North Korean Economy Watch

Daily NK
Han Young Jin
7/2/2007

(visit the Daily NK to see pictures)

On the banks opposite the Chongryukwan (a restaurant) in Pyongyang, a newly leisure centre “Sol Pong Centre” was opened on June 19th.

A Chinese webpage to motivate North Korea-China trade advertizes Sol Pong Centre as, “The latest modernized restaurants, leisure and recreational centre has opened in Pyongyang.”

According to the webpage, Sol Pong Centre offers a variety of services including restaurants, recreational activities, shopping, lounge area, communal bathing, swimming, gym, barber and hairdressers.

Even the entrance to the 5 storey building including a basement, is a revolving door, a rarity in North Korea. There is a Korean barbeque restaurant and shops on the 1st floor, and other modern services on the 2nd floor including a barber, massage therapist, wedding hall and piano concert hall.

This is the first time since the 80’s where a major service centre has opened in North Korea, The last centre “Changkwangwon” facilitated shops, restaurants and a wedding hall.

The webpage features, “This centre was designed to match modern lifestyle and western fashion, and will completely satisfy your recreational lifestyle. It will provide you will a space to enjoy Pyongyang’s modernized foods and leisure.”

North Korea media has not officially advertised the centre as yet. It is being introduced on Chinese investment websites and many speculate that this centre will be more for foreigners and Pyongyang’s top elite class.

Washington Post
Glenn Kessler and Colum Lynch
6/9/2007

Probe Says U.N. Money Was Spent on Property Overseas

About $3 million in United Nations money intended to help impoverished North Koreans was diverted by the Pyongyang government toward the purchase of property in France, the United Kingdom and Canada, according to a confidential State Department account of witness reports and internal business records. Millions more, the department reported, went to a North Korean institution linked to a bank alleged to handle arms deals.

The U.N. Development Program (UNDP) in North Korea spent about $3 million a year over the past decade to promote the country’s economic growth, foreign trade and investment. It halted operations in March after the United States alleged that the agency engaged in improper hiring and financial practices. A preliminary U.N. audit, released last week, confirmed that it violated its own guidelines by hiring local workers who were selected by the North Korean government and paying them in foreign currency.

A separate State Department investigation suggests that some of the agency’s money enriched the North Korean government. The U.S. ambassador to the United Nations, Zalmay Khalilzad, presented UNDP Administrator Kemal Dervis with new allegations regarding the North Korea programs Wednesday, a UNDP spokesman confirmed.

“At first glance, the allegations do not correspond with our own records, which we have scrutinized extremely closely in the past six months,” spokesman David Morrison said.

The U.S. probe, headed by Mark Wallace, a deputy ambassador, also found that the UNDP procured for North Korea equipment that could be used in a weapons program. Such “dual use” equipment included global-positioning system equipment, computers and computer accessories, and a device known as a mass spectrometer, used to determine the isotopic composition of elements.

Morrison said the UNDP purchased the computers, GPS equipment and spectrometer to enable the forecasting of weather patterns in flood- and drought-prone areas of the country. He noted that the 10 GPS devices cost $65,000 and the mass spectrometer cost $6,000.

“UNDP takes these allegations very seriously and has asked the U.S. Mission to provide all available documentation to substantiate the allegations and to facilitate UNDP’s own immediate review of them,” Morrison said.

Ric Grenell, a spokesman for the U.S. Mission to the United Nations, said the information presented to Dervis “indicates an apparent misuse and diversion of UNDP funds, business dealings with certain suspect entities affiliated with [North Korea], UNDP’s procurement of potential dual-use equipment and information related to the further use of counterfeit U.S. currency in” North Korea. He said Dervis indicated that he is “committed to investigating the matter” and providing answers.

The State Department has not made public any documents to back up its interpretation, and Khalilzad has declined to release details of the department’s investigation. Some congressional staff members have received confidential briefings on the findings.

The revelations come at a sensitive moment, as the Bush administration has been working closely with other countries, particularly Russia, to arrange a transfer of $24 million in tainted North Korean money to facilitate an agreement to shut down North Korea’s nuclear reactor.

