Archive for the ‘Statistics’ Category

North Korean market prices suggest serious food shortages

Tuesday, June 20th, 2023

By: Benjamin Katzeff Silberstein

Recently, the BBC became one of few global outlets to succeed in interviewing ordinary North Koreans inside the country about the food situation. The image is dire: starvation, empty markets and other signs of severe food shortages.

In the past few years when reports of food scarcity have surfaced from North Korea, market prices have given remarkably little credence to the claims. Not so at the moment. Comparing current prices levels with historic ones, the overall picture suggests that prices since the onset of the Covid-19 pandemic (and the North Korean government’s border closure), market prices have moved to a permanently higher level, indicating that overall supply of food is lower. This does not give us a specific number on how severe the food shortage is, but it gives quantitative evidence that food has become significantly scarcer since the onset of the pandemic.

To show this, I use market price data gathered and reported by Rimjingang, an online news outlet with sources inside North Korea that regularly publish market prices. I chose this specific data set because it is transparent and specific about where in the country the data comes from. Due to tightened border controls under Kim Jong Un’s tenure, information from inside North Korea has become even more difficult to access. Therefore, transparency about the data is crucial.

The price data almost exclusively comes from the region bordering China, such as Ryanggang and North Hamgyong provinces. The border region is different from the rest of the country in several crucial respect, perhaps most crucially in that it is much more involved in trade and smuggling with China than other regions. Nonetheless, the North Korean market system is integrated to some extent, with goods being transported around the country for sale. Although dilapidated infrastructure and harsh state regulations make internal travel difficult, the overall price trends very likely hold for the national level.

 

Market changes after Covid-19

Prices fluctuate frequently on North Korea’s markets, but usually within a more or less fixed span. The following graph shows prices for North Korea’s two main staple goods, rice and corn, from 2017 until mid-June this year. The prices are shown in renminbi, the most commonly used foreign currency in the border region, to check for inflation in the North Korean currency, Korean People’s Won (KPW).

The left side of the graph shows prices before Covid-19. Aside from a few nonsignificant bumps, prices hovered between 1–1.5 RMB for corn and 3.5 RMB for rice for the most part prior to the inception of the pandemic, fluctuating throughout the year. Interestingly, although North Korea closed its borders in January 2020 to protect against the virus, prices don’t truly begin to move until October that year.

Over the course of the next few months, however, prices for both rice and corn climbed significantly.

Rice prices rose from their regular level to move between 4 and close to 6 RMB in late 2020 and early 2021 and shot up drastically during the spring and summer months, the lean season before the fall harvest, when the storage of food begins to dry up. Prices normally go up during this season, but perhaps a spreading awareness that the border wouldn’t open anytime soon pushed prices up much further than normal. After shooting up to close to 15RMB and remaining much higher than normal for several months, prices stabilized at an interval between 8 and 4.5–5 from the fall of 2021 and onward. Prices have been moving around 5RMB since the end of 2022. That is an approximate 1.5RMB difference from the normal price level, or 42 percent.

On the one hand, prices now are much more stable than last year’s fluctuations to very high levels. On the other hand, the price level is now permanently higher, meaning that North Korean consumers face a permanently higher price level. Higher prices, logically, suggest that supply has dropped. In other words, with food supply lower, people must pay significantly more for the same amounts of food.

We see the same dynamics in prices of corn. Graph 3 below show corn prices from the fall of 2017 until the latest observation in mid-June:

Corn is a generally less preferred staple good for North Korean consumers, meaning that people tend to increase their consumption of corn when food overall becomes more expensive. From moving around 1.5RMB/kg before the pandemic, corn prices climbed significantly from late 2020, hitting almost 3RMB – a doubling of the normal price level – by March 2021. Prices then climbed further during the rest of the year and hovered around 4RMB in the late summer and fall. Since late 2022, prices have moved between 2.3 and close to 3RMB, meaning they have increased by at least more than half on the lower end of the spectrum, and doubled for the higher end.

