Price liberalization « North Korean Economy Watch

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Price and wage data:

Wednesday, February 15th, 2006

Daily DK did a survey of prices in the DPRK this January, 2006.

Official Wages for a North Korean workers labor are 2,000 won to 3,000 won per month (about $1).

Exchange rate

Yuan 350:1 / Dollar 2,715:1 / 100Dollars: 85Euro

Groceries
Rice	750won	Millet	500won
Glutinous	850won	Barley	450won
Annam rice	700won	Pork	3,000won
Chicken	3,000~4,000won(it depends on size)	Egg	150won per one
Edible oil	Yellow-1,930won per kg	Seasoning	1,500won per 500g
Edible oil	White – 1,660won	Corn	380won

Clothes and Shoes
Underwear	panties	500~1,000won	Sneakers	Home handcraft	6,000won
	Brassiere	4,000~5,000won		Private products	3,000won
Socks	500~1,000won			Made in China	12,000~17,000won
Shoes	15,000~20,000won		Handy shoes(for women)	2,000won

Housing Prices
Rental	60won per menth / Paying quarterly
Luxurious apatment	4,000~5,000dollars(99m²)	Quality apartment	3,000dollars(82.5m²)
General apartment	1,500~2,000dollars(66m²)	Small apartment	1,000~1,500dollars(49.5m²)
General single story house	800dollars	Inferior single story house	450~500dollars

Medicines
Cold remedy	20won(1pill)	Vitamin B1 injection	20won(once)
Aspirin	20won(1pill)	Amoxicillin (Antibiotics)	28won(250mm)
Anthelmintics	60won(1pill)	Santonin	120won (1pack)
Obstruent	15won(1pill)	Painkillers	15won(1pill)

– When examined, bribery is not necessary
– When getting a medical certificate or medicines, bribery is necessary
– Bribery: one box of tobacco/ as for medicines for 1,000 won, 7000 won

Stationery
Pencil	General lead pencil	25won	Notebook	Big one	25won
	Mechanical pencil	200won	Notebook	Small one	15won
	Ball pen	50~100won	School Uniform	Elementary school	1,500won
School Bag	10,000won		School Uniform	Mid and High schools	2,500won

– Every month, the following costs should be paid to schools: kindergartens – 1,000 won/ elementary schools- 2,5000 won/ middle and high schools- 4,000 won
– Every month, the following stuffs should be provided to schools: scrap irons, glass 15kg and 40 bundles of timbers
– In an irregular basis, the following stuffs should be provided to school: vinyl, wastepaper, paints and gasoline

Railroad Fares
Shinuiju – Pyongyang	High class – 650won	Shinuiju – Chongjin	1,000won
	Low class – 450won
Shinuiju – Gaesung	1,000won	Shinuiju – Nampo	600won
Shinuiju – Ryongcheon	200won	Sariwon – Pyongyang	200won (low class)
Pyongyang – Dandong(Pyongyang-Beijing international train)		About 10yuan(3,300won)
Dandong – Pyongyang		400yuan

Fares of Cars and Buses
Shinuiju – Pyongsung	8,000won	Shinuiju – Jeongju	5,000won
Shinuiju – Yeomju	3,000won	Shinuiju – Wonsan	10,000won
Sariwon – Wonsan	8,000~10,000won	Sariwon – Pyongyang	1,000won
Sariwon – Pyongsung	8,000~10,000won	Sariwon – Haeju	6,000won

Accommodation Fee
Hotels	Usually 100 dollars, at minimum 60 dollars
Inns	50~100won
Private-owned inns	Less than 100~200 won / The most decent room is 500won

Fees for Travel Documents
Safeguard certificate	in a province	3,000won	Crossing-river certificate	100dollars
Safeguard certificate	Outside of a province	4,000~5,000won	Passport and visa	40,000won

Selling Stand in a Market
Depending on size, place and kinds of business	15,000~50,000won

Appliances
White-black TV	50,000~60,000won	Computer	Pentium 3	170~190dollars
Color TV	200,000won(new one)	Computer	Pentium 4	300~400dollars
Radio	Made in China – 20,000~30,000won(about 100yuan)

Prices and Phone Bills of Telephone and Mobile Phone
Telephone	Installation fee(per one)	40,000won(about $200)	Using in a postal office	Local	2won
Telephone	Rental per month	1,500won	Using in a postal office	distance	40~50won

Posted in Agriculture, Finance, General markets (FMR: Farmers Market), Labor conditions/wages, Price liberalization, UN World Food Program | Comments Closed

Private business in Hamheung province

Tuesday, January 24th, 2006

According to the Daily NK:

Recent testimonies came out stating that 90% of the families in Hamheung City of South Hamkyung province maintain their living by running private businesses and due to the given reality, distribution of phones has been rapidly on the rise. It is a well known fact that the North Korean factories in work are still below 20% and it is the women who are the main breadwinners of the North Korean homes. This is the first time the testimony came out saying that 90% of women in Hamheung City run businesses. Lee said that although she does not sell at a stall in a jangmadang, she does have a business of providing necessary items to a number of regulars. She started this medication business in 1995, when her relatives(Korean-Chinese) living in China helped her by providing 500,000 Won ($250).

Lee said that instead of going to the workplace, she pays 10,000 won ($5). Because she is not working, they do not give her food tickets, but they stamp her attendance card. If she neither works nor pays, she has to go to a labor detention facility (Nodong Danryeondae).

“Although state enterprises say they will give 10,000 won ($5) to the workers, after taking out fees for the People’s Army, savings, and other fees to the state, the money you end up with is only about 2,000 Won ($1). With this, you cannot live. This is why I started my own business,” said Lee.

Kim Jin Chul (male, age 26) from Shinuiju testified, “Most of the families I know of in my town, Dongsang-dong, Shiuiju, have their own businesses. They mostly sell manufactured goods such as shoes, hats, glasses, gloves and food such as candies, ramyun, and liquor.”

“More than 90% of the Dongsang-dong residents live by running their own businesses. They buy goods by making profits by exchanging foreign currency to the trade companies in China, and they sell them in jangmadang,” said Kim.

Posted in China, Economic reform, General markets (FMR: Farmers Market), International trade, Price liberalization, Private property | Comments Closed

Price information

Saturday, December 31st, 2005

Here is more commodity price information courtesy of Open Radio for North Korea:

Agricultural and houselhold commodities:
1) Rice
-Shin Eui Joo: The price rose from 850 won/kg (18th) to 900won/kg (31st)/ whole sale price: 620won/kg
-Bak Chun Gun: October: 1000won/kg, November 800won/kg (trading rice was banned in October with resumption of food distribution system, which caused the rising price.)
-Pyeongyang: Honammi 800won/kg Annammi 680won/kg

2) Corn
-Shin Eui Joo: 400won/kg (December)
-Bak Chun Gun: 350won/kg (November)

3) Pork
-Shin Eui Joo: 3,300won/kg (December)
-Bak Chun Gun: 3,500won/kg (November)

4) Beef: 7,000won/kg (Beef is seldom sold at markets, but was temporarily out in the black market for new year’s holiday season.)