The U.S. probe discovered that the UNDP purchased for the North Korean government 29 books for an arms control and disarmament project, including one titled “The Psychology of Nuclear Proliferation.” Morrison said the books were purchased in December and delivered last month. “In hindsight, better judgment could have been used in the selection and delivery of these books,” he said.

The State Department and the UNDP are in sharp dispute over some of the figures in the transactions. Such quarrels have been frequent between State and the UNDP, with tempers subsiding when documentation emerges to challenge the rhetoric.

According to the State Department, the UNDP transferred more than $7 million between 2001 and 2005 to a North Korean government entity, the National Coordination Committee for UNDP. Morrison said the figure is much lower — a few hundred thousand.

During 2001 and 2002, the UNDP also transferred more than $8 million of other agencies’ funds to the North Korean government, the State Department said. Pyongyang then transferred at least $2.8 million of the UNDP funds to North Korean diplomatic missions in Europe and New York to “cover buildings and houses,” including purchasing buildings in France, the United Kingdom and Canada, the probe found.

The UNDP said the national government received $2.2 million. The agency has no means to determine how North Korea financed its purchase of expensive houses, Morrison said, but he said the UNDP has verified that its money was used to fund its programs.

The State Department also alleged that the UNDP paid nearly $2.7 million for “goods and equipment” to a North Korean financial institution that is linked to Tanchon Commercial Bank (also known as Changgwang Credit Bank). President Bush designated that institution in 2005 as the main North Korean financial agent for sales of ballistic missiles and parts used in the assembly of weapons and missiles.

A UNDP official said the State Department has cited to the agency two financial institutions linked to Tanchon — Zang Lok and the International Financial and Trade Company. The U.N. audit found one payment, for $22,000, sent via Zang Lok in 2004 and none for International Finance.

Korea Herald
5/29/2007

North Korea plans to build 10,000 apartments for its Pyongyang residents this year, according to a report Tuesday, Yonhap News Agency said.

The move follows similar construction of 10,000 apartments in the city last year, the Choson Sinbo, a newspaper run by an association of North Korean residents in Japan, quoted a Pyongyang official as saying.

The plan includes mending cracks and worn-out parts of tens of thousands of existing apartments in Pyongyang, the report said, noting the city government last year completed repairing an unidentified number of apartments built before 1990.

Daily NK
Kim Min Se
3/19/2007

Today, a rich person in North Korea is someone who can spend roughly US$100~$500 (300,000~1.5mn North Korean won) a month. This amount is so large, that it is a figure unfathomable to the average North Korean.

Nowadays, a small number of lower class North Koreans sell noodles at the markets and earn 1,500~2,000won a day. On average, this equates to 50,000~60,000won a month. Additionally, the living costs of a family of 4 in Pyongyang normally costs about 50,000~100,000won.

While a laborer with a stable job earns about 2,000~3,000won (approx. US$0.66~1) a month, spending more than 100,000won (approx. US$32.2) a month is an extravagant figure. Simply put, it has become difficult to live only on selling noodles.

Anyone who spends more than 100,000won a month is probably eating rice and can afford to eat nutritious vegetables. This is the middle class of North Korea today.

The distinctive nature of this middle class is the disparity of the work as well as their past background being rather simple. This class has naturally appeared simply because of their genuine skills. These people know exactly the flow of the market and know how to make money. The only thing important to them is finding the opportunity to make money. In all, they have come to an understanding that money is needed in order to buy goods and live a life to the envy of others.

This middle class is closely linked to power. If a person only takes pride in the sense that he/she can money, then that person will be hit with a severe fall. It is a characteristic of North Korean society that power is critical in living a life making lots of money without trouble.

With money, these people are earning even more by buying the supervision of low ranking safety and security agents and local administrative officers. Simply put, the small amount of money invested as bribery in securing a good location at the markets is petty compared to the income reaped. In other words, whenever a new market is established at a village, a person can be confident in having the best spot by winning over the person in charge. For example, the bidding for the best spot at the Sunam Market, Chongjin is 900,000~1.5mn won (approx. US$290~$490).

Entrepreneurs may become the rich after regime reform

In 2002, the North Korean government passed the July 1st economic reforms which gave more freedom to marketers with less control by authorities and hence, trade became more active.