Conclusion

None of this is evidence of a widespread famine in North Korea, and the BBC’s three eyewitness testimonies also do not fully prove anything of the sort. But that the country is experiencing a significant food shortage seems beyond doubt, as suggested both by reports from people inside the country as well as market prices. These prices do not tell the full story. The situation likely varies significantly between regions, and the state appears to have increased food ration distributions to parts of the public (see one example here). That trade with China has continued to open up little by little in 2023 has probably contributed to food prices stabilizing as well. Still, current price levels remain far higher than normal. For a population’s whose margins are mostly very small, if it doesn’t amount to starvation, it means that an already difficult situation has gone from bad to worse.

Share

Why the North Korea–China trade increase could be an illusion

Wednesday, May 24th, 2023

By: Benjamin Katzeff Silberstein

North Korea–China trade is steadily growing, perhaps slowly moving back to its normal  before Covid-19 -“Maximum pressure” sanctions in 2016–2017. According to the latest numbers, trade continues to grow:

Chinese outbound shipments to the isolated country surged 69% year-on-year to $166 million in April, data released by China’s General Administration of Customs showed.

The top export items in terms of value were processed hair and wool used in wigs, worth about $11.6 million, and diammonium hydrogen phosphate, a widely used fertiliser, worth $8.84 million.

But it is far from back to the “old normal” before 2017. Look, for example, at what is being exported. The biggest export products were wigs and fake eyelashes, accounting for over 66 percent of exports to China. This is part of an offshoring industry where North Korea first imports hair from China, and then locally manufactures it into wigs to export back. Sales of wigs, eyelashes and related products accounted for close to $22.7 million in April. To get a sense of proportion, consider that coal exports, formerly one of North Korea’s most central export goods, totalled $1.19 billion in 2016, a little over $99 million per month on average. So when we look at North Korea’s most central exports at the moment, they are still very small compared to the increasingly distant normal. Wigs just aren’t economically meaningful in the same way as coal.

None of this is to say the increase in trade isn’t meaningful. North Korean imports from China may be just as meaningful or perhaps even more so for the economy at this point, with inputs both for export-destined wigs and fertilizer being the central import goods. The increase in trade is certainly positive for the North Korean economy, but it does not seem to (yet) change the overall dynamics where North Korea still cannot export its formerly most important export goods openly, without circumvention and smuggling that involves significant costs. It could be that covert exports will eventually reach the old level of openly reported exports, but we don’t have any hard data to suggest that is yet the case.

Share

What’s going on with North Korea’s agriculture?

Thursday, March 2nd, 2023

By: Benjamin Katzeff Silberstein

As the South Korean government has said, this week’s meeting in Pyongyang on the food situation is as close to an open admission either of serious food shortages already prevailing, or that the regime forecasts that things will get worse. But what do we really know? In this post, I look at two main indicators: reports and testimonies from inside North Korea reported by the defector-run news outlet Daily NK, and market prices, primarily of corn and rice.

Overall, the food situation appears significantly more difficult than usual. Increased corn prices is perhaps the most worrying indicator. Comparisons with the famine of the 1990s still aren’t warranted, but there are worrying signs that the state wants to tighten control over agricultural production. At the same time, some of the policies put forward by the government make relative sense, in particular those reported by Daily NK (and have not been confirmed by the government). In conclusion, the situation appears concerning and could reasonably be called a “crisis”, but it still does not appear to be in disaster territory. This could change quickly depending on weather conditions and government policies, particularly on border trade.

 

A note of caution

It’s important to bear in mind that the North Korean regime carefully plans what messages it wants to send to the outside world. It’s not always clear exactly what that message is, but it does exist. The government has a purpose in holding a public meeting of this sort, and in telling the world about it. That’s not saying the regime is being dishonest about the situation, but they do have a clear incentive to let China first and foremost, but also the international community at large, know that they need food assistance. It could also be directed towards the broader international community, and there have been reports that the government has been in talks with UN organs about food aid.

 

The food situation and Covid-19

North Korea’s food situation has made a peculiar and sad journey over the past few years. During Kim Jong-un’s first few years in power, agricultural production increased for the most part, a pattern that began already under Kim Jong-il. The food situation overall continued to seem stabile, for the most part, throughout the “maximum pressure” and negotiations of sanctions in 2017–2019. Things really became problematic when North Korea shut its borders to foreign trade in the winter of 2020 to stave off Covid-19. Although North Korea doesn’t (openly) import much food, its agricultural system relies on imports of fertilizer and some agricultural equipment, and spare parts for tractors and machines.