5) Cooking Oil
-Shin Eui Joo: 2,300 won/kg (November)/Yellow Oil
-Bak Chun Gun: 2,500won/kg (November)/Yellow Oil

6) Seasoning
-Same in the region of Shin Eui Joo, Sah Ree Won, Bak Chun Gun: 2000won/bag(200g)

7) Underwear
-Bak Chun Gun: Brassiere: 4,000~6,000won, Children’s underwear: 5,000~6,000won
-Shin Eui Joo : Underclothes: 10,000~15,000won/piece, 20,000~30,000won/set

8) Socks
-Bak Chun Gun: 500~2,000won/pair (socks for winter)

9) Shoes
– Bak Chun Gun: high quality: 15,000won, poor quality: 3,000~4,000won/ Handmade: 2,500won

10) T.V
-Shin Eui Joo: the same as November

11) Price of house and rent
-Shin Eui Joo: One storied house (1 Room, 1 Kitchen): $600, Apartment (2 Rooms, 1 Kitchen): $1,500, Well-located apartment (3 Rooms, 1 Kitchen): $10,000~15,000(able to bargain), 100 Sq.m- apartment: $12,500 (90,000~100,000 Chinese Yuan)
-Sa Ree Won: 100 Sq.m apartment $8,750 (70,000 Chinese Yuan)
-Bak Chun Gun: One storied house (2 Rooms, 1 Kitchen): around $100, Three storied apartment: around $150~200

Footnotes:
1. A middleman receives 10% of the purchase as compensation. If one moves to a purchased house, one needs to receive a certificate which records that you are allowed to live in the house from a police officer in charge of registration in the neighborhood, usually the payment is one mal(10du/15kg) of rice.
2. Expense for making Kimchi(Bak Chun Gun): Chinese cabbage 200won/head, Red pepper powder 2500won/kg, garlic 3,000won/100heads, ginger 300won/kg, salt 350won/kg, sugar 1,000won/kg, salted anchovies 1,500won/kg, scallion is raised at home. Approximately 40,000~45,000won is expended for making 150 heads of Kimchi (usually consumed with rice, and is made with pepper, scallion and salted anchovies), for family of four.

Local Fees and Markets:
1) Electricity- Bak Chun Gun: 10won/lightbulb, 70won for black and white TV (per quarter)

2) Water- Bak Chun Gun: flat rate of 200won per house (per quarter)

3) Tax on land – Bak Chun Gun: 200won/2.5 Sq.m (per month)

4) Payment for spot at markets (Bak Chun Gun)

5) Exchange rate for Renminbi and US dollar
Shin Eui Joo: 2,900won/$ (November 1: 2,715)/ Rinminbi 360won/yuan (November 1:320)/ 3600won/Euro

Footnotes:
1. No payment at markets, but general tax is imposed. 20won/day for agricultural products, and tax for industrial products vary according to the goods.
2. Spots in Markets are rarely traded. For people starting their business at the market, relationship with the manager is important. When business with the manager was successful, managers make a spot for them by making others’ spots smaller.

Health Care and clothing:
1) Medicine for cold and antibiotics (Bak Chun Gun)
-Medicine for cold: Chung Yeong Poong 10won/pill (Adults consume 2 pills)/ Antibiotics: Penicillin 100won per ampoule/ Distilled water: 30won
-Antibiotics: when one receives an injection of 1 ampoule of Penicillin mixed with distilled water, the doctor is paid 100won aside from the price of medicine.

2) Bribe paid for medical examination and basic treatment (Bak Chun Gun)
-5000won for releasing a medical certificate, 350won for 1 injection (ex, glucose 500g), 100won for Penicillin

3) Stationaries (Bak Chun Gun)
-Won Joo Pil( Ball Pen): 250won, Notebook (paper made of straw): 5won/20pieces, Hand-made bag in North Korea, 2,000~3,000won, Uniforms used to be purchased at a flat rate set by the government with a coupon, but uniform is seldom sold at a shop these days. People usually purchase fabrics of appropriate color and size, and hand made the uniforms. (official state rate for elementary school uniform used to be 1,500won)

Monthly tuition and expense (Bak Chun Gun) :
-No monthly tuition is officially required, but some parents give some money to the teachers privately and school requires the students to prepare various materials.
– Club activity: the students need to pay 5,000won every month. (If one participates in cell activity, he/she is exempted from external labor or social labor ).
– Monthly payment is 10 bundles of firewood/Iron 3kg/Vinyl 1kg/Rubber 1kg
– -Students who fail to bring the materials are returned home without being allowed into the class.

Electricity:
-Shin Eui Joo: same as November
-Bak Chun Gun: Electricity was provided throughtout all day despite frequent blackouts occurred in the summer. / Since the beginning of the winter, electricity was provided only between 10:30pm~ 4am due to poor supply. (Mostly, candles are used at night. Candles are 40won each).
– Pyeongyang: electricity is provided for 24 hours, but blackouts occur often. Sometimes, 3~4 hours of blackout occur.

Water Supply:
-In case of Bak Chun Gun downtown, water pipes freeze in the winter. People dig wells for water.
-In case of Pyongyang, peripheral area is provided with water only once or twice a week. (The time when water is supplied is not announced beforehand. People have to watch the faucet on all the time).

Railway system and transportation fee:
-The fare for train from Bak Chun~ Won San with a transfer at Gaema Highland (Where Pyong Buk Sun and Gang Won Sun meets) is 35won, but most of the officials at the station hide the tickets and sell them for 1,000won.
-In order to buy train tickets, one needs to make a reservation a day ahead and stand in line to buy the ticket on the day. However, honored soldiers, soldiers on service and school teachers have priority, and it is hard for common people to buy tickets.
-What is interesting is that a lot of people take the train without paying the fare when moving from Bak Chun Gun to Ahn Joo Gun by Shin Eui Joo-Gae Sung train. It is because no body checks the tickets in this block.

Cars, buses and car fare between major cities:
-Pyongyang: same fare of 5won for subway, train without track
-Bus between Bak Chun ~ Shin Eui Joo runs once a day, and the fare is 2,500~2,800won. Additional 1,000won needs to be paid for one luggage.
-Shin Eui Joo~Nampo/ Roundtrip, once a day, 10,000won
-Shin Eui Joo~Won San/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
-Shin Eui Joo~Sa Ree Won/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
Footnote: No departure time is designated. The train leaves when the train is full.

Lodging:
-Shin Eui Joo: Same as before. Some of the private inns are as well organized as hotel. Chinese Koreans usually use them, and it costs 5,000won per night.
-Bak Chun Gun: State owned inns lacked heating system and was filled with lice, which is why they rarely exist now. Individuals run lodging facilities now (similar to lodging at a private residence)/ they come out to the station in order to invite guests, and it costs 100won per night.