The mindset of the middle are so fixated on money, that they believe that money can solve anything even if a war was to break out the following day or North Korea was to be completely overturned. Though these people conspire with those in power in order to make money, they are unconcerned with what happens or rather does not happen to the Kim Jong Il regime.

There is a definitive difference between the middle class who are rubbing hands and the central class just in case the Kim Jong Il regime did collapse, compared to the upper class. The middle class are not from any particular special background, but with the skills and guile of making wealth, they are confident that there will be no problems irrespective of regime change.

People from this class even have the freedom to save and keep some food and daily necessities in preparation of this incident. Furthermore, currency is undoubtedly being saved, this also being foreign currency such as dollars. This, they call emergency relief in preparation for the time the North Korean regime does collapse, as well as a safe deposit to use whenever trade needed.

In addition, with the change of the North Korean regime, this class will be able to celebrate and radically transform from being an entrepreneur to the newly-rich with all the wealth acquired during the Kim Jong Il regime.

Daily NK
Kim Min Se
3/7/2007

90% daily goods made in China, 50% circulated by Chinese merchants

While some prospect that North Korea may be an affiliated market of China’s 4 provinces in the Northeast, the real focus is on the merchants who actually control North Korea’s markets. Recently, North Korean citizens have been asserting that markets would immobilize if Chinese merchants were to disappear.

Lately, Chinese merchants are nestling themselves with their newly found fortune in North Korea, undeniably to the envy of North Korean citizens.

In a recent telephone conversation with the DailyNK, Kim Chang Yeol (pseudonym) a resident of Shinuiju said “Most of the tiled houses in Shinuiju are owned by Chinese merchants in Shinuiju are upper class and the rich.” Unlike Pyongyang, tiled houses in Shinuiju are greater in value than apartments. In particular, the homes owned by Chinese merchants are luxurious and impressing.

Kim said “At the moment, 90% of daily goods that are traded at Shinuiju markets are made in China.” What Kim means by 90% of goods is basically everything excluding agricultural produce and medicinal herbs. Apparently, about half of the (90% of) supplies are circulated by Chinese merchants.

Kim affirmed that the market system could be shaken if supplies were not provided by the Chinese merchants. Hence, Chinese merchants have elevated themselves in North Korea’s integrated market system, to the extent that the market could break down without their existence.

In addition to this, Chinese merchants are playing a vital role in conveying information about the external world into North Korea. Even in 2004, it was Chinese merchants to first telephone China through mobile phones relaying the news about the Yongcheon explosion. As a result, rumors say that the movement of Chinese merchants can either be a “cure” to the economic crisis in which the North Korean government seems unable to fix, or “poison,” as more and more foreign information flows into the country.

How many Chinese merchants are there in North Korea?

A report by China’s Liaoning-Chosun Newspaper in 2001 sourcing data from North Korea, states that immediately after WWII, approximately 80,000 overseas Chinese were residing in the Korean Peninsula. Then following the Korean War and the formation of a Chinese government, the majority of people, approximately 60,000 Chinese, returned home. In 1958, statistics show that 3,778 families of overseas Chinese were living in North Korea, totalling 14,351 people.

These Chinese engaged in business related to farming, home made handicrafts and restaurant business, and in the late 50’s, lost all this due to the implementation of economic planning and dictatorial regime. Since then, the majority of merchants continued to return to China until the early 80’s.

In 2001, Liaoning-Chosun Newspaper confirmed that approximately 6,000 Chinese were living in North Korea. Of this figure, more than half were residing in Pyongyang, approx. 300 families living in North Pyongan and approx. 300 families residing throughout Jagang and northern districts of South Hamkyung.

At present, there are 4 middle and high schools for children (11~17 years) of Chinese merchants, located in Pyongyang, Chongjin, Shinuiju and Kanggae. In addition to these schools, there are a number of elementary schools (for children aged 7~11 years) located sporadically throughout each province.

Wang Ok Kyung (pseudonym) a resident of Shinuiju attended Chongjin Middle School for children of overseas Chinese in 1981~86. Wang said “At the time, there were about 40 students in each year. Now there is only about 5~6 students.” Nowadays, many Chinese children complete their elementary studies in North Korea, but the general trend is to send the children to China for middle school. She said “In order to enter a Chinese university, students must have completed their middle school studies in China and must be fluent in Chinese. He/she can also go to private institutes in China.”

