North Korean Economy Watch

According to the Yomiuri Shimbun:

North Korean defectors appear to be traveling to [Japan] from South Korea to earn an income in the adult entertainment industry, with a series of arrests having been made in connection with two adult businesses in Ueno, Tokyo.

A woman who defected from North Korean was deported from Japan to South Korea in mid-October after being convicted of illegally operating an adult salon in Ueno, according to Metropolitan Police Department sources.

The woman fled North Korea for South Korea in July 2004, but she came to Japan in April 2006 after experiencing financial difficulties in South Korea.

She opened the adult salon in January last year, and was arrested in May this year, the police said.

According to MPD sources, the woman sent part of her earnings from the shop to North Korea.

Nine other defectors from North Korea, all women, have also been arrested, the MPD said.

One, a massage parlor manager in her 40s, is an acquaintance of the deported woman. Investigative sources said she was arrested Oct. 4 on suspicion of violating the Adult Entertainment Businesses Law by operating the parlor in an area of Ueno where such businesses are prohibited.

The other eight women worked at the two Ueno businesses, and were arrested on suspicion of breaking the Immigration Control and Refugee Recognition Law by working in violation of their visa status.

After defecting from North Korea, all 10 women entered a facility in South Korea that helps defectors settle in that nation, and all obtained status as South Korean nationals, according to the police.

However, the women found it hard to find work in South Korea. One was quoted by the police as saying: “We defected from North Korea because our lives there were difficult, but our lives didn’t improve in South Korea. In Japan, we earned a lot, partly thanks to the strong yen.”

The deported woman made profits of about 35 million yen at her salon between its opening and April this year. The woman said she had sent part of the income to relatives in North Korea, according to the police.

The MPD believes word that good money can be made by starting an adult entertainment business in Japan has been spreading among North Korean defectors.

The arrested massage parlor manager, meanwhile, is rumored to have once been a member of North Korea’s secret police, the MPD said.

The MPD intends to thoroughly investigate the woman, who comes from a northern region of North Korea and visited Japan a few years ago, by exchanging information with South Korean police.

The majority of North Korean defectors seek asylum in South Korea after fleeing the country, often by crossing the Tumen River that runs along the North Korea-China border.

According to South Korea’s Unification Ministry, about 20,000 North Korean defectors currently live in South Korea.

However, many cannot assimilate to life in South Korea. Defectors’ employment rate is about 70 percent of that of the general public.

The Japanese government has accepted as North Korean defectors about 200 Korean-Japanese and their families who went to North Korea on its “return to the homeland” project, which began in 1959.

Most North Korean defectors were born and raised in North Korea, however.

Thought the exact number is not known, it is believed many North Korean defectors have visited Japan as South Koreans after obtaining South Korean nationality.

Also in the Korea Times:

Two pimps were arrested for trafficking female North Korean refugees in Japan and forcing them to engage in prostitution there, police said Friday. Police also arrested 13 female North Korean defectors for selling sex in red-light districts in Tokyo.

According to the Seoul Metropolitan Police Agency, the arrested female pimps, surnamed Tak and Lee, ran a massage parlor in Ueno since November 2008. The two are also North Korean defectors to the South.

The women defectors were forced to sell sex for 6,000 to 10,000 yen per hour, it said. The pimps racked up more than 1.1 billion won in illegal gains.

Investigators said they coaxed jobless female defectors here with the promise that they could make more than 15 million won a month in Japan.

Some of the trafficked women said during questioning they engaged in the illegal business to cover fees needed to take their family members still in the North out of the poverty-stricken state.

“This was the first case to catch a group of prostitutes and pimps, all of whom are North Korean,” a police officer said.

A growing number of female defectors leave for Japan voluntarily in recent years to enter into the sex industry there, a desperate move to escape from financial hardship in the South, the officer said.