Expense for obtaining travel document:
-Travel document: it costs 10,000won to travel from Bak Chun to Pyeongyang (ten box of cigarettes branded “Cat”)/ if using other ways, 6,000won~8,000won (Jagangdo 7,000won/Chungjin 8,000won/Pyeongsung 6,000won)/ 500won from Bakchun to Shin Eui Joo (Within a province)
-Travel document is not supposed to cost any money, but Municipal adminisrative committee, county administrative committee and officials in charge of the process publicly asks for money/ Only expense for travel documents to Pyongyang is flat rate of 10,000won, and expense for other provinces differ by person.
-Travel document to cross the river: Valid for one month, and cannot be extended/ costs around $100~200, which is not much more than passport or visa. (more money paid, the document is more quickly issued)/ Fee for travel document to cross the river is set for 20,000won by the government.
-When Chinese citizen visited North Korea with the document, extension is only available with a cost of $100 a day. (When one has good relationship with people of National Security Agency or any other relevant organizations, he/she can pay $50 a day) Because of the fee, they rarely extend the document.
-Passport and visa: DPRK passport is valid for 2 months and Chinese visa is valid for 90 days (In North Korea, expiration date on DPRK passport is more important than that on Chinese visa)/ Extension can be made twice, but extension is rarely requested by anyone (Specific reason for extension needs to be provided, which is a lot of work)/ Also, certificate of health is only valid for 4 months, which means that the passport cannot be extended twice/ fee for issuance of passport is set by the government for 40,000won (Some people say 150,000won). But actual expense is $100~500, and the expense varies depending on the region, person (interpersonal skills, ability, relationship with others) and the waiting time to get the passport (1 month~1year)/ Passport is issued in 1~2 months with a payment of $500 for Pyongyang, and 2~3months with a payment of $300 for other regions. / DPRK passport is valid for 2 months, but it is actually issued 1 month after the issue date.
-When visiting China to visit relatives, applicants for passport and travel document to cross the river are classified separately. In case of crossing Yalu River, if the applicant intends to stay in Dandong Province (Dandong, Bongsung, Donggang, Gwanjun) they need to apply for travel document, and if they intends to go farther than Dandong Province and for example, visit relatives in Shenyang and Fushun, they need to apply for passport.
-A case of procedure to obtain travel documents to cross the river and visa (with purpose of visiting the relatives)
-Application and procedure -> Mid March, Fill out the application (Hand $200 to officials at the office of foreign works: Confirmation of the relatives at the office of foreign works, military security office, and military police office, confirmation by a chair of women’s committee, Approval from Provincial Police Office and National Security Agency) -> Issuance of travel documents to cross the river in the beginning of November -> Two-day education in the beginning of November (First day: Exhibition on battle against espionage/ Second day: special education by the deputy of military security offic / Lastly, write out the oath) -> entered China on 23 November

Price of a business spot at the market (Bak Chun Gun)
-In case of the market at Bak Chung Eup, they don’t have the price of business spots.

Food Distribution System
-Bak Chun Gun: Distribution was carried out twice in the beginning and the end of October/ Distribution was halted in November/ The amount distributed was 15kg and did not meet the assigned amount of 57kg/ Official amount: 700g for workers, 300g for housewives, 500g for 15 year old child, 400g for 13 year old child/ rice/other crops ratio is 3:7
-Pyongyang: Food distribution was not halted except for the three months period of April~June 2005./ The amount distributed is 485g(official: 700g) for workers, 300g for housewives, 200g for students (official amount 300~500g)/ ratio of rice and other crops was 5:5. The ratio was sometimes 7:3 when things are better than the usual/ The price was 36won for Annammi, 54won for Honam rice (received from South Korea)/ Price at Yangjungso(Place where rice is gathered) was 20won less than market price/ Everyone is supposed to purchase rice from Yangjungso, but because of poor quality of rice, some well-off people buy rice at market.
-Shin Eui Joo and Sa Ree Won is similar to Bak Chun Gun.

Events, accidents, things to pay attention to

1) Penalty for listening to foreign broadcasting or watching illegal recordings
Case1> There was a public trial and punishment in July~August 2004 for 5 people for watching illegal recordings at a conference room of Gun Management Committee of Bak Chun Gun, located in downtown. / The penalty was expulsion of the family of the involved party to the mountains.
Case 2> A person who sold and showed VCD in Pyongyang in November 2005 was arrested. During investigation, the person committed suicide using a string on his bag while the investigator was absent. Reason for the suicide was not to harm the rest of his/her family/In Pyongyang as well, when one gets caught while watching illegal recordings, the penalty is usually an expulsion.

2) Wire telephone and charge for phone calls
– Installation of wire telephone: $200 at Sa Ree Won and Bak Chun Eup, $300 at Shin Eui Joo for obtaining a phone number as well/ customer needs to purchase the wire separately
-User of private wire telephone: There are relatively a lot of users of private wire telephone at Bak Chun Eup because there are a lot of Returnees from Japan and traders. Among 120 households, there are 11 households with telephone./ When somebody want to use wire telephone in a neighborhood, around 500won is paid.
-Common people use telegram for communication. 10won is charged for one page, and .5won is charged for each additional word.

3) Others
-Bak Chun Gun: There was a rumor that private cultivation would be allowed starting from this year, but instead of private cultivation, a group farming was adopted. Each group pay the assigned amount to the government, and the rest was left for the individuals to take care of. However, the groups needed to take care of fertilizer and pesticides which caused decline of the yield/ Phrase including “Communism” is gradually decreasing (example, “Communist Ethics” was replaced with “Socialist Ethics” in textbooks for elementary, middle and high school. “Rice is Communism” was replaced with “Rice is Socialism” as well/General atmosphere is that people do not believe what government and the party says.

-Pyongyang: Broadcasting criticized the resolution on situation of human rights in DPRK at the UN, but it is heard that the criticism has caused side effects/ Many of the people think that the resolution must have been adopted because there is a problem of human rights in DPRK/People in Pyongyang are known to be unhappy with Kim’s regime but have no way to change it. So they try to be patient and endure.

Posted in Agriculture, China, Communications, Emigration, Energy, General markets (FMR: Farmers Market), Hoteling, Price liberalization, Public Distribiution System (PDS), Transportation, UN World Food Program | Comments Closed

Interview with a Citizen of Chongjin City

Wednesday, December 28th, 2005

Daily NK
Kim Young Jin
12/28/2005

The DailyNK has reported North Korean news vividly with the help of the voices inside North Korea during the year 2005.

North Korea expressed farming as ‘the major front line for the construction of socialist economy’ in the joint new year editorial at the beginning of this year. In fact, it has made every effort to relieve its famine by mobilizing a number of people to farming for the entire year. In October, it also announced to its people that it would resume its ration system that had long been stopped.

The DailyNK met a citizen of Chongjin City of North Hamkyeong Province to fully grasp the recent situation of North Korea as a whole at this moment of seeing the old year out and the new year in. The interview is presented in the format of 10 questions and answers. The reader is expected to feel the reality of North Korea in mid-December, 2005 by reading the interview.

1. How does the ration system work?
Workers in Giupso (State Owned Enterprise) receive a ration twice a month, the total ration being 700g a month. The government designated that the price of unglutinous rice is 46 won, while that of corn is 28 won. Those housewives who can work but stay home can buy 300g for 620 won. Children and the elderly, who are not able to work, can buy cereals at the government designated prices.

In short, the government has adopted a double price system. However, those who are rationed receive rice mixed with miscellaneous cereals whereas those who pay 620 won get unmixed rice.

Factories and Giupsos are assigned the farmland of No.112, and they have to produce cereals the quantity of which is equal to two month’s ration. In October, people were fully rationed, but since November, they have not been able to be fully rationed. People without the farmland of No.112 partly received their rations.

Additional question: What is the farmland of No.112?

It is a part of a cooperative farmland which is difficult to cultivate. Every factory and Giupso is assigned one. If a Giupso is influential, it is usually assigned a fertile land. It is so named because the policy was established on either November 2nd, last year or January 12th this year. I don’t remember the date.

2. How do people obtain their food if they are not fully rationed?
They get cereals in black markets. Transferring cereals in large scale is strictly prohibited, but people are selling them to acquaintances or under the cover of a bribe. Trading a large quantity of cereals is stealthily accomplished in a private home. Restaurants are also forbidden to sell processed cereals.

The price of rice has not risen. It ranges from 800 to 820 won ($0.4-0.41). The price of corn is 300 won ($0.15) while that of potatoes is 150 won ($0.075). Because people in Chongjin City do not enjoy eating corn, it is cheap here.

3. How are farmers rationed, and how much is the government’s purchasing price of cereals?
The farmland of No.112 is divided by fertility. The worst class is the 12th. 1,500 won ($0.75) is collected from 9,917.4 square meters of 12th class farmland as a tax. It can be payed with corn. 1kg of corn is bought for 24 won($0.012).

I heard a squad leader of a cooperative farm located near Chongjin say, “Every person on my farm was supposed to receive the prize of some 17,000 won ($8.5) because the government sent the prize to the farm for good farming, but the farm has not given the prize out to the people, saying that it would be a better idea for the money to be used to buy trucks and farm equipment, and thus people are full of complaints. The farm distributes ordinary rations to the workers.

4. What are people’s reactions to the resumption of the ration system like?
Most people are pessimistic about it. They grumble, “We do not understand why the government does not sell cereals indiscriminately. It has just made things complicated.” On the other hand, those who do not have a means of making a living hope for the ration system.

5. Do you have something to talk about regarding companies and work place lives?
In former years, there were people belonging to the circle called ‘the rest’ in companies. These people could do their own business by giving some part of their profits to their Giupso. However, all people are required to come to the Giupso to work these days. If there are some surplus workers, they are fired.

Since it was said that every Giupso should ration its workers, those who are not able to do their own businesses, especially women, have made every effort to be employed by a Giupso.

Rich people are not interested in companies, but the poor are full of complaints because ‘the rest’ circle was eliminated. The poor are getting much more interested in job opportunities.

6. As far as I know, the rate of factory operation is 20% or so. Has there been any changes recently?
No, there is almost no change in the rate. Earning foreign money is active, but I’ve never heard that those factories that had stopped before resumed its operation, or that they changed their business category to be operative.

7. Can you come up with a concrete example that shows that the status of partisans is getting lower?
Factories and Giupsos are reluctant to employ partisans because it is difficult to lay them off. If one says he is a partisan during a job interview, he will probably be turned down. Non-partisans are definitely preferred.

8. Is the control over people getting tighter?
The control in matters of food is getting tight. Because controlling restaurants and processed cereals has been getting tighter, more and more stalls are being emptied in markets, and the price of stalls is decreasing. A stall 50cm wide and 1.5m long for selling apparel can be bought for 120,000 won ($60).

Food for a family of 4 members costs 120-130 thousand won ($60-65) a month. The family also has to spend money for housing and clothing.

Additional question: I heard that even though many people are moving from one place to another, and a number of people dare to complain, punishments are getting weaker and weaker. Can you give me some examples regarding that?

The security agents say that they no longer arrest blasphemers. They even say that they will enforce laws on the basis of scientific evidences. (Blasphemers refer to those who blaspheme the system of the Kim Il Sung or Kim Jong Il regime.)

Punishments for defectors, radio listeners, and other such crimes are considerably moderated.

A neighbor in his 70’s was arrested due to his acquaintance’ betrayal. He revealed that he had been listening to the radio, but he was just called names during the investigation and criticized publicly in front of a crowd of people. That was the punishment. Even though blaspheming is said to be forgiven, you cannot call Kim Jong Il’s name. Maybe it would be okay for you to say South Korea is rich.

Additional question: Recently, it has been reported that Kim Jong Il ordered that torturing be checked and human rights be respected. Have you ever heard from security agents such a story or instructions?

No, I’ve never heard that.

Additional questions: Because punishments are getting moderated, what kind of countermeasures do North Korea take to protect the regime?

The National Security Agency is said to employ and use many informants. It lets people watch each other. According to one of my acquaintances, those who have an experience of escaping from the North are especially encouraged to watch each other.

9. How is the electric power supply like?
Electric power is supplied for 3 to 4 hours a day from 11 p.m. to 3 a.m. Middle class people usually have both a black and white TV set and a color TV set. They use only batteries for the black and white TV. Electric power supply is poor for winter. It starts getting better in the spring and is best in summer.

10. Recently, North Koreans are said to widely use horse-drawn or cow-drawn carriages. Is that true?
They are widely used for carrying cargo. They are seen even in urban cities. Recently, individuals or Giupsos are trading cows. The price of a cow in black markets range from 400 to 700 thousand won ($200-350). Recently, the price for using such a carriage is determined in relation to the distance instead of the weight it should carry. 3 to 4km costs 2,000 won ($1), while anything more than 5km costs 3,000 won ($1.5). The weight of the cargo usually does not exceed 700kg.

If one uses a truck, he must pay for the fuel in addition to the fee. 1kg of diesel costs 2,000 won ($1).

Posted in Agriculture, Black markets, Civil society, Economic reform, Electricity, Energy, Labor conditions/wages, Ministry of State Security (MPSS, NSA, SSD), Price liberalization, Public Distribiution System (PDS), Restaurants, Transportation | Comments Closed

Throwing resources at Pyongyang

Sunday, December 25th, 2005

Asia Times
Ruediger Frank
12/9/2005

The focus of international efforts in North Korea used to be on food aid until a government policy change this fall. Now that the North Korean regime has sent home humanitarian non-governmental organizations and reinforced the public food distribution system, outside attention has shifted to developmental assistance.

However, the basic question remains the same: will international support improve the situation in North Korea or just prop up the regime? It will probably do both, partly because North Korea and the regime are are not easily separable. But are there any visible developments that would justify taking the pain of further outside engagement?

Thinking that the past years went by without any significant economic change in North Korea would mean ignoring reality.

Walking through an extraordinary, festive Pyongyang in October – freely, without any guide – I found a handwritten poster (in Korean) at a watch store reading, “To celebrate the important holiday [60th anniversary of the foundation of the Korean Workers’ Party], we are selling many goods at a 10% discount from October 10 until October 31.”

In other words, there was a sale – in North Korea. Better than any official announcements, this tells a whole story. In an ordinary socialist shop, from the perspective of the employees, selling means the investment of time without any revenue. Neither their income nor job security are usually connected to sales figures. Those familiar with other socialist countries will recall the lack of staff enthusiasm and customer orientation in shops and restaurants. Selling more than the plan dictates could even invite trouble because of empty inventory.

Prices are usually fixed by the state and not negotiable; a socialist store in fact does not sell, it distributes. In such an environment, attracting buyers by giving a discount makes no sense at all. Having a sale implies an interest in selling, as well as price flexibility. It implies an interest in the customers, and hence the readiness to respond to their needs. The motivation surely is money; at least the manager of the store has a vested interest in raising the sales figures. A sale in North Korea? Can this be a harbinger of the start of a paradigm shift? Despite all skepticism vis-a-vis the reforms, monetization and marketization seem to be no empty words.

A few steps later, I saw an advertisement offering coffee, tea, “fresh beer” and a cozy place to play Korean chess (again, in Korean – ie, targeting domestic customers). So far, so good, but this was a clothing store. Obviously not allowed to turn into a restaurant, its staff were at least trying to extend its reach. Near my hotel I found an advertisement for “the first debit card in our country”, issued by the North East Asia Bank.