Fortunes made through trade between North Korea-China during the food crisis

Even until the early 80’s there were no such thing as a wealthy North Korean-Chinese merchant. They were no different to North Korean citizens.

However, in the 80’s, many people began importing and selling goods such as socks, handkerchiefs, hand mirrors and cards from China, literally through their sacks. As the 90’s approached North Korean-Chinese merchants began to experience great wealth, the time where North Korea-China trade fundamentally kickstarted.

Today, Son Kwang Mi (pseudonym, 52) falls under the top 10 wealthiest Chinese merchants in Dandong, characterizing an unique rags to riches story. In the past, Sun lived in Chongjin and was one of the first figures to trade with China in the 80’s.

In the beginning, Son was so poor that she had to sell her watch received as a wedding gift in order to buy goods to sell.

Fortunately, Son found her money smuggling gold. In North Korea, gold is considered a public good or simply put Kim Jong Il’s personal inheritance, so private trade of gold is strictly regulated. Nonetheless, there are still some laborers who export gold secretly and a great number of people still collect gold through dubious ways. In particular, after the 80’s as North Korea began to experience economic decline, more and more people sold gold secretly.

Hence, a small number of Chinese merchants infiltrated the market of secretly trading gold with China. Chinese smugglers were able to take advantage of North Koreans by greatly raise their market margins, as the supply of gold and North Koreans wanting to sell their gold was high yet the demand in North Korea low.

Son said “Of the Chinese merchants in North Korea, 60% earned a great fortune at that time through illicit trade.”

She says that there were two opportunities for overseas Chinese to make a great fortune. The first was in 1985~89 through illicit trade of gold and the second, during North Korea’s mass food crisis in 1995~98.

“During the mass famine, everything in North Korea was in shortage and so Chinese merchants began to provide the daily necessities of life. At the time, if you brought large amounts of goods such as fabric and sugar, you could make a profit of 1 million Yuan (US$137,000),” she said.

Son was fortunate enough not to miss these two opportunities which led her to great wealth and allowed her to possess a fortune of 50 million Yuan (US$6.31 million).

Chinese merchants can relatively enter and exit China freely. Also, with the ability to speak Chinese fluently and the possibility of staying in the homes of many relatives in China, the occupation possesses ideal conditions.

Korea times
Andrei Lankov
1/15/2007

Some time in the late 1940s, a young Russian journalist made a tour of the Mt. Kumgang, accompanied by a local official. The numerous Buddhist temples scattered in the valleys attracted his attention, but the official assured the Soviet visitor: “Do not worry, we will take care of them. We will close most of them, and will find a good use for others _ like, say, resorts for the working masses.”

It is difficult to say what the journalist felt back then, but when he recalled this episode in the early 1980s in his memories, his disdain was palpable. But this is indeed what happened to many _ indeed, most _ Buddhist temples in North Korea.

For decades, the North Korean state was almost unique in its hostility to all forms of religion. Indeed, few if any Communist states ever came close to proclaiming and enforcing a complete ban on all kinds of religious activity _ aside from North Korea, such a ban existed only in Albania, another ultra-Stalinist state (Pol Pot introduced the same policy in his infamous “Democratic Kampuchea,” but he did not stay in power long enough).

In the late 1980s, a very limited amount of religious activity came to be tolerated, but for some 25 years, between 1960 and 1985, North Korea had neither temples nor officially recognized religious groups.

However, if all religions are bad for the North Korean authorities, not all of them are equally bad. Some of them are worse, while others were ranked as marginally more tolerable.

For the North Korean regime in its early years, it was the Christianity that was clearly seen as an embodiment of evil.

This attitude was prompted by the fact that Christianity was a recent introduction, with too, too strong connections to foreign powers, above all, to the United States. It was both “reactionary” (as every religion) and anti-national.

The most acceptable religion probably was Chondogyo, or the Teaching of the Celestial Way. Nowadays, this eclectic cult has somewhat waned and does not play a major role in either Korea, but for a century, from the 1860s to the 1940s, it was a important force in the spiritual life of the country.