Read the full stories here:
N. Korea defectors in vice busts / Arrested women drawn to Japan by earning potential in adult industry
Daily Yomuri
10/24/2010

North Korean defectors caught selling sex in Japan
Korea Times
Park Si-soo
10/22/2010

According to Yonhap:

Prosecutors said Friday they have arrested three people suspected of trying to defect to North Korea, allegedly disgruntled with South Korean society.

A medical doctor, identified only by his surname Shin, and two others are charged with attempting entry into the communist state via China last February, prosecutors said.

Seoul judges issued arrest warrants, citing that the suspects are feared to try to flee and destroy evidence.

The three returned to South Korea after failing to cross into the North, despite receiving help from an acquaintance in Sweden.

They met through an online pro-North Korea community and were quoted as having attempted defection because they were “sick of (South) Korean society,” prosecutors said.

Prosecutors have not found evidence of other parties’ involvement in the defection attempt, but are probing indications that the three had contact with the North during their stay in China.

Read the full story here:
Three suspected of attempting defection to N. Korea
Yonhap
10/22/2010

According to KBS:

Japan’s State Secretary for Foreign Affairs Takeaki Matsumoto says there are more than 100 North Korean escapees in Japan.

Matsumoto made the assessment on Thursday in response to a question posed by Democratic Party of Japan legislator Yosihu Arita during a meeting of a special House of Councillors committee on Japanese abductees.

Arita said a dozen North Korean escapees are under the protection of Japan’s diplomatic mission in China. He said there are reports that some of the escapees have been unable to leave China for nearly two years and urged the Japanese government to promptly address the matter.

In response, Foreign Minister Seiji Maehara said Tokyo will seek the early departure of the escapees in line with the interests of related countries.

Read the full story here:
‘More than 100 NK Escapees Have Entered Japan’
KBS
10/21/2010

According to the Choson Ilbo:

The senior secretaries of all North Korea’s 11 metropolitan and provincial party committees paid a rare collective visit to a senior member of the Communist Party of China in Beijing on Tuesday.

The North Korean delegation led by Mun Kyong-dok, the senior secretary of the Pyongyang municipal party committee, met with Zhou Yongkang, a member of the Politburo Standing Committee who ranks ninth in the hierarchy, to discuss economic cooperation.

Zhou was quoted by the official Xinhua news agency as saying it was “the first time” in the history of bilateral relations that senior secretaries of the Workers Party’s metropolitan and provincial committees have visited China as a group. “I wish that you will expand exchange with various Chinese regions you’re visiting and achieve success from your tours.”

The North Koreans also met with their Chinese counterparts to discuss investment in development projects in the North. The Chinese officials were in Beijing to attend the fifth plenary session of the 17th Communist Party Central Committee.

A South Korean government official said, “The North Korean officials’ visit to Beijing is equivalent to all 16 South Korean metropolitan mayors and provincial governors flying to Washington as a group to discuss exchange and cooperation with ruling-party lawmakers and state governors in the U.S.” He said since Kim Jong-il’s son Jong-un was established as the official successor to the leadership, the North and China have increased the frequency of personnel exchanges “to discuss more substantive matters than before.”

The profiles of the Chinese delegation that attended the 65th anniversary celebrations of the North Korean Workers Party were also exceptional. It included senior officials of the three Chinese northeastern provinces — Sun Zhengcai, the secretary of the Jilin provincial party committee, Chen Xi, the deputy secretary of the Liaoning provincial party committee, and Du Yuxin, the deputy secretary of the Heilongjiang provincial party committee.

They were welcomed at Sunan Airport by Ju Yong-sik, the senior secretary of the party committee in Jagang Province, a border region. The senior secretaries of the party committees in all four North Korean provinces bordering China — Ju from Jagang Province, Ri Man-gon from North Pyongan Province, O Su-yong from North Hamgyong Province and Kim Hi-taek from Yanggang Province — attended a dinner that evening in honor of the Chinese delegation.

“There have recently been more signs of the North and China deepening and developing economic cooperation, including various development projects focusing on the border areas,” a Unification Ministry official said. “It seems that after the North’s Workers Party and the Chinese Communist Party finished talks at headquarters level, their provincial party committees have now begun concrete cooperation.”

Military exchanges are also increasing ahead of the 60th anniversary of the day the Chinese joined the Korean War on Oct. 25.

The official North Korean Central Broadcasting Station on Tuesday reported a delegation of Chinese People’s Volunteer Veterans led by Wang Hai, a former Air Force commander, and the People’s Liberation Army’s art troupe arrived in Pyongyang for the anniversary.

O Kuk-ryol, vice chairman of the National Defense Commission, and Pak Jae-kyong, vice minister of People’s Armed Forces, hosted a reception for them.

On Oct. 14, a North Korean Army delegation led by Pyon In-son, another vice minister of People’s Armed Forces, visited China, to tour PLA units. Quoting the North’s official Rodong Sinmun daily, Xinhua said, “Friendship bonded by blood in the previous generations is being handed down to the next generation.”

A South Korean security official said, “The North is apparently trying to counter the South Korea-U.S. military alliance, which has been strengthened since the sinking of the Navy corvette Cheonan in March, by intensifying military ties with China, as well as attempting to escape international economic isolation by leaning on China.”

Mike has more at NK Leadership Watch.

Read the full story here:
N.Korea, China Grow Ever Closer
Choson Ilbo
10/21/2010

Low-resolution satellite image of the Tumen-Namyang border.

UPDATE: Here is the original story in Asahi:

Goods from North Korea are being traded freely in a thriving market that opened last week in a Chinese city near the border with the reclusive state, according to sources from the region.

Marine products–frozen squid is a specialty–are prominently displayed, the sources said.

The market in Tumen, Jilin province, opened on Oct. 13. It appears to be the latest development in growing economic exchanges between Beijing and Pyongyang following a visit to China by North Korean leader Kim Jong Il in August and moves to secure a smooth transition of power to his third son, Kim Jong Un, the sources said.

Earlier this month, it was learned that Tumen is preparing to accept an influx of cheap labor from North Korea.

The market, which has a total space of about 10,000 square meters, is located on the banks of the Tumenjiang (Tumengang in Korean) river, which serves as the common border between the two countries.

Currently, the market is open twice a week, but there are plans for it to become a daily feature in the near future, the sources said.

According to the sources, Chinese residents in Tumen, which is located inside the Yanbian Korean Autonomous Prefecture within Jilin province, can obtain travel permits to North Korea by presenting identification.

With entry permits in hand, the Chinese are able to cross the river to Namyang, where they are allowed to buy products at designated areas, provided they return to China the same day.

Purchases worth up to 8,000 yuan (about 96,000 yen, or $1180) are treated as duty-free and can be sold at the Tumen market.

The sources said about 150 people showed up at the market on Oct. 13, including merchants as well as ordinary citizens.

North Korean marine products, whose prices are considerably cheaper than Chinese products, dominated the goods on display.

A Tumen city official declined to provide details on the market, saying “it is still in the experimental stage.”

But sources suggest that the market is part of efforts to enhance commerce in northeastern China, which has trailed in economic development compared with coastal regions in the rest of the country.

The market also provides a crucial means for North Korea to earn hard currency by freely selling goods in China.

The idea of setting up such a market is not entirely new. In 2005, the Jilin provincial government authorized the opening of a market as a means to revitalize the border region. However, the project had to be shelved after an international uproar over an underground nuclear test conducted by North Korea.

The plan resurfaced after the region encompassing the Tumenjiang river district and the cities of Jilin and Changchun was designated in 2009 as a development and deregulation promotion zone, the first such national-level development project for a border region.

Jilin province has since taken strident measures to encourage exchanges with North Korea with which it shares a sprawling border.

Sun Zhengcai, a top Chinese Communist Party official from Jilin province, joined a delegation of party officials to North Korea this month on the occasion of the 65th anniversary of the founding of the Workers’ Party of Korea, and is believed to have engaged in talks with the North Korean side on boosting commerce.

The opening of the market follows reports that North Korean laborers may soon be able to work in Chinese factories in Tumen legally, and that Chinese businesses have acquired rights to use and develop wharf facilities at the ports of Rajin and Chongjin in northern North Korea.

Chinese businesses are also reportedly moving toward participating in the construction of infrastructure such as railways and roads to access the ports.

ORIGINAL POST: According to KBS:

A Japanese daily says a “free market” operated by North Korean and Chinese citizens has opened near the Tumen River, which flows between China and North Korea.

The Asahi Shimbun said Wednesday that the market was established in the city of Tumen in China’s Jilin Province a week ago.

The paper said the ten-thousand-square-meter market allows Chinese people to buy up to eight-thousand yuan worth of North Korean goods tax-free each day for resell in China.

The paper said that on the day the market opened last Wednesday, some 150 Chinese purchased tax-exempt frozen squid from North Koreans at the market for resell.

The Asahi said North Korea and China are apparently expanding bilateral economic exchanges following North Korean leader Kim Jong-il’s visit to China in August, citing Chinese firms’ recent move to employ North Korean workers.

Unfortunately high-resolution satellite imagery of the area is not yet available on Google Earth, but we do know that Namyang contains 1 of 4 railway links the DPRK maintains to China and 1 of 8 ground transportation crossings.  Besides Sinuiju, it is the only other DPRK border crossing with both rail and automobile bridges.

Read the full story here:
Market for North Korean goods opens in Chinese border city
Asahi
Daisuke Nishimura
10/21/2010

Asahi: NK-China Tax-Free Market Opens in Tumen City
KBS
10/20/2010

According to Voice of America:

North Korean propaganda has emerged on popular Internet social media sites. It is not for domestic consumption as virtually no North Korean has Internet access. Rather it is targeted at other countries, especially South Korea. But in the democratic South, considered the world’s most connected country, the government blocks such content.

South Korea’s Internet censors are working harder these days to keep up with an expanding number of Web sites showing material from or sympathetic to North Korea.

South Korea blocks such sites under laws forbidding dissemination of false information or activities against the state.

Bloggers such as Kim Sang-bum, of the on-line community Bloter, which focuses on digital technology, calls the censorship an over-reaction.

“I don’t think it is necessary for our government to regulate citizens too tightly. South Koreans have become too sophisticated to fall for North Korean propaganda,” he said. “We consider that kind of propaganda as rather silly.”

South Korea’s Communications Standards Commission and the National Police Agency declined requests for interviews.

Jeon Kyoung-woong is the former director of the Korea Internet Media Association, and an on-line journalist. Jeon says pro-Pyongyang material needs to be restricted because it is not as innocuous.

“There are actually forces inside South Korea supporting the North Korean regime,” he said. “Some of them are in touch with North Korean spy groups. Thus the South Korean government sets restrictions on such on-line content.”

South Korean Internet users must register with their real names. On the most popular web sites, anyone posting comments must register with their national identity number.

“The adoption of real-name system shows that the current government is excessively sensitive about political opinion on the Internet. I think the situation has become worse since the current government came into power.”

Jeon, however, is less bothered.

“South Korean cyber police has been active for more than a decade,” said Jeon. “Recently it feels like the cyber police are becoming increasingly active but that is only because it’s being publicized by those subject to such restrictions. Political restrictions were actually tighter under the previous two governments.”

While South Koreans can freely argue about to what degree on-line content here should be regulated, that is not an option in North Korea. Only a few people there are allowed Internet access. And the country only recently established its first full connection to the Internet.

Here are previous posts about the North Kroeans moving into popular social media sites: Twitter, YouTube.

Read the full story here:
N. Korean Propaganda Appears on Popular Internet Social Media sites
Voice of America
10/19/2010

According to Yonhap:

In a move likely to draw a harsh response from North Korea, South Korea will push to come up with a plan by mid-2011 to handle the costs of unifying itself with the impoverished communist neighbor, a senior official said Tuesday.

In an August address, South Korean President Lee Myung-bak proposed a “unification tax” and suggested that his country begin discussions on dealing with what may be astronomical costs of merging with North Korea, an elusive decades-old national goal.

Unification Minister Hyun In-taek said Tuesday in a meeting with civilian advisors on relations with North Korea that his government will work with a group of researchers starting next month to create a blueprint for financing the costs of reunification.

“Based on the research to be completed in February next year, opinions from within the government will be collected by April, and a report will be presented to parliament by June,” he said.

Experts say the costs of merging the divided states will amount to trillions of U.S. dollars in the worst scenario possible.

The state-run Korea Development Institute said in August that the South will need US$2.14 trillion over three decades in the event of a regime collapse in Pyongyang, which could spark political and social chaos in the communist country.

Read the full story here:
S. Korea to draw up plan for financing reunification with N. Korea: official
Yonhap
10/19/2010

According to the Daily NK:

In Dandong, the number of people studying the Chosun language (Korean) is increasing, while real estate prices are rising on the back of rumors that Shinuiju, just across the North Korean border, will soon be opened up to trade and investment.

One anonymous Korean-Chinese trader who already engages in business with North Korea in the area told The Daily NK on the 15th, “The rumor among Chinese traders who have recently been in North Korea has it that ‘The North Korea authorities will open Shinuiju sooner or later.’”

As a result, he said, “There is currently an upsurge in the price of apartments and shops in Dandong, while the number of people wanting to learn the Chosun language is increasing.”

The trader explained that for the last three or four years the real estate market in Dandong has been flat. However, with reports of Kim Jong Eun’s internal appointment as the successor spreading earlier this year, the price of Hanquosheng, Dongfang Minzhu, Taiyang Dasha and other luxury apartments has increased by more than ten percent over the course of the summer.

The source pointed in particular to the fact that the price of apartments under construction in the Langtou Port area has gone from 2,000 Yuan/m² (approximately $300) in May to 3,200 Yuan/m² (approximately $480) in October. The neighborhood has particularly bright prospects as it is the location for the planned Second Yalu River Bridge under an agreement made during the visit to Pyongyang of Chinese Premier Wen Jiabao in 2009.

The Daily NK’s Korean-Chinese source explained that those primarily responsible for fuelling the real estate gains are Korean-Chinese from the Northeastern provinces of China.

He reported, “Since Dandong has geographical advantages, being cool in summer and warm in winter, as well as being able to provide for North Korea’s development of Shinuiju, the city has emerged as the best investment location for Korean-Chinese people.”

“The expectation that Kim Jong Eun is still young and has experience of life in Switzerland; therefore he knows well the need to develop the country and will have no choice but to make that decision, is driving the investment by Korean-Chinese,” the source added.

Naturally, the presumption that Shinuiju will soon offer some new opportunities for business is producing a new trend for learning the North Korean language.

Wang, a 21 year-old student from a university in Dandong said, “Chinese students know that South Korean is different from Chosun,” and went on, “Until now, South Korean has been all the rage thanks to Hallyu (as the South Korean cultural influence in wider Asia is known), but recently the number of students wanting to learn Chosun has been drastically increasing.”

There are presumed to be roughly 3,000-4,000 North Koreans residing in Dandong, including students. Some of them exchange languages with Chinese students, while some others give private classes for between five and ten Yuan an hour.

Alongside which, private Korean language institutes in Dandong are enjoying increased demand.

One South Korean who manages a Korean language institute in Dandong told The Daily NK, “In the case of Korean language institutes in downtown Dandong, each class has seen an increase of four or five students for this fall semester. Alongside Hallyu, the expectation that Shinuiju will open up has meant that the number of Chinese young people wanting to learn Korean is steadily increasing.”

Read the full story here:
Shinuiju Development Making Waves in Dandong
Daily NK
Park In Ho
10/18/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-10-18-1
10/18/2010

The majority of joint ventures investing in North Korea have suffered significant losses since the South Korean government began to enforce sanctions as a result of the sinking of the ROKS Cheonan. On average, companies have incurred losses of almost one billion won, and most companies are no longer interested in investing in the North.

According to the Korea Chamber of Commerce and Industry, a survey of 500 companies (200 inter-Korean economic cooperative schemes and 300 other companies involved in business with the North) showed that 93.9 percent of respondents said they had suffered losses due to trade restrictions put in place due to the Cheonan incident, while 66.5 percent responded that they faced “financial difficulty” due to the sanctions. The companies have suffered an average of 974 million won in losses.

Investment and operational losses due to the ‘all stop’ order from the government amounted to 51.9 percent of losses reported, while 26 percent of respondents pointed to a reduction in orders and 22.1 percent blamed an increase in transportation and other associated costs. One company importing anthracite from the North turned to China, Vietnam, Russia, and other vendors after inter-Korean trade was restricted, but due to each country’s efforts to secure its own natural resources, this year’s sales are expected to be more than 10 billion won less than that seen last year.

Another company, investing in textiles, was strategically producing hand-made works in a North Korean factory, but now production has come to a halt and it may not be able to deliver goods it has produced. A source from the factory stated, “Personnel and raw material expenses in China, Vietnam, and other countries mean that profit margins will be minimal, and there is no alternative.” The same source also stated, “Special funds were distributed from the government, but [companies] are concerned about how long they can hold out.”

As companies invested in North Korea suffer losses in the wake of the Cheonan incident, interest in North Korea investment opportunities is also waning. 82.7 percent of responding companies believe that “even if economic cooperation was normalized, there would be no new investments or continuation of existing projects,” and 76.9 percent of respondents believed that “because of the uncertainty of the North Korean system” non-economic issues would dampen investment enthusiasm. 13.7 percent stated that difficulties with transportation and other infrastructure issues would discourage investment, and 9.4 percent of respondents answered, “North Korean authorities’…interference and restrictions” would turn away foreign investors.

Among those businesses not involved in cooperative economic ventures, 41.5 percent pointed to “North Korea’s overall reform and opening,” while 22.2 percent chose “guaranteeing the security of investments and expanding domestic SOC” as being necessary to propel investment in North Korea. Another 19.7 percent answered, “security issues like North Korean denuclearization” were necessary for improvement in the investment environment.

Many also voiced concerns over the ongoing ban on inter-Korean exchanges. When asked about the impact on business if sanctions against the North were to continue, 5.18 percent of respondents stated, “opportunities for foreign investors will suffer,” while 25.6 percent responded that the North’s economic reliance on China would grow, and 22.6 percent feared that the national image would suffer due to an increase in the security risk.

63.6 percent of respondents call for strengthened protection for investors, including protection against losses as well as guarantees on operational freedoms. 20.1 percent called for easing restrictions on businesses in the Kaesong Industrial Complex, and 16.3 percent pointed to the need for more monetary support.

Even after the government’s announcement halting inter-Korean exchanges on May 24, , inter-Korean trade worth approximately 80 million USD (90 billion won) was recorded due to a number of goods with special exceptions. 639 different cases of imported goods manufactured from raw materials or parts sent to the North prior to the May 24 restrictions amounted to 31.15 million USD, while 269 cases of pre-ordered exports amounted to just over 49 million USD.

This survey was conducted from August 12 to September 1, calling or faxing 200 companies invested in inter-Korean cooperative schemes and 300 of the 1000 companies involved in sales.

According to KBS:

The Yomiuri Shimbun says China’s Jilin Province will hire 100 North Koreans this month to work at a plastic manufacturing plant in Tumen City. The report says their wages will be less than half of what Chinese workers are paid.

Japan’s Asahi Shimbun says China’s introduction of North Korean labor is picking up speed. It says that nearby Dandong City in Liaoning Province has also begun the process of bringing in one-thousand North Korean workers.

Read the full story here:
China Border Cities Hiring NK Workers
KBS
10/18/2010