbian elite was divided into two camps, one opposing contacts with South Korea and the other favouring opening up to South Korea and other capitalist countries. The pro-South Korea camp lobbied the central government to grant Northeast China preferential trade rights. Both groups included Han Chinese as well as Korean-Chinese. Thus, not only national-level policies but also divisions among local factions hampered the opening up of Yanbian.

Although small-scale trade associated with tourism was lively by the late 1980s, official trade contacts between Yanbian and South Korea were few before 1991. Yanbian Koreans first developed transnational bonds with North Koreans and Korean-Soviets. Yanbian Koreans frequently visited relatives in North Korea and the USSR and created close ties with kin and friends there. The local authorities supported these visits partly because of the profitable small-scale trade conducted during the visits. In particular, the shuttle trade with North Korea was profitable: In the early 1990s, the annual value of this unofficial trade was estimated to exceed RMB 100 million.

In 1991, Yanbian emerged as a center of international cooperation as the UNDP-backed Tumen River development program was inaugurated. The bold initial plan of this program was to turn the Sino-Russian-North Korean border area around the mouth of the Tumen River into a new international commercial hub with intercourse extending to South Korea, Mongolia and Japan. After the establishment of China-South Korean official relations in 1992, Yanbian was fully integrated into a regional, transnational Korean ethnic community, and state-supported transnational activities expanded especially to South Korea.

Organizing Activities for the Promotion of Ties

Since the mid-1980s, Yanbian’s contacts with South Korea and other countries have gradually expanded through unofficial channels drawing on ethnic and family ties. The first business contacts were created by associations, individual scholars, artists, and athletes. The first to “break the isolation” was a Yanbian University professor who visited West Germany and Sweden in 1982. Unofficial cultural exchange with South Korea began in 1989, when a famous Yanbian Korean poet visited several South Korean universities and a song and dance troupe from Yanbian performed in South Korea. In the mid-1980s, the Party-affiliated Yanbian Overseas Union hosted members of the Sino-Canadian Association for Economic and Cultural Exchange of the Korean People and the Friendship Association of Korean People in China and the United States. In 1988, the Yanbian Overseas Union paid a return visit to Canada and the United States, paving the way for economic cooperation. Members of this same association had also visited South Korea even before the establishment of Sino-South Korean diplomatic relations. In 1990, the Yanbian Department of Foreign Trade and Economic Cooperation set up a Chamber of International Commerce to build unofficial ties with South Korea.

Once official Sino-South Korean relations were established in 1992, the local government launched a full-fledged mobilization of Korean linkages. It openly encouraged Yanbian Koreans to visit South Korea and contact Koreans living abroad. In addition to associations, businessmen, and officials, ordinary people were also encouraged to link up with South Koreans and visit the country. Yet, the foreign trade administration of Yanbian was ill-prepared for large-scale international economic cooperation. In this situation, unofficial channels inevitably took the lead.

Different types of associations helped widen business contacts and act as middlemen. The Yanbian Overseas Union played a decisive role in attracting five foreign investments, and the Association of International Public Relations drew two factories to the area. Ethnic Korean members of these two associations also supported foreign trade officials when business negotiations encountered difficulties. For example, when negotiations between officials and investors deadlocked, the associations sometimes persuaded investors to start businesses in Yanbian. In the 1990s, the role of ethnic Korean middlemen became crucial for the additional reason that the state-owned companies were staffed mainly by Han Chinese, who lacked appropriate cultural and social capital.

The role of the above associations and other ethnic Korean middlemen in business promotion subsequently diminished. Following the early 1990s, when the foreign trade administration struggled in the face of insufficient resources, contacts, and experience, the administration expanded and gained strength. The administration and local companies established wide and stable international contacts, as well as additional resources to facilitate international cooperation. Now, the associations were mobilized in campaigns that focused on student exchange, labour export, and charity work, to mention a few.

In order to reinforce the emerging cooperation, leaders of the prefecture as well as lower-level units invited South Korean businessmen to discuss cooperation and celebrate the Spring Festival, the New Year, and China’s National Day in Yanbian. South Korean foreign students, politicians and artists were also invited to participate. At these events, important South Korean partners were granted honorary citizenships and other honours. Local governments were also active in establishing ties with cities, prefectures and counties elsewhere. By 1999, the Yanbian capital Yanji had created friendly relations with 11 cities and districts in five countries. Of these locations, five were in South Korea. In addition, Yanji had friendship cities in Australia and Russia.