Its leaders and activists were prominent in two major outbreaks of the nationalist movement _ the Tonghak Uprising of the 1890s and the March First Movement of 1919, and this tradition made the North Korean authorities somewhat more tolerant towards it.

Buddhism fell somewhere between. It could not boast the nationalist credentials of Chondogyo _ on the contrary, in the colonial era many Buddhists collaborated with the Japanese (as a matter of fact, some colonial administrators saw Buddhism as the “religion of empire” and actively promoted it). At the same time, it did not have Christianity’s close associations with “imperialist” powers.

The land reform of 1946, proclaimed by the North Korean authorities (but actually designed by the Soviet military) inflicted the first major strike on Buddhism, and all land holdings of religious institutions were confiscated. This left the monks without any means of existence and drove many of them from the monasteries.

To keep the Buddhists under control, the Korean Buddhist Union was created in late 1945 as an umbrella organization. It did not so much represent the believers as make them accountable to the emerging state bureaucracy. This was a standard device: Similar bodies were created for other religions as well.

While all Christian churches ceased to function immediately after the Korean War, services were held in some Buddhist temples until the early 1960s. It is even possible, even if not particularly likely, that some services continued through the dark age of North Korean religious history, the period between 1960 and 1980.

Of course, the former Buddhist monks were subjected to strict surveillance and numerous restrictions were placed on their social advancement. However, it seems that they fared better than former Christian activists and priests.

The Buddhist Union was quietly disbanded in 1965 _ at least, for years nothing was heard about this body for nearly a decade, and in all probability it fell out of existence for some time. However, from around 1975 the representatives of the North Korean Buddhist Association were again seen at international gatherings where they scorned the U.S. imperialist warmongers and their South Korean puppets, all the while explaining how happy the masses in their country were to be led by the “Great Leader.”

The 1970s and 1980s witnessed a large-scale restoration of old Buddhist temples, and these days there are 63 officially recognized temples in North Korea. Some of them are allegedly used for religious services, but it is not clear when the services are real and when they are nothing but carefully staged performances for the sake of foreign visitors. It is known that nowadays there are some 300 monks in the North, all receiving their wages from the state and taking care of the temples.

Thus, by the standards of North Korean religious policy, the treatment of Buddhism was not particularly harsh. However, it seems that Buddhism is not positioned to experience a dramatic revival in future. It appears that the North will eventually go Christian, and this Christianity is likely to be of a radical, nearly fundamentalist, variety. At least this is what can be guessed from the study of the events of the recent decade.

Joong Ang Daily
12/19/2006

Despite United Nations sanctions aimed at preventing the North Korean government from buying luxury goods for its ruling class, government sources here said a North Korean trading company is still busy providing Kim Jong-il loyalists with their perquisites.

Tian Ming Trading Company, in the center of this former Portuguese enclave now with the same China-affiliated status as Hong Kong, says its main business line is carpets, and little more. Three office workers said there were no North Koreans at the company and that it has never traded with North Korea. The company’s president was out of town on business, they said.

But a source with close ties to the trading economy here said that Park Su-dok, a 53-year-old North Korean, is in Macao and obtained a visa as an employee of the company.

Another source said, “Tian Ming is a joint venture by North Korean and Hong Kong investors, and its main business is buying luxury goods from Hong Kong for shipment to North Korea.” He added that Tian Ming’s president, a Hong Kong resident, is buying luxury watches, gold products and expensive liquor at North Korea’s request, using a Hong Kong branch office for the purpose.

Other Macao government officials said 18 North Korean firms were registered in Macao as of late November, and 115 North Koreans carry Macao visas as employees. Twenty have become Macao citizens, they added.

Since Washington threatened to impose sanctions on Banco Delta Asia here, allegedly for helping North Korea launder cash from its alleged dubious business lines, some of those companies have shut down. Ten are still in limited operation, however, these government sources said.

Separately, a South Korean banker in Hong Kong told the Joong-Ang Ilbo that a North Korean businessman had visited him in an attempt to sell gold bars through one of the South Korean bank branches in Hong Kong.