Currently, it can only be used in roughly a dozen shops and restaurants. Still, this is a beginning. Some traders were ready to bargain, which implies private economic activity or at least growing flexibility. In one small but nicely arranged shop, not in the vicinity of a hotel, I found Chanel handbags at a very reasonable price, tags written in Korean but with prices also in US dollars. The same currency, not the euro, is required to purchase a ticket at the Air Koryo (the North’s state airline) office in Beijing. A North Korean official asked me to send him English-language economics textbooks for his daughter who studies at Kim Il-sung University, and would not mind if I sent him the books via ordinary mail. This list of examples can be continued.

Beyond this anecdotal but significant evidence, there are other developments. For the second year in a row, North Korean agriculture was able to increase its output significantly (Yonhap News, “USDA Estimates North Korea’s Grain Output as Largest in 10 Years”, November 28). Analysts were quick to discard the idea that the famine of 1995-1997 was mainly caused by natural disasters; so it would be unfair to associate the positive development this time only to good weather. The attempts to utilize market incentives to increase production have been effective, although not without unexpected side effects.

In China and Vietnam, too, initially nobody wanted to change the whole economic system. Even in the 1990s, Chinese economists were talking about a secondary and supplementary role of the non-state sector. But successful experiments prompted new ones, leading to the stop-and-go piecemeal approach that we now, in hindsight, recognize to have been the beginnings of gradual transformation. The external situation was more favorable there also. So there is room for optimism concerning North Korea.

A huge and important difference between the North Korean case and that of China and Vietnam is the weight of agriculture in the national economy and in society. About 80% of the population in Vietnam and 70% of the population in China worked in agriculture at the start of the reform process, as opposed to only about 30% in North Korea. Liberalizing food trade in a non-saturated and isolated market implies rising food prices. This is good for food producers, but may signal rising prices for consumers. In China and Vietnam in 1979, a majority benefited, while only a minority was forced to bear heavier costs in exchange for diversified supplies, and hence could be supported by state subsidies.

Because of its different socio-economic structure, in North Korea it has been the other way round. The majority of the population had to use their few and mostly static resources to struggle for food in the market and this drove up prices as well as industrial wages. Accordingly, inflation in North Korea skyrocketed, while it was much more moderate in the early reform phase in the other two countries.

“Skyrocketing inflation” is not just an empty phrase. Due to the lack of data, there is so far no reliable way to calculate a North Korean inflation rate based on the standard method of creating a basket of basic goods and services. But the development of wages should provide us with important clues, assuming that wages must at least cover subsistence. Otherwise, nobody would go to work. I asked a worker at a cable factory in Pyongyang in October about his monthly wage, and he answered it was 30,000 won (US$29). Would he tell a foreigner the truth?

The number he provided appears to be very high, if compared to the official wages that have been raised from about 100 won to roughly 3,000 won in 2002, and allegedly have only reluctantly been paid. However, in addition to a few private shops, I also entered several state-run department stores in Pyongyang, in which goods are displayed at official state prices. Some examples: a pair of very basic sports shoes cost 10,000 won, a bar of soap was 600 won, a wall clock cost 8,500 won. This suggests the possibility that the worker was telling the truth. Based on this evidence, if the wages increased tenfold in three years, we can estimate the annual rate of inflation in North Korea to have been roughly about 215% since 2002.

If this is roughly accurate, the situation is politically not sustainable. So in October, the government put on the brakes, hoping to curb inflation by taking its major source – food – out of the market cycle. Will it work? That remains to be seen. Are the reforms over? Is avoiding reform the surest survival strategy for the elite in Pyongyang? I would disagree with such a view. If the whole world around North Korea moves – and it certainly does – the riskiest course may be to remain static. So, even if the preservation of the status quo is the objective of the elite, in the long run it must work actively to achieve that goal. Strange as it may sound, reform is the only way to avoid regime change. Kim Jong-il calls that “adjusting to the new environment”.

This brings us back to the international community. Assuming that domestic agricultural production is still, despite the increases in the last years, insufficient – does North Korea now “rely” on food deliveries from China and South Korea? That would be something revolutionary in its own right. If true, it must mean that the North Koreans see no alternative to reliance on Chinese and South Korean food aid in the short run. But if history is a guide, they will hardly bet their future on it.

Rather, the intention seems to be to repeat what in principle has already been done after another major crisis. During the Korean War until about 1953-54, Kim Il-sung asked his “socialist brothers” mainly for conventional aid, such as food, clothing, etc. Then, the items on his wish list changed to support for reconstruction and the delivery of machinery, technology and even turnkey factories. Today, we would call that developmental assistance. Of course, the current situation is in many ways different from the 1950s. Yet a similar pattern may be unfolding.

So, what is the plan? In perfect congruence with the spirit of juche, (self-reliance) the North Koreans now do what economist David Ricardo would and what European experts including myself at economic seminars in Pyongyang have told them for years: ensure self-sustainability in food by increasing industrial output, exporting it and using the revenues to import food to supplement domestic production.

Before 1990, the North Koreans had the opportunity to engage in “politically correct” trade with socialist partners, who, for strategic reasons, often could not avoid buying low-quality goods. Now, if they want to export, the North Koreans have few alternatives to dealing with capitalists. Even the highly cooperative partners in South Korea are private companies that will go bankrupt if they purchase worthless or over-priced goods. North Korea’s industry has no choice but to become competitive.

The logical consequence is the urgent need for modernization, the introduction of advanced technology, securing a stable energy supply, the import of capital and the development of an institutional and human resource capability to interact on the international scene. This is behind Pyongyang’s focus on intensified economic training measures for its officials, and the background of the recent news about eased regulations for direct investment in North Korea (Hankook Ilbo newspaper, November 30). This is even more so since normalization with Japan and the expected financial support related to that deal are not out of reach, though still too far away.

The reforms are not necessarily over; the leaders in Pyongyang might just have adjusted their strategy. Rome was not built in a day, and the risks are high from the perspective of the North Korean leadership. International support will continue to be an important and effective policy, as it obviously was in the past, although its nature might change and the impact will not always be directly measurable. However, it works. The few millions spent on projects in North Korea are a low price for regional security and improved living conditions.

Ruediger Frank is a Korea specialist at the University of Vienna and Distinguished Visiting Professor at Korea University.

Posted in 2002 Economic reforms, Agriculture, Banking, Economic reform, Energy, Finance, Fiscal & monetary policy, Foreign direct investment, Price liberalization | Comments Closed

North Korea Reinstates Controls on Grain Sales

Monday, October 3rd, 2005

Los Angeles Times
Barbara Demick
10/3/2005

North Korea Reinstates Controls on Grain Sales Rice and other foods will be distributed by the government and banned at markets.

Rolling back some of its economic reforms, North Korea is banning the sale of rice and other grains at private markets and strengthening its old communist-style public distribution system under which all citizens are supposed to get rations, aid groups and North Korea experts say.

The changes were supposed to be implemented Oct. 10, a holiday in North Korea marking the 60th anniversary of the ruling Workers’ Party. But reports from the World Food Program office in Pyongyang, the capital, indicate that merchants have been told already that they can no longer sell grain.