One form of official business promotion activity was the arrangement of international Korean cultural events. Some of these events had a purely commercial character, while others sought to bring the Korean-Chinese community to the knowledge of Koreans abroad and portray them as potentially valuable partners. Important occasions included international trade fairs and the anniversaries of the autonomous prefecture, which were celebrated grandiosely every fifth year. These celebrations were organized by the prefectural government. The First Korean Cultural Festival, which Yanbian Prefecture organized in August 1992 to celebrate the prefecture’s 40th anniversary, provides a good example of these cultural-trade events. The organizers of the First Korean Cultural Festival invited ethnic Korean guests from 10 countries, among them over 500 businessmen with a Korean background. During the festival, representatives of Yanbian companies negotiated with the business guests and agreed on participation in over 40 projects.

In addition to holding festivals with an ethnic Korean character, Yanbian also tried to attract overseas Koreans’ attention by building up a permanent exhibition on Korean-Chinese folk customs, and by reconstructing several traditional villages. Cultural activities of this kind echoed the practices of China’s minority policy. China has emphasized the cultivation of minorities’ folk customs, such as traditional festivals, the performing arts and clothing, often adapted to Chinese sensibilities. Koreans in China have managed to maintain their folklore rather well, and they enjoy a high level of education, mainly in the fields of literature, history and the performing arts. This background has provided a solid basis for the arrangement of ethnic cultural events and exhibitions.

The above attempts to elevate the Koreanness of Yanbian can be interpreted as a way to strengthen “diffuse solidarity” in the transnational community. This type of solidarity creates affinity within larger entities such as territorial and symbolic communities, in which participants largely lack face-to-face contact. [3] Yanbian tried to deepen the interest and affection of foreign Koreans toward Yanbian by highlighting its cultural Koreanness. At the same time, it aimed to control politically sensitive claims on commonality. For example, the officials suppressed all statements of Yanbian being a part of Korea historically or in terms of nationhood.

Building Ties

The first joint venture in Yanbian was established in 1986 between an American subsidiary of a South Korean company and the prefecture of Yanbian. Before the establishment of Sino-South Korean official relations, most foreign investments came from Korean-Americans or American affiliates of South Korean companies. By the end of 1992, a total of 131 of the 212 wholly or partly foreign-owned companies in Yanbian, sanzi qiye, were run by ethnic Korean capital. The greatest part, consisting of 72 companies, had absorbed South Korean capital, and 10 had taken up North Korean capital. In all, 49 companies were partly or wholly financed by ethnic Koreans from other countries such as the United States, Japan and Canada. At least in these 49 cases, it could be reasonable to argue that ethnic and family ties had played an important role in the investment decision. In 1996, an official in the foreign trade administration informed me, foreign investors from countries other than South and North Korea were mainly ethnic Koreans.

The year 1996 can be seen as a turning point in Yanbian’s foreign economic cooperation. The number of enterprises receiving South Korean investments rose to 393, including large-scale investments. Between 1996 and 1997 the total volume of implemented foreign investment more than doubled. The financial crisis which hit the South Korean economy in the latter years did, however, precipitate a nosedive in South Korean foreign direct investments. South Korea recovered quickly from the crisis, but the number and value of the absorbed FDI would not quickly return to 1996 and 1997 levels. Still, by 2002, total South Korean direct investment projects had risen to 515, which was 74 per cent of all FDI in Yanbian. Their average value (US$790,000) was rather small compared with the average value of FDI from Hong Kong (US$2.7 million), Taiwan (US$1.02 million) and Japan (US$1.01 million). A report compiled by a leading cadre of the Tumen Programme Office, however, revealed disappointment with the type of investments Yanbian had received. Although the number of investments was relatively high compared with other parts of Jilin Province, and South Korean investment accounted for more than two thirds of international investment in Yanbian by 2002,the level of technology, scale, efficiency and compatibility was said to be low. Moreover, the companies experienced huge losses and failed to invigorate the local economy. [4]

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Compared with South Korean investment in other parts of China, interest in Yanbian was limited. Shanghai, Tianjin and the coastal provinces Shandong, Liaoning, Jiangsu, and Zhejiang ranked highest in South Korean investment. Investment decisions were guided principally by profitability, not by emotions. By comparison to leading coastal provinces, Yanbian’s infrastructure was meagre, hence South Korean interest in investment low. In addition, South Korean companies could readily recruit Korean-speaking workers from Northeast China to their factories situated in the coastal regions.

The amount of FDI in Yanbian rose gradually in the early 1990s, but foreign trade did not. Yanbian’s foreign trade declined between 1993 and 1996. In the early 1990s Yanbian’s main trade partner was North Korea, which faced mounting economic difficulties leading to a sharp drop in trade in 1993. The other reason for the crash was the establishment of Sino-South Korean official relations. North Korea responded by cutting back on trade. The low quality and narrow selection of Yanbian’s main export products in the early 1990s—cereals, coal, tobacco, sugar—also hindered development of trade with the emerging new trade partners, Japan and South Korea. Yanbian’s foreign trade plummeted from a peak value of US$467 million in 1993 to US$155 million in 1995.