The banker reportedly spurned the overture, although the transaction would not have violated any South Korean laws or regulations on North-South dealings. He said he simply did not want to get involved in such a deal given the international attention being paid to commercial dealings with North Korea. The banker suggested that the offer may have been a sign of the foreign currency problems North Korea is facing because of the UN sanctions and U.S. pressure on financial dealings with North Korea.

Banco Delta Asia has said that between 2003 and 2005, it had sold 9.2 tons of gold bars that it had purchased from the North, where gold production is estimated to be about 25 tons per year, mostly for export.

Wall Street Journal
12/18/2006
Gordon Fairlcough, p.A1

Close-Out Sale: North Korea’s Elite Shop While They Can

A North Korean businesswoman with heavy makeup and a bouffant hairdo studied herself in a mirror as she modeled fur-lined leather coats at a small store in [Dandong, China] this frigid northeast border city.

During a three-day excursion late last month, the woman also tried on shoes and looked at large-screen television sets before buying furniture and fresh fruit and heading home to Pyongyang, North Korea’s capital city.

The United Nations has called for a crackdown on luxury-goods shipments to North Korea as a way of pressuring the country to drop its atomic-weapons programs, which came under new fire after an October nuclear test.

If anything, the uncertainty about the flow of fancy goods appears to have whetted the appetites of some privileged North Koreans — whose impoverished country cultivates a Spartan socialist image.

In Dandong, North Koreans, many wearing lapel pins with a picture of North Korea’s founding dictator, Kim Il Sung, stroll through hotels and department stores. Signs are often written in Korean, with storekeepers advertising computers, karaoke machines and the erectile-dysfunction drugs Viagra and Cialis.

A few North Koreans have bought new cars at a Toyota dealership near the Dandong customs checkpoint, according to a salesman. One man paid about $50,000 in cash for a luxury sedan.

Gold is also gaining a following. Wang Xiaoju, a saleswoman at the jewelry counter at Xin Yi Bai Department Store, says North Korean women come in nearly every day, mostly to buy gold chains and other gold jewelry.

Women from the North also are frequent visitors to a riverfront spa, favoring milk baths and massages, according to staff there. A saleswoman at the Xin Yi Bai L’Oreal counter says North Koreans are regular customers. Among the big sellers: body sculpting cream for women who want to look thinner.

In the first 10 months of this year, Chinese exports of fur coats and fake furs to North Korea soared more than sevenfold from the year-earlier period, according to Chinese Customs figures. Exports of televisions and other consumer electronics were up 77%, while perfumes and cosmetics were up 10%.

Some North Koreans are even buying real estate in Dandong. One high-rise building, where three bedroom apartments go for nearly $100,000 each, has sweeping views of a decrepit North Korean village with crumbling cinder-block houses across the border. A North Korean buyer recently purchased one of the units with cash, according to the building’s sales agent.

“Life is quite comfortable” for senior party members, military officers and traders, who have prospered despite widespread shortages of food, fuel and medicine in North Korea, says Pak Yong Ho, a former high-ranking North Korean official who defected to South Korea two years ago.

North Korea’s Communist Party has long had overseas agents in Macau, Switzerland and elsewhere dedicated to maintaining supplies of luxuries for top military and government personnel, according to former North Korean officials. Their jobs, in the wake of the U.N. sanctions, could get much harder.

The U.N. so far has let individual countries decide which high-end products to block. Washington has barred U.S. companies from selling everything from iPods to Harley-Davidson motorcycles. But that move was largely symbolic, as there is very little direct trade between the U.S. and North Korea.

Japan, which has for decades been a source of luxuries for the North Korean ruling class, has banned exports of 24 fancy products from caviar and gems to watches and art.

But the key to whether the sanctions will work is in the hands of China, North Korea’s largest trading partner.

A steel-girder bridge here spans the Yalu River, connecting Dandong to the city of Sinuiju in North Korea. That has helped Dandong, whose name means “Red East,” become a popular shopping destination for North Koreans with money. It is unclear how much that will change because of the sanctions.

So far, China hasn’t disclosed what specific kinds of high-end exports — TVs or luxury automobiles, for instance — it will block. A Chinese foreign-ministry spokeswoman, Jiang Yu, has said the list “should not be allowed to impact normal trade transactions” between the socialist neighbors.