The United Nations agency said in a statement on its website that “as of Oct. 1, reports are that cereal sales in the markets will cease and public distribution centers will take over countrywide distribution.”

North Korea experts say the moves do not necessarily indicate an abrupt U-turn in the impoverished country’s economic policies, so much as concern that change was taking place too quickly.

“I think it is a transitional necessity. You can’t move too fast into free—market economics without softening the blow for people who have grown up in a planned economy,” Richard Ragan, who heads the World Food Program office in Pyongyang, said in a recent telephone interview. “This is not that different from what you saw happening in China in the 1990s.”

Lee Young Hwa, a Japan—based human rights worker who has close contacts with traders at the Chinese—North Korean border, believes the new restrictions on markets are designed to boost the power of the Workers’ Party and curb the role of the military in the economy.

“The military people control the food sold at the market. Nobody else has the trucks or the access to gasoline to move food around the country. The leadership fears that their economic reforms aren’t working because everything is controlled by the military, and they want to take back control,” Lee said.

For years, there have been accusations that the military was pilfering humanitarian shipments of rice and other aid, keeping the best for its own and selling the rest at markets. Secretly taped video footage obtained last year by human rights workers shows apparently unopened sacks of rice given by the U.S. and other donors being sold illegally at a market in the northern city of Chongjin.

On the open market, a pound of rice costs 15 to 25 cents — an impossible sum for many North Koreans, whose average salary of $1 per month keeps them on the verge of starvation.

Under the new rules, rice, as well as other staples such as corn, is to be sold at public distribution centers at subsidized prices and in rationed quantities. Markets, which have been gradually legalized since 2002, will still be permitted to sell vegetables, produce, clothing and other goods.

Cho Myong Chol, a former North Korean economist who lives in Seoul, said he believed North Korea would continue with market reforms but at a slower pace. “Since the economic reforms in 2002, the gap between the haves and the have—nots has become so extreme that there is an imbalance that is causing social unrest and dissatisfaction. I think they needed to do something about food to keep control.”

It remains to be seen whether the changes will help ordinary North Koreans. The government recently informed U.N. aid officials that it was cutting back their operations and no longer needed large donations of rice and other foodstuffs. Experts believe North Korea is concerned about the U.N. ‘s monitoring requirements and prefers direct aid from countries such as South Korea and China, which place fewer restrictions on donations.

Until the 1990s, the public distribution system introduced by North Korean founder Kim Ii Sung was the hallmark of a nation that claimed to provide its people with everything from rice to shoes. But the system collapsed in the early l990s, exacerbating a famine that killed an estimated 2 million people — about 10% of the population. The public distribution system still operates, but at reduced capacity.

Although North Koreans today buy much of what they need at markets, the government doesn’t like to admit it and insists that the cradle—to—grave system of social welfare remains.

“We are still a communist country. Nothing has changed. I get everything I need through the public distribution system,” said Yoon So Jung, 25, a guide interviewed last week at Mt. Kumgang, one of the few areas of the country open for tourism.

But pressed about her pink windbreaker, Yoon admitted hesitantly, “Well that, I bought at the market.”

Posted in Black markets, Economic reform, General markets (FMR: Farmers Market), Military, Political economy, Price liberalization, Public Distribiution System (PDS), UN World Food Program, Worker's Party | Comments Closed

Market Research

Tuesday, August 9th, 2005

Korea Times
Andrei Lankov
8/9/2005

Once upon a time, North Korea prided itself on being the country that came the closest to the complete the eradication of markets, those notorious dens of private commerce and capitalist spirits. It seems that in the 1960s markets were indeed formally outlawed for a brief while. Later, they made a moderate comeback, but they remained marginal to the life of most North Koreans until around 1990.

And then things changed. The slow-motion collapse of the Stalinist economy began in the late 1980s, and in a few years this slide developed into a free fall. By 1996, the old economy of coal mines, mammoth plants, and chimney smokes was dead, rations were not forthcoming, and many North Koreans had to resort to commerce to survive. The markets began to grow.

There is a large volume of evidence about these markets, and now I would like to say a few words about one of them. This market was described in the Pukhan monthly by a former female vendor who recently defected to the South and now lives in Seoul. It is located in a relatively large North Korean city, somewhat close to the border with China.

This market began to operate on a large scale in the mid-1990s. Initially, the local authorities felt a great unease about this new institution, and even launched occasional eradication campaigns, which are still well remembered in the city. The victims were largely old ladies who were first to initiate the market trade.

The poor “halmonis’’ were dragged to the police station by policemen who occasionally shouted some appropriate slogans, like “down with speculation!’’ But such bizarre sights did not last long: by around 1996, the authorities gave in and ceased to fight the market which alone made survival of the population possible.

The market ground is a space some 50 to 100 meters-square, surrounded by a high wall made of crude cinder blocks (the sort of very large bricks that are widely used as construction material in the North). Inside the market, there are rows of stalls used by the vendors.

The gates are closed when the market is not in operation _ that is, between 5 p.m. and 7 a.m. The guards and managers ensure that nobody stays inside the market after hours. But this does not mean that trade only takes place inside the walled space of the officially allocated area. A great amount of bartering, both legal and semi-legal, happens outside the wall. There, trade lasts much longer, and the food stalls do not close until 10 or 11 p.m.

Outside the gates, one can also find a bicycle shed (guarded, of course, since bicycle theft is very common now), a storeroom where vendors can leave their merchandise for the night, and a canteen. There are also private canteens around, as well as some private storeroom facilities, but those institutions try to keep a low profile and not attract any excessive attention from the authorities.

Most of the goods on sale are imported from overseas, largely from China, but there are South Korean products as well. The latter are generally admired for their high quality, but often become the targets of bans and confiscations.

The market has a manager appointed by the local government, and the manager is assisted in his hard work by a staff of 6-8 people. There is also a police box permanently staffed by a policeman, as well as a small office of the Ministry for Protection of the State Security, the North Korean political police. Yes, a market has its own representative of this agency.

Once again, the Kims have out-Stalined Stalin: even in the most paranoiac times of recent Russian history one could not imagine a KGB operative being posted to every single countryside market! The administration enforces law and order, makes sure that nothing improper or forbidden takes place, and also collects the market fee that is paid by every vendor.

One of the major problems is the regular confiscations of prohibited goods (often this means goods produced in South Korea). During a check, a group of policemen goes along the stalls checking all goods in search for forbidden merchandise. Everything is put into a pushcart. The market is arranged in such a way that vendors cannot hide their merchandise from an inspector’s eye, so resistance is futile.

The confiscated goods are supposed to be sent to a special “commercial shop.’’ Such shops normally buy and sell the production of local handicraftsmen at market prices (as opposed to the fixed prices of the state commercial system, now almost defunct). There are rumors that some goods are taken by the market managers and police officers for their private use.

Well, quite likely… although for some minor transgression a payment of roughly 15 percent of the price of the confiscated merchandise will be probably sufficient to get the goods back. But from what is known, it appears that the North Korean officials do not overuse the right, more or less at their discretion, to confiscate goods for extracting bribes.