Yanbian responded by launching, in cooperation with South Korean investors, new export products: textiles, yarn, timber, and wooden products. One third of the South Korean-invested companies were engaged in textile manufacturing. Yanbian also imported timber from Russia and North Korea in order to manufacture wooden products for South Korean markets.

In 2003, the value of Yanbian’s trade with North Korea was nearly equal to its trade with South Korea: US$117 million versus US$116 million. Yet two years later, trade with North Korea had expanded to double the value of trade with South Korea. The economic reforms initiated in North Korea in 2002 were presumably one of the main reasons for this increase. In addition, the visit by China’s leader Jiang Zemin to North Korea the same year probably boosted trade relations. However, compared with other regions in China, Yanbian’s trade with neighbouring countries remains small. By comparison, the border city of Dandong in Liaoning Province handles over two-thirds of China’s trade with North Korea.

In reality, Yanbian’s trade with North and South Korea and Russia, like its trade across other land borders, has been much more extensive than official numbers show. Many of the companies involved in foreign trade with North Korea were not registered. Thus, their trade remains outside of the statistics. Similarly, the vibrant shuttle trade with the bordering countries, South Korea included, is not visible in the statistics.

Trade and investment flows between China and the two Koreas have been most intensive in China’s Bohai region, which stretches from Liaoning to Shandong; Yanbian, due to its remote location and less developed infrastructure, has remained a backwater by comparison. Nevertheless, although the Korean investments in Yanbian are relatively few, and registered trade with the two Koreas low, the role of overseas Korean ties in the development of the Yanbian economy has been crucial. China’s central government has provided Yanbian with several preferential polices [5], but it has provided only limited funds to create a solid economic foundation. Supported by preferential policies, Yanbian’s development has largely been financed by South Korea. Today, as Yanbian’s economic structure has become consolidated, domestic companies are showing increasing interest in Yanbian, further supported by the state-sponsored campaign to rejuvenate the economy of Northeast China. This new development could reinforce Yanbian’s position in the Northeast Asian circle of ethnic Korean capital flows.

The patterns of ethnic Korean investments in Yanbian show similarities with overseas Chinese investments in China’s coastal regions. The investments have been small and have not involved high technology. Rather, they have concentrated in the service sector. Cooperation with South Korean companies has provided an important learning process for inexperienced Yanbian Korean companies, helping them to adapt to international cooperation. In southern China, overseas Chinese investments have paved the way for other foreign investors; in Yanbian, overseas Korean investments have created conditions which facilitate the flow of both foreign and domestic Chinese investments into the area. In this way, the foreign investments have in fact supported Yanbian’s integration into China’s domestic economy.

Compared with overseas Chinese community investments in China, the Korean transnational community has been less inclined to invest in South Korea. To a great extent this is the product of South Korea’s restrictive policy on foreign direct investments. South Korea made the first attempts to mobilize its Korean diaspora for economic purposes only in 1997, when the Overseas Koreans Foundation was established. Since 2002, the Foundation has convened annual “World Korean Business Conventions,” which aim at building a global Korean business network in support of the South Korean economy. As South Korea has liberalized foreign investment rules, ethnic Korean investment has started to increase. Yanbian has been ahead of South Korea itself in its organized attempts to mobilize the transnational ethnic Korean community.

Attracting donations and remittances has been a central part of building ties between China and overseas Chinese. By comparison with overseas Chinese donations in Guangdong, overseas Korean donations in Yanbian and elsewhere have been few.

There have, however, been donations directed to schools, institutes and universities, as is the case with Chinese contributions to their hometowns in Guangdong. Some foreign Koreans who lived in Yanbian in their childhood have donated to their alma maters. Donations have included technical equipment, books, periodicals and grants. During fieldwork in Yanbian in 2004, I met with a South Korean businessman who had recently made a donation to a technical institute in Yanbian. Although he was investing in other parts of China, he had chosen Yanbian for his donation because his father and mother were born there.

During the 1990s, Yanbian received institutional donations worth US$10 million. High taxes imposed on donations, as well as corruption, were mentioned as reasons for limiting donations. Remittances to relatives tended to flow out from Yanbian rather than in, as local Koreans helped their relatives in North Korea; indeed, my local contacts emphasized that the main flow of economic support was from Yanbian to North Korea, not from South Korea to Yanbian. Rather than sending money, many South Korean relatives preferred to give generous gifts when they met with their Yanbian relatives. By contrast, significant flows of Korean capital were directed from Yanbian to North Korea. Yanbian Koreans supported relatives and friends in North Korea both financially and by providing clothes and food. Yanbian also served as a channel for South Korean remittances to North Korea. Both South Koreans and North Koreans who lived outside their home country used Yanbian Korean brokers to deliver money to their relatives in North Korea.

Finally, the remittances sent by Yanbian Korean labour migrants from abroad to Yanbian were significant. In 2003, migrant remittances are said to have reached US$650 million. This sum was double the local budget, and fifteen times higher than the value of realized foreign investments in 2003.

Korean Ethnic and Family Ties in the Service of Economic Development

Without a doubt, Korean ethnic ties have given impetus to Korean investors to start businesses in Yanbian. Firstly, ethnic affinity led some investors to invest in Yanbian. Some South Korean researchers of China-South Korean trade have mentioned the Korean population of Yanbian as being advantageous for South Korean investors; for example, the South Korean economist Si Joong Kim assumes that cultural proximity has attracted South Korean small- and medium-sized firms to China’s Korean areas. [6] Yanbian has also attracted Korean interest in its capacity as a link with North Korea. As Yanbian Koreans can easily enter North Korea, information from and about North Korea is readily available there. Local companies can also act as middlemen with North Korean companies. Thus, some investors see Yanbian as a springboard for future investments in North Korea.

The Complexity of Transnational Ethnic Ties as an Economic Resource

Overseas Korean networks have not, however, provided comparable resources to Yanbian as the overseas Chinese networks have provided to Southern China. China’s coastal region possesses a long tradition of entrepreneurship, and the overseas Chinese community is highly business-oriented, factors which have contributed to the rapid economic growth on China’s southern coast. Yanbian, by contrast, was predominantly agrarian, and due to its remote position adjacent to North Korea, its economy has been less developed. The high level of education of the Korean-Chinese has not led directly to economic cooperation with foreign countries, as the highly educated Korean-Chinese have mainly pursued studies in history, literature and the arts. Moreover, they have tended to be oriented toward careers in government, in the performing arts and literature, or in the media. Hence, compared with the overseas Chinese, the Korean transnational community has been less well positioned to invest in Yanbian.

A closer look at certain elements of Koreanness that Yanbian wished to rely on reflects the complexity of ethnic ties as a resource for promoting economic cooperation. Ethnic background or family ties do not automatically generate business. When the Yanbian Koreans won the opportunity to visit South Korea, they were surprised at not receiving a warmer welcome there. Indeed, South Koreans tended to look down on them. For political and cultural reasons, North Koreans were held in even lower esteem in South Korea. As Korean-Chinese were often mistaken for North Koreans when visiting South Korea, due to similar dialect and appearance, they often met rather harsh treatment.

As contacts between Korean-Chinese and South Koreans intensified, the differences in their habits and values also became quite clear. Korean-Chinese and South Koreans had drifted apart during forty years of separation. The resulting differences led to conflicts over values and other misunderstandings between the two groups. According to sociologist Hyun Ok Park, the Korean-Chinese had turned from “long-lost relatives of blood-kin” to a cheap labour force which faced discrimination, arrests, crackdowns and deportations. [7]

Family networks did not provide wide access to business, because the majority of the Yanbian Koreans had their relatives in North Korea. Close ties between the Yanbian Koreans and North Korea constituted a hindrance to trade with South Korea in the mid-1990s. According to one Yanbian Korean contact, those who wished to maintain trade relations with North Korean companies were often unable to seek business partners in South Korea, for fear that the North Korean side would break off the relationship. Although trade with North Korea had become less and less profitable by the mid-1990s, many Yanbian Korean businessmen avoided business contacts with South Korea in order to maintain their partnerships with North Korean companies. Some Yanbian Koreans also feared that cooperation with South Korea would put their relatives in North Korea in a difficult situation.

Loyalty to China

Some Chinese government officials also wanted to avoid the problems which contacts with South Koreans might create. This, especially, seems to have hindered cadres of Korean origin. Due to the strong South Korean connection with Yanbian, and the pan-nationalistic activities aimed at creating a united Great Korea, including Yanbian, Yanbian was classified as one of the four sensitive regions in China where the Central Government fears separatism. [8] The fear is that pan-nationalistic South Koreans might infiltrate Yanbian in the guise of economic cooperation. Some officials, who wished to render their career secure by avoiding all trouble, chose to block cooperation with South Koreans and other foreigners.

The activities of the associations that were pursuing people’s diplomacy with overseas Koreans were closely monitored. One article in the journal of the local Party School stated that strengthening party guidance was essential for people’s diplomacy, and urged close cooperation between associations and the Party. The article even called for Party cells in associations in order to assure that they follow the Party line. [9] In this environment, the prerequisite for an internationally oriented association to be active seemed to be a chairperson who was a trusted Party member.

Similar views were presented in articles prepared by the national-level Ethnic Affairs Commission, Minwei. [10] Korean-Chinese were generally regarded as a patriotic group, having participated in the Civil War on the side of the Communists, and later in the Korean War in the ranks of the Chinese People’s Liberation Army. The starting point in these articles was that the Korean masses should be trusted; leaders should have faith in the Koreans and trust that their political consciousness is strong enough to resist the influence of foreign infiltrators. The second point was that international economic cooperation is essential for Yanbian, so ties with foreigners should be developed. Still, social stability, national unity and border security remained priorities.

There was also concern for the eventual reactions to strong condemnation of Yanbian Koreans as unpatriotic or unreliable. The labelling of Yanbian as a sensitive area (mingan diqu) would convey a lack of trust to local Koreans. It was feared that this would create opposition and disappointment, which could push the Korean-Chinese to the side of infiltrators. There was a clear need to find an appropriate balance between flexibility and control, in order not to obstruct positive economic transfers from the Korean transnational community to Yanbian.

At the same time as concern for the loyalty of Yanbian Koreans arose, exclusivist tendencies in South Korean society produced a counter-force in favour of China. Many Yanbian Koreans became disillusioned because of the discrimination they encountered in South Korea. This strengthened their bonds with China. In addition, in China, they could anticipate rising living standards and could feel pride in belonging to the Korean-Chinese community. Thus, the question of the loyalty of Yanbian Koreans involved multiple contradictory factors.

The Role of Religion

In addition to political ideas, religious activities spread through transnational ties. Christianity was not only perceived by the Chinese leadership as a threat to the “Chineseness” of the Yanbian Korean culture, but Christian congregations were considered to be a disguise for political infiltrators who aimed to disintegrate the country through peaceful means. South Korean missionaries worked not only among Korean-Chinese but also among North Korean migrants and refugees. While in South Korea, many Korean-Chinese encountered Christianity. Until the 1980s, the role of religion had been limited among Korean-Chinese, while in South Korea, one-third of the population were Christians. One contact assumed that the Korean-Chinese migrants were initially attracted to Christianity when they got support from South Korean believers while working under adverse social and economic conditions: Christian organisations provided practical help, like free medical treatment, as well as social and political support. Christian organisations also won support by backing Korean-Chinese demands that South Korean authorities guarantee humane treatment.

Korean churches worked among Korean-Chinese actively not only in South Korea but also in China. They sent both money and personnel to local churches and ran welfare projects. Some churches had established congregations in Yanbian and other areas of China. Many returning migrants joined a local Christian congregation. By the year 1996, the Christian community in Yanbian had grown to include nearly 10 percent of the ethnic Korean population. In addition to return migrants, these congregations also appealed to locals who looked for support in the midst of deteriorating socio-economic conditions.

In order to counteract foreign political and religious infiltrators, three measures were taken in Yanbian in the late 1990s. Firstly, education emphasizing patriotism, socialism and religious policy was intensified. Secondly, leadership was strengthened. Thirdly, control of foreign religious activities was intensified.

Government-Imposed Limitations to Transnational Activities

Yet, various issues remained salient. A report on the new tasks of nationality work from 2001 stated that unequal and slow economic development worked against the cohesion and “centripetality” of minority nationalities. Furthermore, certain international factors and religious activities posed a latent threat to the ethnic unity and social stability in some areas. Yet, this particular document did not provide any policy proposals beyond the routine phrases of training ethnic minority cadres in the spirit of the “three representatives” (sange daibiao). [11] This dilemma will persist as long as the Sino-Korean border exists.

Overall, at the grassroots level, unorganized transnational activities have been allowed to operate freely, but organized activities have only been approved if under the guidance of the Party. At a higher level of institutionalization, whether controlled by individuals, government units, or companies, transnational activities have been required to proceed only according to a strict code of operation. Hence, central tenets of Yanbian’s approved transnational policies can be summarized into two key concepts, viz: trustworthy relations with the centre, and ethno-politically disciplined organizations.

Conclusion

In the course of the 1980s and early 1990s, Yanbian Koreans were gradually linked to the Korean transnational community. Their relationship to this community has since evolved from a fervent Korea-fever to disillusionment. Bernard Vincent Olivier has drawn interesting parallels between the interaction of Yanbian Koreans and North Koreans in the 1960s and the interaction of Yanbian Koreans and South Koreans in the 1990s. In both cases, close interaction initially generated euphoria but later resulted in strengthening the Chineseness of Yanbian Koreans. [12] This tendency was also evident in the early 21st century. Contrary to the fears of China’s leaders, transnational ethnic relations do not necessarily undermine the loyalty of cross-border ethnic groups. Indeed, deeper contacts with ethnic kin abroad may even strengthen minority groups’ ties to the home country.

Although trade and investment flows between China and the two Koreas have been most intensive in China’s Bohai region, the role of overseas Korean ties in the development of the Yanbian economy has been crucial to the locality. As Yanbian’s economic structure consolidates, its position in the Northeast Asian circle of ethnic Korean capital flows might become more significant.

Drawing on traditions of overseas Chinese work, the Yanbian administration was able to mobilize ethnic Korean resources for prefectural development. The mobilization of the Korean transnational community by Yanbian officials was similar to that in overseas Chinese-connected areas such as coastal Guangdong and Fujian, but on a smaller scale. The administration of transnational relations of the ethnic minorities is, however, politically more sensitive in Yanbian than in coastal China since transnational ethnic relations raise questions about border security and separatism. Nevertheless, transnational ethnic relations have been allowed to expand and deepen in relatively unrestricted ways, compared, for example, with those involving the Uyghurs of Xinjiang. This suggests the possibilities of ethnicity-based cross-border economic activities in China.

The mobilization of transnational linkages has provided China with substantial resources that have contributed to China’s rise. While this has been widely recognized with respect to the Chinese diaspora, far less attention has been paid to linkages with Koreans abroad. Yet China has clearly embarked on major efforts, both at the center and in localities, to draw in overseas resources to support China’s rise.

Editors’ note: This article refers to Chinese persons of Korean descent as Korean-Chinese (Korean-Chinese in Yanbian are frequently termed Yanbian Koreans). Other English-language literature, including the author’s PhD thesis, refers to Korean-Chinese as Chinese-Koreans. Chinese usage is closer to “the Korean nationality” or “the Korean minority nationality.”

Outi Luova is a senior researcher at the Centre for East Asian Studies, University of Turku, Finland. Her PhD thesis dealt with the attempts of the Yanbian government to utilize transnational Korean ethnic capital for the economic development of Yanbian. She can be contacted at [email protected]. This article is a revised version of an article that appeared in China Information 2006:1. Many thanks to Mark Selden for comments on earlier drafts of this article.

On Gaoguli/Goguryeo (or Koguryo), see “Competing Nationalisms: The Mobilisation of History and Archaeology in the Korea-China Wars over Koguryo/Gaogouli,” “The Legacy of Long-Gone States: China, Korea and the Koguryo Wars,” and other Japan Focus articles searchable using the keyword “Koguryo.” On border politics and cultural politics, see “Dance or Else: The Politics of Ethnic Culture on China’s Southwest Borders.”

Notes

[1] Ahn, Yonson (2006). “Competing Nationalisms: The Mobilisation of History and Archaeology in the Korea-China Wars over Koguryo/Gaogouli.” Japan Focus, February 9.

[2] Dong-Hoon Seol and John D. Skrentny (2005). “South Korea: Importing Undocumented Workers.” In Cornelius W. et al., eds., Controlling Immigration: A Global Perspective. Stanford, California: Stanford University Press, 489.

[3] Faist, Thomas (2000). The Volume and Dynamics of International Migration and Transnational Social Spaces. Oxford: Clarendon Press, 106, 109.

[4] Sun Xingbiao ( 2001). Guanyu Yanbian duiwai kaifang wenti de sikao. A report by the deputy director of the Tumen Programme Office (no date available). In Zhu Hongqi, ed., Zhongguo dangdai juece wenku. Yanbian Chaoxianzu zizhizhou lingdao ganbu diaocha lunwen ji. Shang juan. Beijing: Xueyuan chubanshe, 274.

[5] These policies include preferential policies for ethnic minority regions: the Tumen River Development, the Development of the West, and the Development of the Old Industrial Basis of the Northeast.

[6] Si Joong Kim (1994). “Korean Direct Investment in China: Perspectives of Korean Investors.” In Sumner J. La Croix, Michael Plummer, and Keun Lee, eds., Emerging Patterns of East Asian Investment in China: From Korea, Taiwan, and Hong Kong. Armonk, New York: M. E. Sharpe, 205.

[7] Park, Hyun Ok (1996). “Segyehwa: Globalization and Nationalism in Korea.” In The Journal of the International Institute 4:1. www.umich.edu/~iinet/journal/vol4no1/segyeh.html.

[8] The other sensitive regions are Inner Mongolia, Xinjiang, and Tibet.

[9] Jin Yongwan (1999). Shilun shehui zhuyi xiandaihua jianshe he minjian waijiao. Yanbian dangxiao xuebao 1. CNKI Database.

[10] Yanbianzhou Minwei (1997). Duiwai kaifang duinei gaohua zhashi gongzuo cujin bianjiang de wending he fanrong. Speech given by a cadre in a responsible position in the Yanbian Minwei at a national meeting on Minwei’s work in border areas. Minzu gongzuo 5; Wang Tiezhi & Li Hongjie 1997. Duiwai kaifang yu zhongguo de chaoxianzu. Minzu Yanjiu 6

[11] Han Changzhen (2001). Dangqian wozhou minzu gongzuo minlin de yixiang xin renwu. Report by deputy head of the Standing Committee of the People’s Government in the Yanbian Prefecture (no date available). In Zhu Hongqi, ed., Zhongguo dangdai juece wenku. Yanbian Chaoxianzu zizhizhou lingdao ganbu diaocha lunwen ji. Shang juan. Beijing: Xueyuan chubanshe, 286.

[12] Olivier, Bernard (2001). “Ethnicity as political instrument among the Koreans of Northeast China, pre-1945 to the present.” Korean and Korean-American Studies Bulletin 12:1.

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North Korean Restaurant in China Shuts Down as Receptionist Escapes

Wednesday, March 21st, 2007

Daily NK
Kwon Jeong Hyun
3/21/2007

A North Korean restaurant “Pyongyang-kwan” in China is facing a similar predicament as another restaurant in the same area “Pyongyang Moran-kwan,” where a female employee “Lee” was repatriated back to North Korea last October having been arrested for fleeing the restaurant. As a result, North Korean authorities made the restaurant accountable and repatriated all the employees back to North Korea, which inevitably led to the restaurant closing its doors.

In 2000 also, some female employees fled a restaurant “Pyongyang” in Yanji. As a result, the business was terminated and has yet to restart operations again.

The majority of North Korean restaurants located in China are run by entrepreneurs who have signed a contract with North Korean authorities. While the Chinese are responsible for business and property lease for the restaurant, North Koreans bestow the female workers and extract 40% of the net income.

As more and more waitresses break away from restaurants, North Korean authorities are continuing to withdraw the remaining restaurant employees, as is their custom. Consequently, if all North Korean employees are removed, the restaurant has little choice but to shut down.

North Korean workers sent overseas must undergo a meticulous selection period. North Korean authorities select graduates as their ideal candidates and even if a minor detail is undesirable, the candidate is discarded. Furthermore, North Korean authorities dispatch independent National Security Agents to regulate the overseas workers. Normally, 2~3 security agents are residing at the restaurant also.

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We [ROK] Could Be Left Out of a U.S.-N.Korea Deal

Monday, March 19th, 2007

Choson Ilbo
Yun Duk-min
3/19/2007

It was set off by a nuclear test. The Bush administration, which insisted it could not reward a wrong and wouldn’t conduct bilateral negotiations with North Korea, made a U-turn and promised the North political and economic compensation in bilateral talks. North Korea’s response has been equally astonishing. North Korean Vice Foreign Minister Kim Kye-kwan recently had a long meeting with former U.S. secretary of state Henry Kissinger. What he said sounds unbelievable. Expressing a deep interest in improving U.S.-China relations, he asked if the U.S. has “strategic interests” in North Korea and added, “The Korean Peninsula has been invaded by foreign powers like China and Japan. Strategic relations with the U.S. will be of help to North Korea and regional stability.”

The U.S.-China rapprochement early in the 1970s involved two factors. The U.S. wanted to use China’s strategic value to check the Soviet Union’s expansion, so it broke close relations with Taiwan in exchange for diplomatic relations with China. By the same token, it seems that North Korea is now willing to cooperate with the strategic U.S. interest of restraining China.

North Korea will inwardly have been concerned about its deepening economic reliance on China and increasing Chinese influence on its domestic affairs. In view of the rumors that China could be attempting a change in the North Korean leadership in the wake of the North’s nuclear test, the North may be trying to check the attempt by drawing in the U.S. As the U.S. abandoned Taiwan for the sake of diplomatic ties with China, North Korea may attempt to isolate and restrain South Korea through strategic relations with the U.S.

Kim Kye-gwan’s remarks suggest that the North intends to check South Korea and China by drawing in the U.S. Why does North Korea, after saying it only developed nuclear weapons because of the U.S., now embrace Washington to restrain the South and China? Having introduced a capitalist system in the 1970s, China is emerging as a serious threat to the North Korean regime. What’s more, Beijing in the wake of the collapse of the Berlin Wall forsook Pyongyang and established diplomatic ties with Seoul. South Korea’s rapid economic growth and democratization posed a threat of unification by absorption. In order to avoid either absorption by the South or becoming a Chinese satellite, Pyongyang needed two approaches; nuclear armament and establishment of strategic relations with Washington.

A close review of the 17-year process of negotiations on the North’s nuclear weapons development program clearly reveals North Korea’s intent. The only counterpart in negotiations was the U.S. But unlike the Clinton administration, which negotiated with North Korea directly, the Bush administration, with its top priority on the creation of a new order in the Middle East, had practically left the issue to China. Two aircraft carrier fleets are deployed in seas near Iran, but none came anywhere near the Korean Peninsula when North Korea test-fired missiles and tested a nuclear device. Thanks to its nuclear test, North Korea has now managed to bypass China and secure direct negotiations with the U.S.

Secondly, the North pledges to pose no threat to the U.S. if the latter tacitly approves its limited nuclear armament. It can relinquish long-range missiles capable of attacking America and will never transfer nuclear weapons or materials to third parties or terrorists, the North says. Thirdly, Pyongyang says it can recognize the U.S. forces on Korea. Already in 1991, the senior North Korean leader Kim Yong-sun, deceased in 2003, told high-ranking U.S. officials that North Korea could be a U.S. ally and recognize the USFK. Pyongyang has now only added its willingness to cooperate with Washington’s China strategy.

North Korea’s attempts failed so far because the North wanted both — strategic relations with the U.S. and nuclear armament. Without the premise of resolving the North Korean nuclear crisis, the U.S. could hardly accommodate that. But North Korea’s willingness to cooperate in restraining China must be a very interesting development for the U.S. Rumors are afoot that the U.S. may give tacit consent to the North’s nuclear armament. If the nuclear problem is shelved, it is possible for the U.S. to accommodate North Korea’s demands.

We are at a crucial juncture with denuclearization of the Korean Peninsula. While the North endeavors to build a survival framework through nuclear armament and the help of foreign powers, we are bogged down in domestic bickering as to who will benefit more from a possible inter-Korean summit and a peace agreement. We must recognize that our principle of not tolerating any nuclear weapons on the peninsula could prevent a U.S.-North Korea compromise that would be unfavorable to us. North Korea, too, should realize quickly that the survival of its regime and the happiness of its people depend on its relations not with the U.S. but with South Korea, which accounts for two-thirds of the peninsula’s population and 99 percent of its economic strength. 

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Yongchun Explosion…Chinese Merchants First to Inform

Wednesday, March 14th, 2007

Daily NK
Kim Min Se
3/14/2007

It is a well known fact that goods made in China are sweeping across North Korea with Chinese merchants taking the role of distributor.

However, Chinese merchants are not only exporting goods into North Korea but are also importing goods made in North Korea such as seafood, medicinal herbs, coal and minerals back to China.

Particularly, dried shellfish sells very well in China. As more and more Chinese merchants buy dried shellfish from North Korean markets, they play a critical role in the lives of North Korean citizens as sellers who are then able to raise the price due to demand. Every year, from April~Sept, people from the North-South Pyongan, Haean collect shellfish along the shore. 10kg of rice can be bought with 1kg of shellfish meat. Consequently, citizens of other regions also come to the beaches to collect shellfish.

If Chinese merchants did not import any goods and North Korea’s finest goods were not exported to China, the cost of goods at Jangmadang would increase exponentially. This is how close the relationship between the lives of North Korean citizens and Chinese merchants have become interconnected.

Significance of information runners

Though Chinese merchants are currently contributing to market stability, it does not necessarily mean that their existence will continue to be positive to North Korean authorities.

The people first to inform news of the Yongchun explosion in April 2004 to the outside world were Chinese merchants.

At the time, after confirming the lives their family members in North Korea, Chinese merchants who heard the explosion in Dandong gathered information about the explosion details from relatives in Shinuiju and Yongchun over mobile phones. Undoubtedly, news spread instinctively. The economic development zone, Dandong, which is at the mouth of the Yalu River is merely 10km from Yongchun.

Due to this incident, Kim Jong Il banned the use of mobile phones in North Korea. Chinese merchants have played a great role in the outflow of inside North Korean issues, a problem feared by North Korean authorities that contributes to the inflow of foreign information.

Recently, Chinese merchants have been charging a 20% fee involved in remitting dollars to defectors wanting to send money to family in North Korea. For example, if a defector wishes to send $1,000 to family in North Korea, a merchant will extract $200 and transfer the remaining $800 to the family.

As long as Chinese merchants have a specific identification card, they are free to travel between the North Korean-Chinese border and hence many defectors prefer to use Chinese merchants as the intermediary. Thanks to these merchants, many people can convey money and letters to family within North Korea.

In these respects, Chinese merchants are not only selling goods but are acting as information runners transporting news of the outside world into North Korean society.

As more and more North Koreans rely on markets as a means of living and trade between China and North Korea, the North Korean market will only continue to expand. We will have to wait and see whether or not Chinese merchants will have a healing or poisonous affect on the Kim Jong Il regime from here on in.

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