North Korean leader Kim Jong Il, whose own taste for expensive French cognac and other imported luxuries is well known, uses money and goods liberally in an effort to buy the loyalty of the elite, according to U.S. and South Korean officials. Some of these officials say that depriving the ruling class of its creature comforts could alienate them from Mr. Kim, long known as “Dear Leader.”

But many North Korea watchers and North Korean defectors doubt that the elite would revolt against Mr. Kim’s government, because their fates are so closely tied to his now. “Under this regime, the privileged have had a very good life,” says Kim Dok Hong, the second-highest North Korean official to defect. “If the regime collapses, the people they’ve mistreated will be looking for revenge.”

At the peak of the famine that killed more than a million North Koreans in the mid-1990s, Mr. Pak, the former government official, says his parents weren’t short of food. Their home had three refrigerators regularly replenished with imported provisions by the Communist Party. Mr. Pak uses a pseudonym to protect family members still in the North from government retribution.

“The elites have had more freedom to do their own business” since economic overhauls in 2002, says Yang Chang Seok, a senior official at South Korea’s Unification Ministry, which oversees relations with the North. “People have earned a lot of money from trading.”

These days in Pyongyang, members of the ruling class are ferried around in imported cars and live in well-appointed — and well-guarded — apartment complexes. Their children race around city parks on in-line skates and play American computer games.

Says Mr. Pak: “If you can afford to pay, there’s nothing you can’t get.”

From the Daily NK:
9/18/2006
Kang Jae Hyok

My nephew had lived in an apartment in 1dong of new Dancheon (Tanchon). The apartment was completed in 1991 and transformed into a dumping ground in 4 or 5 years. [How] did it happen?

It was in 1983 that the apartment was completed in Younggangli. The instruction of Kim Il Sung who visited ‘Dancheon Magnesite Factory’ led to the construction of the apartment complex. Kim Il Sung ordered to build an apartment complex for workers working in ‘Dancheon Refinery’ and the factory around the Younggangli sea, and to design the apartment same as the Changgwang apartment in Pyongyang. Aftermath, an apartment construction group was formed from each province, city and district, and began to construct the apartment.

A 2,500 household apartment complex was completed in 8 years

During the construction period, N. Korean economy had been being stagnant. In addition the supplies of construction materials and equipments so often stopped that the construction was often dispensed. Some construction materials such as soil and gravel were gathered from the close places. Yet, because of proximity of railroad, construction condition was good.

However, cement, woods and ferroconcrete had been not supplied on time and thousands of workers had often wasted time. So, it had taken as many as 8 years to complete the 2,500 household apartment complexes. The number of workers for the construction was 4,500. Apartments had ranged from 5 floors to 15 floors and various designs.

Yet, nobody wanted to live in the apartment. In a desolate plain only apartments stood, there were no convenient facilities and no Jangmadangs.

It 8 km to arrive at the factory from the apartment, yet there were no shuttle buses. Head of South Hamkyung province who thought the apartment had to be filled forced workers to live in it. Powerless workers were obliged to live in it.

A 100watt light bulb and a baby in a box

The new apartment complex was named New-dancheon, and divided into two, 1 dong and 2 dong. In the first year tap water and heater were supplied, yet in the next year no heating in the apartment. The freezing whether of South Hamkyung province was the one that even stout adults stand.

In N. Korea, electricity is allowed only for light and watching TV. It can not be used for other purposes. Electricity monitors watch day and night. If a household caught in the monitor, it is not allowed to use electricity and punished by Giupso (state owned enterprise) or People’s unit.

A couple of workers working for the refinery put their baby and a 100 watt bulb in a box and warmed the baby with the bulb plugged into electricity. It was caught in a crackdown. Yet censors could not say anything about their illegal action.

Residents living in the apartments suffered from others as well. Tap water was often suspended, so that each house had to prepare a few crocks that were filled with water and used for a rainy day. As the water in crocks was empty, all family members had to carry water from the distant wells. If the apartment building was not high, residents would have suffered less.

From 1994 when food crisis began and the number of the death increased, workers working in the Dancheon refinery and Magnesite factory could not get food and some workers died of starvation. The highest number of the death was from the New-dancheon apartment complex. The survivors left the apartment and moved around for food.