The border closure also significantly disrupted the flow of information from the country. Because of the government’s strict enforcement of border controls, it has become significantly more dangerous and difficult for independent organizations (mostly based in South Korea) with sources inside the country to keep in regular contact, and traders and smugglers cannot venture over to China in the same way they normally have since the early 2000s. North Korea has always been a closed society, but this is even more true since the beginning of the pandemic.

 

What does the state say?

To understand how the North Korean government sees the agricultural situation, it’s worth looking in-depth at the summary report published by Rodong Sinmun today (March 2nd, 2023). The current spotlight on agriculture is really part of a longer focus that began in 2021, and isn’t as sudden as the global interest in it (my emphasis throughout the text):

The plenary meeting of the WPK Central Committee had a discussion of historic significance to comprehensively analyze and review the work for 2022, the first year of implementing the programme for the rural revolution in the new era, and further concretize the important tasks and long-term objectives for putting the agricultural production on a stable and sustained growth track and the urgent tasks arising at the present stage of the national economic development and the practical ways for carrying them out.

North Korean parlance has a way of making every issue “the most important”, but it’s very clear that agriculture is explicitly front and center on the economic policy agenda:

The concluding speech raised again the revolutionary change of the rural communities at the present stage of struggle as an important revolutionary task for achieving the prosperity and development of the state and the promotion of the people’s well-being, and put forward the principled matters to be maintained in implementing the programme for the socialist rural revolution in a perfect way. 

It referred to the intention of the Party Central Committee which set the attainment of the grain production goal as the first target of the 12 major goals for the national economic development and the main purpose of the current enlarged plenary meeting, and raised the main goals and tasks for agricultural development.

The problem is, of course, what to do in practice. The report is short on specifics and concrete details, and most statements related to policy appear to advocate modernization for the sake of it, but with what resources? Highlighting the role of irrigation and mechanization suggests the government does have a sense of the most central challenges on the ground, but to develop these areas, North Korea would need to import both machinery and spare parts:

It is necessary to set it as a priority task in ensuring the stable development of agriculture at present to accelerate the completion of the overall irrigation system to cope with abnormal climatic phenomena, and dynamically push ahead with the irrigation project planned for this year and perfect the irrigation system of the country in the period of the five-year plan.

The machine-building industry and agricultural sectors should produce and supply to the rural communities more new and high-efficient farm machines which are the most necessary and effective in putting the agricultural production on a modern and advanced basis, while steadily propelling the work for renovating the farm machine sector in an innovative way. 

From a policy perspective, the emphasis on the role of the state is worrying. In other policy areas, North Korean rhetoric over the past few years has been clear that the state seeks to take back control over the direction of the economy from markets and other non-government players. Further centralizing state control over agriculture could be devastating for efficiency, but I’m not sure this section of the report must be read that way. Rather, it could be about local government organs supporting farmers with what they need (again, unclear with what money):

In order to increase the nationwide agricultural output, attention should be paid to overcoming the lopsidedness in the guidance on farming and keeping the balance to be responsible for farming as a whole and it is important to concentrate on increasing the per-hectare yield at all the farms. This is an important principle for guidance on the agricultural production.

The General Secretary stressed the need to enhance the role of the provincial, city and county guidance organs and all the farms in attaining the long-term objectives of agricultural development.

[…] 

The concluding speech put forward the measures for further expanding the rural construction this year and the policy-oriented tasks to be prioritized and pushed forward with by cities and counties.

In order to attain the gigantic long-term objectives of rural development, it is necessary to decisively strengthen the Party guidance over the agricultural sector and improve the rural Party work.

[…]

He stressed the need for all Party organizations to intensify the struggle against the practices of weakening the organizational and executive power of the Cabinet, the economic headquarters of the country, and thoroughly orient and subordinate the Party work to the implementation of the Party’s policies, thus getting their working efficiency verified in the practical struggle for attaining the 12 major goals for the development of the national economy this year.

 

Reports from independent sources

A few recent articles from Daily NK (henceforth DNK) shine interesting light on the situation. Their reporting gives the impression of a protracted, difficult situation rather than a sudden emergency. DNK reports, for example, that the North Korean currency has strengthened against foreign currencies with expectations that trade may soon begin again:

Because hopes of expanded trade have been frustrated several times before, North Koreans are not rushing out to secure foreign exchange even when the government hands down orders regarding the expansion of trade.

According to Daily NK’s recent survey of North Korean currency rates and market prices, the US dollar was trading at KPW 8,400 in Sinuiju, North Pyongan Province as of Feb. 19.

As that figure represents a mere 0.2% increase from the previous survey on Feb. 5, when the dollar was trading at KPW 8,380, the rate does not appear to have changed significantly.

In Pyongyang as well, the dollar was trading at KPW 8,360, more or less what it was on Feb. 5, when it was trading at KPW 8,370.

[…]

With rising expectations of reopened trade repeatedly dashed over the last three years, trade-related directives from the North Korean authorities are not immediately translating into renewed trade, a reporting partner in North Hamgyong Province told Daily NK recently, speaking on condition of anonymity.

In fact, North Korean authorities issued orders on Feb. 10 to provincial trading agencies calling for submissions of general plans for import and export activities and foreign currency acquisition.

The reporting partner said trade has failed to restart several times during the COVID period even after the authorities said it would.

“As long as the government issues no clear permissions [to resume] trade, orders to merely prepare [to restart trade] are not leading people to buy yuan,” he said. 

DNK also reports that the steep, recent climb in food prices may have been generated by signals from the state that its food reserves increasingly need to be replenished. These price hikes are very significant, and far larger than normal:

North Korean market rice prices have recently skyrocketed after holding steady since last November’s harvest. A nationwide campaign of soliciting donations of “patriotic rice” may have helped fuel the dramatic rise in market rice prices.

According to Daily NK’s regular survey of market prices in North Korea, a kilogram of rice in Pyongyang’s markets cost KPW 6,000 as of Feb. 19. On Feb. 5, it cost just KPW 5,200, meaning the price climbed 15% in just two weeks.

Thus, the price of rice in Pyongyang climbed about KPW 6,000 for the first time in three months, having held steady in the KPW 5,000 to 6,000 range since last November.

The price of rice climbed in other regions, too. The price of rice in Sinuiju and Hyesan climbed 9% and 5%, respectively, between Feb. 5 and Feb. 19.

[…]

The recent spike in North Korean rice prices is smaller than the climb immediately following the border closure; however, the spike is much steeper that the usual increase in prices early in the new year.

On the other hand, the price of corn in North Korean markets has trended differently from region to region.

A kilogram of corn cost KPW 2,700 in Pyongyang as of Feb. 19, 6% less than it did on Feb. 5, when it cost KWP 2,900.

This means that while demand for rice has increased in Pyongyang, demand for corn has fallen.

In Sinuiju, a kilogram of corn cost KPW 3,000 as of Feb. 19, the same as it did earlier in the month. On the other hand, in Hyesan, the price of corn has climbed. A kilogram of corn in Hyesan’s markets cost KPW 3,300 as of Feb. 19, 6% more than it did on Feb. 5, when it cost just KPW 3,100. In Hyesan, the price of rice and corn both rose 5 to 6%. 

The state is both supporting market prices more through grain distribution, but also demanding more from the people. This means that while prices have been kept somewhat stable by the state opening its storage houses for some public distribution during the winter, the state is signaling shortages by demanding more rice from the public:

The recent climb in market rice prices appears influenced by the country’s nationwide campaign for “patriotic rice” contributions and insufficient supplies at official grain shops.

Daily NK recently reported through a source in North Hamgyong Province that North Korea is asking all citizens to contribute at least 5 kilograms of “patriotic rice.”

There are price differences region to region, but since rice generally costs twice as much as corn, the North Korean government is treating 10 kilograms of corn as equal to five kilograms of rice when accepting donations. In fact, many North Koreans are donating whichever grain is cheaper in their areas of residence. As a result, rice prices have spiked sharply in Pyongyang and Sinuiju, where rice had been relatively cheap compared to corn.

Moreover, entering February, state-run food shops have sold only small amounts grain to consumers, which appears to have helped contribute to the spike in market grain prices. 

Thanks to DNK, we also have some sense of at least what some North Koreans have been told about the plenary meeting on agricultural issues. Interestingly, the policies mentioned appear much more prudent and wise than those included in the Rodong Sinmun report:

In particular, North Korea’s government ordered each province to secure irrigation facilities appropriate for their geographic conditions and draw up plans to ensure water for terraced fields, calling irrigation facilities that work no matter what the climatic conditions “the most important issue.”

North Korea’s leadership also ordered the preparation of various data, including soil analyses of farmland, analyses of irrigation conditions and analyses of progress in agricultural mechanization.

[]

The province’s authorities also ordered the writing of a draft plan for scientific farming in accordance with soil and lot conditions, and called on officials to hurry construction of modern agricultural housing as per this year’s plans, the source said.

How far these measures can go is very hard to tell and, again, no major change will occur unless the state dedicates significant resources to agricultural development. That would mean moving resources from higher-priority areas, which the state is unlikely to do in the near future.

Share

North Korean rice prices stabilize in September

Friday, September 23rd, 2022

By: Benjamin Katzeff Silberstein

Following a quite usual pattern, rice prices have stabilized in the past few weeks after climbing during July, the country’s “lean season” in food. Daily NK reports:

North Korean rice prices appear to be falling this month after climbing past KPW 6,000 a kilogram in late July.

According to Daily NK’s regular survey of North Korean market prices, a kilogram of rice in Pyongyang cost KPW 5,600 as of Sept. 18. This is about 11% less than it cost on July 26, when a kilogram of rice climbed to KPW 6,280.

In fact, the price of rice in Pyongyang has continued to fall since the July 26 survey.

In other regions such as Sinuiju, North Pyongan Province and Hyesan, Yanggang Province as well, rice prices have continued to drop, falling 8 to 12% since late July.

It appears rice prices are falling from July because double-cropped wheat, barley and potatoes have been harvested, and because the authorities provided some North Koreans with unglutinous rice, glutinous rice, wheat flour and other foodstuffs earlier this month to mark the anniversary of North Korea’s founding on Sept. 9.

However, the provisions were primarily aimed at Pyongyang residents and cadres of state agencies. Ordinary people in the provinces received nothing in particular.

According to the source, in some regions such as Yanggang Province, rice of relatively poor quality is currently circulating in markets. Considering the poor state of the musty, moldy rice, it appears some low-quality rice in military storage found its way into markets after it was given to soldiers.

North Korean authorities recently ordered officials dispatched overseas to obtain grains such as unglutinoius rice, corn and soybeans. However, the authorities have yet to provide the imported grains to ordinary people.

According to another source in the country, some military units have gone directly to Nampo, where the imported grain is being stored, to load up on unglutinous rice.

(Source and full article: Seulkee Jang, “N. Korean rice prices fall after climbing past KPW 6,000 per kilogram in late July,” Daily NK, 23 September, 2022.)

Share

Is the North Korean economy in crisis territory?

Thursday, September 8th, 2022

By: Benjamin Katzeff Silberstein

Is the North Korean economy in a crisis following years of tough sanctions and the Covid-19 border closure? In a new report, the Bank of Korea’s answer is yes. They point to factors such as vast price increases on several basic goods to show that shortages have led to a price inflation virtually across the board for crucial consumer products:

The price of sugar in North Korea has multiplied by a factor of 8.3 between 2017 and late June of this year, from 5,201 won to 43,000 won per kilogram. During the same time period, the price of flour grew 3.7 times in the country as well, from 5,029 won to 18,700 won per kilogram.

Sugar and flour are two of the main food products North Korea imports from other countries. The extent to which their prices jumped in North Korea exceeds what might be observed in South Korea today due to high inflation. What could have happened in North Korea in the past five years to occasion such a surge in prices?

On Monday, the Bank of Korea published a report titled “North Korea’s Economy in the Past Five Years and Its Future Outlook,” which pointed to how the country’s economic environment changed during the time period. In a nutshell, the report argued that North Korea’s economy has entered yet another period of crisis after the 2000s, when its economy grew, following the 1990s, when the country experienced an economic crisis and a famine, also known as the Arduous March. North Korea’s gross domestic product (GDP) fell by 2.4% on average every year from 2017 to 2021 and is estimated to have dropped by a total of 11.4% during this time period.

What prompted the crisis in North Korea were economic sanctions against the country as well as border closures due to COVID-19.

(Source: Park Jong-O, “Why the price of sugar went up 726% in N. Korea over the last 5 years”, Hankyoreh, September 6th, 2022.)

Broadly speaking, given the data available, it is difficult to draw any other conclusion. At the same time, it is crucial to keep a few things in mind. First, much of the economy is adapted to a situation with very little foreign trade, because even in a normal year, North Korea’s external trade is exceptionally small compared with most countries in the world.
Second, there’s like to be considerable regional variation in the economic situation. Transportation inside North Korea has improved considerably over the last 10-15 years but getting goods from, say Hyesan in the northeast to Pyongyang, or a southern city like Sariwon, is still difficult, complicated and time consuming. So we are not necessarily talking about one, unified market with similar conditions across the country, but rather about a very fractured system.

Third, the word “crisis” in the context of the North Korean economy comes with very serious connotations since the famine of the 1990s. But we are decidedly not talking about a situation with mass starvation, and the Bank of Korea acknowledges this. Because of the expansion of the market system, the economy can respond very differently to shortages today than it could in the 1990s and early 2000s. Consumers can and likely have switched to less desired goods that can be procured and produced domestically. Both flour and sugar can, after all, to some extent be substituted for less desired but more easily available goods. We’ve also seen an increase in the price over corn over rice, which exemplifies this well: when the more desired good (rice) becomes more expensive, a greater number of people switch over to corn. This does suggest economic conditions have worsened, but not necessarily that they are disastrous.

Share

North Korea’s agricultural production grew last year, South Korean data says

Thursday, August 11th, 2022

By: Benjamin Katzeff Silberstein

South Korea’s Bank of Korea (BOK) recently published its GDP estimates for North Korea in 2021. Overall, their estimates (the faults and flaws of which are many) are consistent with the general impression that last year wasn’t great for North Korea, but also relatively stabile.  An estimated GDP decrease of 0.1 percent in 2021, after all, is a whole lot less than the contraction estimated by BOK for 2020, minus 4.5 percent.

Agriculture (including forestry and fisheries) is, interestingly, estimated to have grown by 6.2 percent. Such precise numbers are rather pointless in estimates like this. Nonetheless, the direction seems to confirm assessments by the World Food Program and others that agricultural production last year performed somewhat better than the years before.

Share

Market conditions in North Korea, amid rising prices

Monday, July 11th, 2022

By Benjamin Katzeff Silberstein

Unfortunately, Daily NK recently ceased general publication of their detailed price data, but a recent report details how prices are rising in the country. In combination with the crackdown on unauthorized small-scale trade, conditions are tough for the many North Koreans sustaining themselves through market trade:

A recent spike in the price of staples such as rice and corn at North Korean markets is making things even tougher for ordinary people in the country.

A source in Yanggang Province told Daily NK on Wednesday that the price of rice at markets in the city of Hyesan has been increasing since the beginning of last month.

Moreover, since June 30, the price of one kilogram of rice has gone above KPW 6,000, leaving more North Koreans without access to grain and stoking anxiety among the public, the source said.

He also reported that rising food prices have made things even harder for street vendors, who were already hit hard when the North Korean authorities closed the national borders  and intensified crackdowns on the vendors.

According to the source, one resident of Hyesan who supports herself by selling rice cakes on the street has made few sales since June. Crackdowns by the Ministry of Social Security have kept her from selling rice cakes, putting her further in debt.

Without any income, the woman cannot even keep up with the interest on the loans she took out to fund her business. If she misses a second deadline for making her interest payment, the interest will balloon and her credit will collapse, leaving her unable to borrow any more money, he explained.

On top of her predicament, food prices in the market continue to rise, and the woman is now afraid she will become completely destitute.

“Even though the ‘barley hump’ has passed, food prices just keep getting higher and higher. The mood among the populace is so grim that some are afraid people will resort to cannibalism if things keep on like this. Many people are so famished because of the high cost of food that they can’t even go to work,” the source said.

(Source: Lee Chae-un, “Recent spike in rice and corn prices make things even more difficult for ordinary N. Koreans,” Daily NK, July 8th, 2022.)

Price data from Rimjingang also reflects this trend. Prices in their data set went from 5,400 won/kg for rice on June 10th, to 6,700 on the 17th and 6,600 on the 24th, and stabilized somewhat at 6,300 won on July 8th. In USD terms, that’s an increase from 0,72/kg to 0,86 most recently, an increase of almost 20 percent.

Share

North Korea’s problematic Covid-19 numbers

Wednesday, May 18th, 2022

By: Benjamin Katzeff Silberstein

North Korea’s admission of a Covid-19 outbreak has understandably drawn global attention. It’s one of two countries – the other one being Eritrea – that have not yet started administering Covid-19 vaccines. North Korea also claimed, until just a few days ago, to have had zero cases of infections.

Naturally, the government’s data is highly interesting in this situation, and you can follow the officially reported numbers here at 38 North‘s tracker. Due to the lack of testing kits, North Korean authorities report cases of “fever” as a proxy for Covid-19.

These numbers perhaps tell us more about how the government perceives the situation, than how many North Koreans have actually been infected with Covid-19. That North Korean authorities are now signalling a greater level of pragmatism in tackling the virus does not mean their claims until a few days ago about zero cases were true. The zero cases claim defies common sense and logic, not least since North Korea borders Chinese provinces where we know there have been significant outbreaks. Outlets such as Daily NK, Rimjingang, Radio Free Asia and others with sources inside North Korea have reported since the start of the pandemic about large numbers of people coming down with Covid-19 symptoms.

Already in March 2020, shortly after the pandemic began, sources in North Korea told Daily NK that over 20 North Koreans had died from the virus. By November last year, Daily NK reported that more than 100,000 people with symptoms were housed in government quarantine facilities. These are only two examples out of a large number of such reports. There is of course no way to confirm any of the information about Covid outbreaks in North Korea. Most  reports, however, have used roughly the same metric as the government uses right now to count cases — fever symptoms.

North Korean state media reports of the number of people in treatment per province also raises a lot of questions. Consider the map below, from the 38 North tracker:

It is possible that Pyongyang and its surroundings, Kaesong, and Rason, all have significantly higher numbers of cases than, say, North Hamgyong province. After all, Pyongyang is a relatively crowded city by North Korean standards, making infections spread more easily. But these are also sensitive areas and it may well be that the government is simply paying more attention by testing (for fever) more and monitoring numbers more closely. All three, in fact, are so-called “administrative special cities” (특별시/t’ŭkpyŏlssi), placing them under more direct central government administration than other cities. Pyongyang, moreover, is politically sensitive as the country’s power center, and Kaesong sits on the tense border with South Korea. Rason holds a special economic zone and is close to North Korea’s borders with Russia and China. Perhaps the government pays greater attention to these cities because of this common denominator.

The question is still why the North Korean government chose to acknowledge the presence of Covid-19 in the country this month. Since the announcement, the state has strengthened quarantine measures, some of which were already in place, and imposed a nationwide lockdown, though there’s been some questions raised about how sternly it is implemented. It is still possible, as I noted in a previous post, that the government is changing to a more pragmatic Covid-19 policy overall, starting with recognizing the virus.

As of now few data points point in this direction, although it is still much too early to tell. It may also be that the government made the announcement to set the stage for accepting vaccines and other assistance from abroad. Even with such assistance, it remains unclear how the rollout would work in practice given North Korea’s lacking equipment for, for example, storing vaccines and keeping them cold while transported around the country.

Share

Another data point on North Korea and the world economy

Monday, April 25th, 2022

By Benjamin Katzeff Silberstein

At 38 North, I recently looked at how world market price swings impact the North Korean economy. Given the lack of consistent price data for coal in North Korea, I was unable to look at the potential impact of global coal price changes on domestic prices (and export prices) in North Korea. But with global coal prices shooting up following bans on imports of Russian coal and other energy products, North Korean producers will likely benefit significantly, at least in the short- to medium-term. So although global food price hikes following Russia’s attempted invasion of Ukraine may hurt the North Korean economy in some ways, rising coal prices will benefit it in others.

Daily NK notes this in an interesting recent report. According to their sources, prices paid by Chinese importers for North Korean coal have risen by 40 percent in a short time:

According to multiple Daily NK sources in North Korea on Wednesday, Chinese traders are paying an average of USD 70 per ton for smuggled North Korean coal.

That is not even one fourth of international price coals, including Australia’s benchmark Newcastle index, which have been climbing at a frightening rate due to the EU’s ban on Russian coal imports.

The price of smuggled North Korean coal is about half that of the local price in China, where there is a price cap. However, it is also more than double the price of exported North Korean coal prior to the COVID-19 pandemic.

Moreover, even compared to early October, when smuggled coal sold for about USD 50 a ton, the current price represents a more than 40% climb from six months earlier.

At the time, Chinese coal prices were skyrocketing due to local shortages following Beijing’s suspension of Australian coal imports due to trade disputes with Canberra.

In the end, the price of North Korean coal is essentially hitching on to continuously rising global coal prices.

Moreover, the sources said North Korea is selling high-quality coal of more than 7,000 calories to China. Accordingly, more Chinese traders are reportedly demanding North Korean coal.

They further said that while coal exports are not as brisk as they were prior to the pandemic, North Korea has been continuously exporting coal through the port of Nampo as of late.

(Source: Seulkee Jang, “N. Korea sees coal prices rise as international energy prices skyrocket,” Daily NK, April 21st, 2022.)

It is always striking and interesting to note just how much of a buyer’s monopoly North Korea is subject to when it comes to China’s coal imports. Because China is the only country of true significance for North Korean coal exports, it is to a large extent free to set the prices. As the article notes, the prices Chinese importers pay for North Korean coal are not even one-fourth of global prices. It’s worth keeping in mind when China is referred to as North Korea’s economic “lifeline”. It may be somewhat true, but it’s far from that simple.

Share

Oil and fuel supply shortages on North Korean markets?

Wednesday, March 23rd, 2022

By Benjamin Katzeff Silberstein

It’s been a couple of months since railroad traffic opened again between China and North Korea. Although it isn’t very much time to fully evaluate such a drastic change, we can see some interesting price movements on the country’s markets. (Click to see the full graph.)

Average of market prices for rice, gas, diesel, USD and RMB in three North Korean cities. Graph by NK Econ Watch. Data source: Daily NK. 

First, and unsurprisingly, foreign exchange rates have gone up drastically. This makes perfect sense, since news of trade resuming would make more North Koreans want to hold foreign currency, to import and purchase goods from abroad.

Second, both diesel and regular fuel prices have gone up, and quite drastically. As Daily NK notes, the fuel price increase in North Korea is much higher than that of global oil prices. This is also logical, since businesses have likely increased their purchases of fuel in anticipation of increased demand as border trade increases. I’m not sure, however, that the entire magnitude of the increase can be explained this way, since in some localities, prices have more than doubled. Diesel prices have also skyrocketed, which is somewhat unusual since gas and diesel prices tend not to fluctuate this much together. (Gas prices are some of the most volatile on North Korean markets and often fluctuate with the geopolitical situation.)

Price hikes in China, on both diesel and gasoline, are likely a strongly contributing factor. Another significant factor, reported by Daily NK in the article above, is likely moves by the North Korean government to restrict private fuel sales, perhaps leading hoarding by sellers. The rapidly rising exchange rate also makes fuel more expensive, but fuel prices have risen faster than the exchange rate.

Increased supply from China may come to stabilize fuel prices, but given global oil price increases, such deliveries to North Korea are increasingly costly for China as well.

Share