On an average day, the market (both its walled and open sections) attracts some 8,000 vendors and 50,000-60,000 shoppers. The vendors are predominantly female, and this reflects an interesting peculiarity of North Korea’s new capitalism: to a surprising degree it is dominated by women. But that is another story…

Posted in Black markets, Economic reform, General markets (FMR: Farmers Market), Price liberalization, Private property | Comments Closed

Stand in Line for Half Day Long to Make a Phone Call

Wednesday, July 20th, 2005

Daily NK
Kim Young Jin
7/20/2005

Demand for Wire Telephones after the Government Confiscation of Cellular Phones

Recently in North Korea, demand for house phone skyrocketed and as the government confiscated personal cellular phones, people have also be increasingly using public phones.

It is known that setting a wire telephone for a household costs more than 450,000 Won and it is difficult to get one even after 4-5 months longs reservations.

Even Cellular Phones of Government Officials Confiscated

Park Young Chul (pseudo name, age 45) whom The DailyNK met in Tumen of China testified, “As the government completely banned the use of cellular phones after the Ryonchon Incident, demand for wire phones has been skyrocketing.”

Is the use of cellular phones still banned?

“It is hard to see cellular phones in North Korea. Not in local places, even in cities, people holding cellular phones cannot be seen.”

How about the Party cadres and managers of the state enterprises?

“The government confiscated all the cellular phones after the Ryongchon accident. They are still strictly banned. Even the provincial party cadres, National Security Agency, People’s Safety Agency officials are not allowed to use cellular phones.”

There are two kinds of cellular phones used in North Korea.

One kind is the official one acknowledged by the government, the GSM method of European style, which was used since 2002. Although it costs more than $1300 only to register and it is only usable in the city, it is known that more than 20,000 people are using this kind. Most of the users are foreigners and among the North Korean people, Party cadres and special government officials possessed it as the symbol of their special right.

The other kind is the Chinese wave, which the people use in secret along the Sino-Korean border areas. Although the number of users is unverifiable, it is known that the main purpose of their cellular phone use is to communicate with their family members in China and South Korea or with the dealers for their businesses. Due to the limitation in reach of the wave, these phones cannot be used extensively in inland. They are especially targeted by the government for control.

Then after the Ryongchon accident was known to the outside world by the cellular phones, the government of North Korea confiscated all the cellular phones last May. Although the foreigners are free from prohibition, there is no way for North Korean people to legally possess cellular phones.

Wire Phone Lines Still Hard to Get Even with Money

Then how do the people in North Korea communicate with each other?

“Usually by the wire phones (house phones). People who run business with other sellers and buyers in other verify their deals through phone. Those who have enough money seek to obtain their own phone line.”

Due to the limited means of transportation and communication, price differences between the regions varied much. For example, in Huiryeong of North Hamkyung province, the price of rice was low and the price of pollak pretty high while in Chungjin the opposite. People could take advantage of such price difference and earn money in between, for instance, by buying pollak in Chungjin and selling them in Huiryeong and buying rice from Huiryeong and selling it in Chungjin.

In the past such business were done only with guesses on price, but now phones are used to check the price differences. Recently dollar dealers are known for checking exchange rates through phone calls to China and even across the nation everyday.

How much does it cost to obtain a phone line?

“In the past it was not so difficult if you had money. Now, it is pretty difficult even if you had money. It cost about 450,000 to 500,000 North Korean won. That is a lot of money in North Korea. However, it is not a matter of how much it costs. The problem is that the government does not have enough of IC block necessary for switchboard of the Ministry of Communication to set up the phone line, so even if you had requested for a phone line, you are not guaranteed to get one.

Does that mean that someone has to withdraw a line for another person to get?

“Precisely. In the end, the cost of setting a phone line is actually the cost of selling and buying the IC block. The cost also includes the expense of laying phone line from the place where switchboard is located to the designated house. That is why it is so expensive.”

After the 7.1 Economic Management Improvement Measure in 2002, the average monthly wage of a North Korean worker ranges between 1500∼2500 won, thus 450,000won is the amount which an average worker has to save for 20 years without spending a penny, but the fact that “many people are willing to obtain” shows that there is a significant number of rich people present in North Korea.

Personal Identification and Deposit Money Required for the use of ‘Public Phones’

How is the situation of the public phones?

“They are called “common phones,” and two or three of them are located in each communications office or branch office in each area (district). There is a communications office in every 8km~12km and in the city about 4km.”

How much does it cost?

“It costs 10won for one local call. Before it was 50 jun (half of 1won) but recently the price increased. Of course the price varies for long distance called, they are more expensive. You have to leave your personal identification and 40-50won of deposit at the office prior to your make the call and when you are done you get them back after you pay.”

Why do you need personal identification and deposit money?

“They made this procedure because of some people who ran away without paying”

Are there many people using the public phones?

“There was a communications office about 4km away from my house, usually if I go, I had to wait about 30 minutes to make a call. Sometimes you have to waste as long as half of the day for your turn. Still, there are many people in line waiting.”

Park sighed and said, “Only if the transportation system were a little bit better, the living of the people would be much better. When one thing gets better, the government soon turns it down.” What we see is a scene of discord between the people who are already living in capitalistic style and the government that tries to deject it.

Posted in 2002 Economic reforms, Agriculture, Cell phones, Communications, Ministry of Communication, Price liberalization, Telephones, Transportation | Comments Closed

Almost-Free Enterprise

Tuesday, July 12th, 2005

Korea times
Andrei Lankov
7/12/2005

In 1997, when the North Korean economy began to crumble and the public distribution system ceased to function, the inhabitants of Yognchon County received a special gift from the Dear Leader: everyone was given a pair of nylon socks. Not luxurious goods, of course, but getting something in such a hard time was unusual. Few people knew that those socks were not actually provided by the government. The socks were donated by a Chinese Korean businesswoman, known to us as Mrs. Hwang.

But why did she do it? Why was it necessary for her to provide more or less the entire population of the county with socks?

It is increasingly difficult to see North Korea as a socialist state. The traditional Stalinist economy of the mammoth steel mills, railroads and coal mines, died a painful death in the mid-1990s. Nowadays, the North Korean economy depends on foreign aid, but most actual economic activity is made possible through the efforts of small-scale businessmen and businesswomen.

In order to be successful one has to have access to money. In other ex-Communist countries it is the former bureaucrats and party cadres who were best positioned to start a business simply by stealing the property they once managed as government-appointed officials. The property might be as large as an oilfield or as small as a corner shop, but an ex-bureaucrat always has many more chances to take over than an outsider.

But in North Korea the government is undecided on these issues. It has not (yet?) given the green light to large-scale privatization schemes along the Soviet or Chinese lines. Thus, it is other groups of people who are in position to make money. Paradoxically enough, they often come from groups once were seen as suspicious: repatriates from Japan or China, or local ethnic Chinese and Koreans who have close relatives overseas, preferably in China or Japan.

In this regard, Mrs. Hwang is a very typical case. Recently, Kwon Chong-hyon, an energetic Chinese-based correspondent of the Daily NK paper, interviewed her and got her to relate her life story and exploits. I believe that this is a story worth re-telling, since people like Mrs. Hwang are increasingly common these days.

Mrs. Hwang was born in China, in a mixed marriage, her father being Han Chinese, her mother an ethnic Korean. Like many other China-based families of Korean origin they fled from Mao’s “Cultural Revolution” in the 1960s and moved to North Korea. These days, when people are escaping from the North in their thousands, it is a little difficult to imagine that but a few decades back North Korea was often seen by the Chinese as a land of stability and affluence!

In recent years, Mrs. Hwang has lived in Yongchon County, not far from the border. Like many other Koreans with “Chinese connections” Mrs.Hwang began a cross-border trade business in the 1990s, when government control began to wane. Unlike many others, she had no need to resort to smuggling: having immediate relatives in China she can travel there legally, and in recent years this has become a lot easier. Of course, getting a travel permit might be troublesome, but her money allows her to smooth over the procedure with few kickbacks.

And, of course, her publicity stunt with “Kim Jong-il’s socks” did help a lot. She bought 100,000 pairs of socks wholesale and presented them to the local government for distribution. In doing so the local authorities could win some praise from above and improve their political standing, and in return Mrs. Hwang received powerful political support. And the common people got their socks!

Mrs. Hwang explained her survival strategy to Kwon Chong-hyon: “I know a lot of people in the foreign affairs department of the state security police in North Pyongan Province. Since I have a travel permit [to China], I can go there without trouble as long as I get it stamped by state security. If you have good relations with state security, it’s easy to get travel permits; if you have good relations with police, it’s easy to fight off the criminals; if you have good relations with the Party, it’s easy to do trade”.

The reference to criminals is not incidental. There is a growing lawlessness in the borderland areas, and businesspeople have to pay for their security. Mrs. Hwang said: “The criminal police and state security love tobacco, liquor and good dress very much. Now there are so many thieves and mobsters in North Korea, but once I give a phone call to the police officials whom I know, they always come [to protect me and my merchandise]. ”

Currently, Mrs. Hwang has two houses: one in North Korea and another in China. She prefers to deal with used and second-hand goods, items people in China do not buy any more. Such goods are cheap to buy in China, but when sold in North Korea they bring hefty profits measured in the hundreds of percent!

One of her most successful recent deals took place in late 2004. Mrs. Hwang bought 5,000 pairs of cheap working shoes in China, at 4 yuan a pair. She then re-sold the shoes to North Korean retailers for the equivalent of 13 yuan.

Mrs. Hwang is married, but it seems that her husband is less prominent in business than she. Indeed, the social changes of the last decade have greatly changed the balance of gender roles in the Korean families. But that is another story…

Posted in Black markets, Economic reform, Political economy, Price liberalization, Public Distribiution System (PDS) | 2 Comments »

The Transformation of Class Structure and Class Conflict in North Korea

Friday, July 8th, 2005

International Journal of Korean Unification Studies
Vol. 14, No.2, 2005, pp 52-84.

PDF Here: transformation of class structure.pdf

Abstract
This study examines how North Korea’s class structure transformations influenced the social transformations, and seeks to understand the structural characteristics of North Korea by examining in detail the existing shape of each social class. This study found that North Korea’s socialist transformation was the process of dismantling every social class, such as the landowners, farmers, commerce and industry, and intelligentsia classes, etc. The 1946 land reform dismantled the landowner class, the 1958 agricultural collectivization dismantled the farmers class, and the 1958 nationalization of commerce and industry did the same to the petty bourgeoisie. The only class remaining in North Korea is the managers of the governing class. There was no class differentiation, only dismantlement. Thus, with social classes dissolved, the governing class remains as the monolithic class monopolizing social, economic, and political power in North Korea, with no other social power to act as a balancer. This type of class structure may constitute the social conditions of political dictatorship in North Korea.

Highlights:
In North Korea, the fundamental ownership relations of the traditional class structure were dismantled in the name of socialist construction. The victims of this construction were the traditional classes of landowner, petty bourgeoisie, farmer, and intellectual.

When the 1946 Land Reform Law was passed, it was enacted in a month. The law provided for government confiscation of land properties over 5 chongbo (1 chongbo=2.45 acres). When completed, 1,000,325 chongbo of 1,982,431 under cultivation at the time. At the time, land owned by the Japanese state, Japanese people, and religious organizations was barely 4%. the remaining 96% was in the hands of Korean landowners and tenants. It affected 405,603 of the 1,121,295 registered farming households. 4 in 10 households had land confiscated in part or whole. Ten years after land reform, many were again prospering, and theor political influence became noticeable. Kim il Sung sought to reassert control over them. In 1958, land reform was reversed and farms were colectivised.

Nationalization of industry, traffic, transportation, communications and bank finances, including over 1034 important factories and businesses. In 1947 80.2% of industry was held in state control. Private commerce made up the rest. After the Korean War, private enterprise production consisted of small-scale mills, metal workshops, rubber factories. by May 1957, the number of private industrial enterprises was 633. By August 1958, this activity was completely eliminated.

To purge the intellectuals (who were educated in the old ways) Kim il Sung proposed, “we have to speed up the construction of socialism, and fo rthat purpose, we have to fight against the conservatism of the intellectuals.” This started with technicians and economic managers. Then dissident writers.

All social powers were ousted: Landowners, farmers, businessmen, and intellectual classes. All menas of production were nationalized and socialiazed, so all became employees of the state, and the state became the sole employer. North Korea’s new system consists of the rulers and everyone else (two groups).

To prevent remanats of the past from gaining influence, North Korea classified each individual according to their family background, and discriminated on this classification (starting in 1957).

Yunan and Soviet factions were purged in the August Faction Incident in 1956. Cabinet Decision 149 mandates that ousted individuals be put in area 20km from the sea coast and demarcation line, 50km away from Pyongyang and Kaesong, 20km away fro mother cities and limited residential areas. These individuals received a special stamp on their ID cards and were registered with the social security agency.

The North Korean managerial (ruling) class is an exclusive group which has institutionalized a system so that it may keep its privileges. Only the sons and daughters of the core class can become promoted within the managerial class. Children of Cadres only marry children of cadres.

Core class is 3,915,000 people in 870,000 households. Wavering is 3,150,000 in 700,000 households. Hostile is 7,930,000 in 173,000 households.

In the workplace, all indivduals are obliged to be part of one of three organizations: the party, the Youth League, or the Workers Union.

Supplies are divided into special numbers. 1,2,3,4, etc. Those in higher positions are afforded higher rank in distribution. “How could Party Secretaries, who don’t do anything,obtian objects of a 4 level?”

Private relationships are only possible through the party.

Self-criticism sessions are carried out every week. Since these are routine, people know each other and act accordingly. Becuase everyone has to criticize each other they tend to do so in a modest way.

Peasants most angry. Laborers and office workers have time to do business on the side, but peasants do not. Some bright peasants do tend private plots.

People complain openly now.

While the core class focused on inner-systemic solidarity when faced with a crisis, the wavering and hostile classes were the first to enter the black market. After business expanded in the country side like wildfire the government brought the businesses into the open in July 2002. The marginalized societies led the change in values. Reportedly the collude with the regulatory authorities and security guards, borrow and rent vehicles for biusiness.

Only those sub-classified as Manyongdae line (Kim Il Sung’s lineage), Baektusan line (Kim Jong Il’s lineage), and Ryongnamsan line (People who graduated with Kim Jong Il from Kim Il Sung University) are able to receive official government posts.

Of the total population, 10% makes up the power-holding ruling class. Another 40% make up a lower social rung doing business and making deals.

Posted in 1946 Land Reform Law, 1990s Famine, 2002 Economic reforms, Agriculture statistics, Arduous March, Black markets, Civil society, Economic reform, Emigration statistics, Political economy, Price liberalization, Private property, Songbun, Statistics | Comments Closed

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