The apartment complex was taken away and became like a haunted house. Only in the first floor lived some workers and in the second floor were nobody.

Here and there in the apartment dumps and garbage began to be found. Moreover, the murder incidents happened so that people began to call the apartment a ‘Ghost Apartment’. Residents living in the Ghost Apartment struggled to leave it, yet they had no money to move.

The main cause that produced the Ghost Apartment was an instruction of Kim Il Sung, ‘Build an apartment complex having a good sea view’ and without a plan construct it. The Ghost Apartment Complex definitely shows the internal situation of N. Korean society.

I wonder if by now my nephew left the ‘Ghost Apartment’.  

From the Daily NK:

‘Good Friends’, an organization for aiding North Korea, revealed on a newsletter of the 14th that, “The North Korean upper-class families usually live in the houses valued at from 27 million to 40 million won and have a bed valued at 300,000 won($100) and furniture at 800,000 won($267)”, and “some have housemaids in their houses”.

Furthermore, the upper-class families furnish with VCRs, vacuum cleaners and electronic heaters besides six home appliances (Refrigerators, sewing machines, TVs, washers, recording machines and electronic fans) that general North Koreans wish to have once in their lifetimes.

Plus, it added, “They spend 30,000 won in purchasing rice, pork, egg, Alaska pollack, various fruits and vegetables a month, and their total expenditure a month including other expenses amounts for more than one million won”.

It explained, “In the case of North Hamkyung province, their main sources of income are generally black market, drug traffics, curio dealing, wholesale carrying food and industrial products by car to Najin or Chonjin”, and “To get guaranteed, generally they closely connect with officials working at judicial authorities”.

According to the newsletter, however because most of the North Koreans maintain subsistence level, the gap between the rich and the poor are increasing.

It newsletter further explained that, “The gap between the rich and the poor varies according to areas, countries or cities”, and “This gap results from the distributional differences produced by productivities of each factory, operations, electronic situation, operational conditions of trains or cars, and demand difference of food, industrial products and necessities according to areas”.

Of the cities, Pyongyang is the most advanced city, Sariwon, Hamhung, Chongjin, Hoiryeong, Rajin, Shinuiju, Pyongsung are the second advanced cities, and the other cities are at the level of the subsistence.

In the case of North Hamkyung province, the upper middle class lives in houses valued at 1,500,000 won to 4 million won, and spend 100,000 won to 150,000 won in rice, pork, eggs, and some alcohol a month. Their main sources of income are some black markets, crossing a river, helps of relatives living in China, or business.

The low class can not even see rice, and generally lives on rice mixed with corns, corn noodles, vegetable soup. Their expenditure a month is around 30,000 won to 40,000 won.

Their main sources of income are trifling jobs such as vegetable sale, house repair or cleaning night soil. Although they want to do their own businesses, they have no money to do. Salaries are their only source to get some money, but they are not paid on time.

The lowest class of the elderly, the disable and Kotjebi(Street children) lives barely. They usually sleep in buildings, under bridges, garbage dumps, or riversides. Recently the people of the lowest class are increasing. 

Daily NK
Kwon Jeong Hyun
5/26/2006

In North Korea, domestic rice prices are showing a sharp rise.  In mid May, the price of rice in North Pyongan province was 1,300W ($0.43)/1kg. Compared to the price in May 2005, it rose 500W ($0.17). In Jangmadang, there is a rumor that rice will rise to 2,000 won ($0.67), so it seems that it’s just a matter of time before rice becomes more expensive.

The reason for the rising cost of rice is simple: a lack of rice. The rice stored in Autumn has begun to run out and there are not enough edible plants to go around. North Korea calls this period the Spring Austerity Season. This period is the hardest season for North Koreans.

The average wage of North Koreans is 3,000W($1). To be more exact, it means that 4 family members have to live off of 1.5kg of rice a month. Everybody struggles to survive by doing business, digging up edible plants, getting help from relatives living in China, and selling scrap iron.

The following is March prices from North Pyongan province. This shows the great difference from this year’s price. Except for food and groceries, the price does not vary much: