North Korean Economy Watch

DPRK border guard shoots 3 Chinese

June 8th, 2010

UPDATE 2: According to the Daily NK:

The recent shooting of four Chinese smugglers on the border between North Korea and China by a North Korean border guard was due to a quarrel between the Chinese smugglers and North Korean border guards about an antiques smuggling ring, according to a local trader.

The North Korean border guard shot the four smugglers on June 4th; three were killed and one was wounded. Afterwards, the North Korean authorities apparently issued an apology for the accident to the Dandong municipal government and paid compensation to the victims’ families.

The trader, Kim, who lives in Dandong, reported the details of the shooting accident to The Daily NK earlier this week. The spot where the accident happened was on a boat around Hwanggeumpyeong on Shin Island at the mouth of the Yalu River, he explained, where the facilities of the Shinuiju Shoe Factory are located.

According to Kim, although it was reported in some quarters that the North Korean border guard did not know who was on the boat and fired at it in the dark, in fact, both sides already had close relations.

They were well acquainted with each other thanks to smuggling, Kim said; the North Korean guard had apparently passed several antiques which he had obtained in the North to the Chinese smugglers. However, the Chinese smugglers did not pay for them and severed contacts with him.

The antiques the North Korean guard had procured included rare pieces of white Chosun dynasty china, he said.

After the Chinese smugglers disappeared, the guard tried to find them for a while, but then encountered them by chance while on his patrols.

The guard chased and eventually caught them, then they argued, but the smugglers refused to pay money for the antiques, claiming they were all imitations.

After a while, the smugglers said they would give other goods of equivalent value instead of money and then tried to leave, at which point the guard apparently shot them.

Kim also reported the details of the North’s official response. After the Chinese Ministry of Foreign Affairs released a statement heavily critical of the shooting, the North sent a delegate to Dandong on the 15th to apologize, he explained.

In a meeting with Dandong governmental officials, the North’s delegate reportedly said it happened accidentally, and expressed the North’s sincere apologies for the accident.

The delegate apparently added that the North would restrict shooting towards the Chinese side and suggested that both sides should strengthen their mutual regulations on smuggling. He also paid $3,000 for each death as per the stipulations of a treaty between the two countries.

Kim said, “I thought the compensation was too low, so I asked once again, but their answer was that it is stipulated by the treaty.”

He added, “They promised the Chinese side that the border guard who shot the Chinese would be severely punished on suspicion of smuggling antiques and killing citizens of an allied country.”

UPDATE 1: According to Reuters:

The isolated North made the effort to soothe China, its sole major economic and political supporter, after North Korean border guards last week shot at the Chinese nationals crossing the river border near the northeast Chinese city of Dandong.

Three were killed and a fourth was wounded.

Chinese Foreign Ministry spokesman Qin Gang said both countries were now “further investigating and handling the case”. He provided no other details.

On Tuesday, the Foreign Ministry made a rare public complaint about its neighbor and now North Korea appears to be seeking to placate Beijing.

North Korean border authorities said an initial investigation showed the incident was an “accident”, China’s official Xinhua news agency reported.

“The North Korean side expressed its grief over the Chinese deaths, and offered condolences to the families of the dead and to the injured, and will severely punish the perpetrators,” said the report.

“The North Korean border security authorities will further investigate this incident and prevent such incidents from recurring.”

ORIGINAL POST: According to the Associated Press:

A North Korean border guard shot and killed three Chinese citizens and wounded a fourth on the countries’ border last week, China said Tuesday after lodging a formal diplomatic protest.

The guard shot the four residents of the northeastern border town of Dandong last Friday, apparently on suspicion they were crossing the border for illegal trade, Foreign Ministry spokesman Qin Gang said.

“On the morning of June 4, some residents of Dandong, in Liaoning province, were shot by a DPRK border guard on suspicion of crossing the border for trade activities, leaving three dead and one injured,” he said at a regularly scheduled news conference. He used the acronym for North Korea’s formal name, the Democratic People’s Republic of Korea.

“China attaches great importance to that and has immediately raised a solemn representation with the DPRK. Now the case is under investigation,” he said.

Dandong is a major shipping point and rail link for goods going into and out of North Korea from China.

Qin did not give any further information. There have been some reports in South Korean media on the incident, though North Korea has not acknowledged the shootings.

And how did the South Koreans react? According to the Los Angeles Times:

The irony of China’s protest over last week’s shooting was not lost on South Korea.

“This time it is their citizens who are killed, and they show they are not so naive after all about North Korea,” said Kim Tae Jin, a North Korean defector and human rights activist in Seoul. However, he applauded China’s protest of the shooting. China needs to show North Korean leader Kim Jong Il “that he can’t get away with whatever he wants,” Kim said.

China’s public protest is unusual in that relations between China and North Korea are normally shrouded in secrecy, to be discussed only in the politburos of the longtime communist allies.

“It is rare for China to publicly complain. Usually there is a private apology or money paid,” said Kim Heung Gwang, a former North Korean college professor and head of Seoul-based North Korea Intellectuals Solidarity.

The stretch of the Yalu just south of Dandong is frequently trafficked by smugglers, some of them bringing North Korean-made drugs into China or banned Chinese products, such as DVDs or cellphones, into North Korea.

The North Korean government is especially strict about the export of copper, which has been looted from factories, electrical and telecommunications facilities by Northerners desperate for money. But the North’s border guards do not normally shoot to kill — at least not when the smugglers are Chinese.

“Only their own people,” said Kim.

Read the full stories here:
China says NKorean border guard killed 3 Chinese
Associated Press
Tini Tran
6/8/2010

China makes rare public protest against North Korea over killing of 3
Los Angeles Times
Barbara Demick
6/9/2010

North Korea seeks to soothe China over border shootings
Reuters
6/10/2010

Posted in Antiques, Black markets, China, International trade | Comments Closed

Ulrich Kelber interview on recent trip to DPRK

June 8th, 2010

The interview (in German) can be found here. A reader, however, sent in an English version:

Klaus-Martin Meyer: Mr. Kelber, you were recently in North Korea for the first time. Was this trip in what is certainly a totally different world consistent with your expectations?

Ulrich Kelber: Though I prepared myself with both oral and written accounts, there were things, both positive and negative, that surprised me. Among the negative things were the uniformity and control; among the positive were how well educated the people are, and their effort to bring the country forward.

Klaus-Martin Meyer: The political climate of the Korean peninsula is currently more tense than ever. The North Koreans described their version of the fall of Cheonan. How realistic is it?

Ulrich Kelber: I’m not an expert on these sorts of questions, which prevents a very detailed assessment. North Korea’s November threats of retribution alone aroused suspicions. But, in fact, South Korea has to allow questions. Why can’t an independent commission examine the evidence? Why aren’t the survivors permitted to testify publicly?

Klaus-Martin Meyer: In Pyongyang you also visited a German joint venture with the company Nosotek. As a member of the Bundestag, what are your impressions of the working conditions and day-to-day work of software developers in this sector of the North Korean economy? Are you convinced that Nosotek is actually developing for the international market?

Ulrich Kelber: Yes, we saw typical products for the international market, which, as a computer scientist, greatly interested me. The programmers and graphic designers are obviously very highly trained, with technical equipment up to Western standards. One significant exception to this is the lack of internet access in the company itself. Of course, this makes business and customer support more difficult, but isn’t an obstacle for actual software development.

The working conditions were the same as I have seen at German start-ups or in developing countries. No one could comment on the wages, which is also the customary rule in Germany. However, I had the feeling that the employees were part of the middle class, to whatever extent it exists in North Korea.

Klaus-Martin Meyer: How do you rate the opportunities and risks for foreign entrepreneurs in North Korea?

Ulrich Kelber: That’s hard to say after a single visit, but at Nosotek there seems to be little standing in the way of economic success. Possible risks would be the regime further shutting the country off, or wider-reaching sanctions. The well-trained employees, which I also can affirm in other areas such as the trades and agriculture, represent a great opportunity for all businesses.

Klaus-Martin Meyer: As usual in closing, our standard question (not just in interviews about communist countries.) Where do you see North Korea being in five years?

Ulrich Kelber: If the regime doesn’t open up economically, the country will barely progress, in spite of any efforts, for example, to maintain their infrastructure. Even with a little more openness, North Korea could make enormous economic gains, since both infrastructure and well-trained workers are available. The possibility of a political thaw depends both on the ability of the North Korean regime to resolve the succession issue, as well as whether or not South Korea’s hardliners keep calling the shots.

Posted in Computing/IT, Foreign direct investment, Germany, International trade, Nosotek | Comments Closed

PRC holds DPRK official on drug trafficking

June 8th, 2010

According to the Choson Ilbo:

South Korean activist Do Hee-yoon quoting a source in China on Monday said that a 33-year-old official surnamed Rim from the Sinuiju city government’s trade bureau was arrested by Chinese police on charges of drug trafficking in Dandong on the evening of March 2.

“North Korean agents targeting South Korea have been arrested before for their involvement in drug trafficking, but it’s unprecedented for a senior government trade official to be arrested for direct involvement,” Do said. “The Dandong Customs Office has mobilized customs officials from Dalian to probe all aspects of North Korea-China trade.”

The drug enforcement bureau of Anshan in Liaoning arrested four drug dealers based on a tip that Dandong drug dealers gained control of the trafficking network in Anshan, he added.

Under questioning, they revealed that a key figure in the drug ring in the Dandong area was a North Korean and that he was soon to arrive. Officers arrested Rim in Dandong on the evening of March 2 about after a month-long stakeout and took him to Anshan.

The bureau confiscated 2 kg of top-quality methamphetamine Rim had hidden in a kimchi container when he traveled from Sinuiju to Dandong, Do said. Rim was reportedly a very influential man in the North Korea-China trade. Despite the danger, he had traveled to China to buy goods necessary for his younger sister’s wedding scheduled for March 6 and take bribes.

“It seems Rim took a lot of bribes. There are rumors that he was going to take three large truckloads of goods back to the North,” Do said. “Rim’s arrest confirms that the North engages in international drug trafficking at the state level,” he added.

A South Korean official said the government has similar information but China has not officially confirmed it.

Read the full story here:
N.Korean Official Held in China for Drug Trafficking
Choson Ilbo
6/8/2010

Posted in China, Drug smuggling, Illicit activities | Comments Closed

North Korean foreign trade down 10.5% in 2009

June 7th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-07-1
6/7/2010

In 2009, North Korea’s foreign trade (not including inter-Korean trade) amounted to 3.41 billion dollars, 10.5 percent less than 2008, which saw the largest amount of DPRK overseas commerce since 1991. Exports were down 5.97 percent (1.06 billion USD), while imports were down 12.45 percent (2.35 billion USD), recording a 1.29 billion USD trade deficit.

These figures come from a KOTRA analysis of the Korea Business Center (KBC)’s statistics of trade with North Korea by foreign countries. Because North Korea does not reveal trade statistics, this ‘mirror analysis’ method of analyzing the statistics of its trading partners is the only method available.

Looking at each country’s trade figures individually reveals that China is the North’s largest trade partner. DPRK-PRC trade amounted to 2.68 billion USD last year, 78.5 percent of all the North’s foreign trade. The North exported 790 million USD worth of goods to China, while its imports from China amounted to 1.89 billion USD. As North Korea’s trade with China continues to grow relative to that with other countries, so too, does its economic dependence on Beijing. In 2003, DPRK-PRC trade amounted to 42.8 percent of its overall foreign trade. This grew to 48.5 percent in 2004, accounted for more than half (52.6 percent) in2005, hit 56.7 percent in 2006, 67.1 percent in 2007, and 73 percent in 2008.

North Korea’s main imports from China were crude oil and petroleum (330 million USD, down 44.2 percent from 2008), boiler and machinery parts (160 million USD, up 10 percent), and electrical components (130 million USD, up 31 percent). Top exports to China included coal (260 million USD, up 26 percent), minerals (140 million USD, down 34.1 percent), and textiles (90 million USD, up 20.7 percent).

Germany, Russia, India, and Singapore were the North’s 2nd thru 5th largest trade partners. Trade with Germany was up 33.7 percent, amounting to 70 million USD, while trade with Russia, India, and Singapore dropped off. After these countries, Hong Kong, Brazil, Thailand, Bangladesh, and the Netherlands made up the rest of the top 10 trade partners, which account for 92 percent of all the North’s overseas trade.

In addition, with continuing sanctions against the North by the United States and Japan, there were no exports to these countries, and imports from these countries amounted to a mere 2.7 million USD and 900,000 USD, respectively.

Inter-Korean trade for 2009 amounted to 1.68 billion USD. This was down 7.8 percent from the previous year. North Korean imports from the South were down 16.1 percent, recording 740 million USD. This was largely impacted by the closing of the Keumgang Mountain tourism project.

Combined, North Korea’s total foreign trade was down 9.7 percent, to 5.09 billion USD. 53 percent of this was with China, while 33 percent was with South Korea.

Continued international sanctions against the North and the possibility of additional unilateral sanctions from several countries means DPRK foreign trade will likely shrink more in 2010. It is also expected that the North’s economic dependency on China will continue to grow.

Posted in China, International trade, Korea Trade-Investment Promotion Agency (KOTRA), Oil, Statistics, Trade Statistics | Comments Closed

South Korean government hesitant to sanction

June 7th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-04-1
6/4/2010

In the aftermath of the Cheonan incident, the Lee Myung-bak administration has sought to strictly punish North Korea with the ‘May 24 Sanctions.’ As North Korea has reacted strongly to the South’s sanctions, there are many concerned over the safety of the ROK workers in the Kaesong Industrial Complex, and the economic implications of the ‘Korean Peninsular Risk’ are evident in the KOSPI and the value of the South Korean currency.

The South Korean government has yet to issue a detailed strategy in response to the Cheonan incident, and appears to risk falling into a quagmire as knee-jerk reactions severing economic ties and the ‘May 24 Measure’ are issued. When the government announced the ‘May 24 Measure’, Seoul stated that all inter-Korean exchanges (with the exception of the complex) were suspended and travel to the North was banned. In addition, North Korea ships are no longer allowed to use South Korean sea lanes and loudspeaker psychological warfare operations will restart along the DMZ.

However, 9 days later, there was still no change in South Korean military operations. An official with the Ministry of Defense stated that the plan of action was still being implemented, but that they were unable to implement the oiginal measures. It appears that the South Korean government is concerned about the response from Pyongyang.

After the announcement of the South Korean measures, North Korea declared that all inter-Korean relations were to be severed and that they would fire upon ROK loudspeakers projecting propaganda into the North. The North also alluded to restricting access for Kaesong Industrial Complex employees and evicted South Korean public officials from the area.

Now, South Korean authorities are contemplating the North’s announcement restricting access to the KIC. If North Korea were to cut off the complex and South Korean workers were trapped in the North, the ROK and U.S. Would have few options outside of the military, and military options, while still on the table, are very unpalatable. The May 24 Measure has impacted the South’s finances, as well. The KOSPI and the value of the South Korean currency are factors in ROK decision making.

The day after South Korea announced the new measures, the KOSPI dropped 5.88 percent. The government took several steps to stabilize the market, but could not push it back to levels seen prior to the announcement. Increasing talk of ‘Korea Risk’ impacts the government’s view on whether to close the Kaesong Industrial Complex. At first, the government decided not to close the complex but did not care whether or not the North ordered its shuttering. However, the concern of overseas investors drove Seoul to take more of an interest. In addition, it appears that international support for the South Korean’s Cheonan incident report will have little influence on the sole remaining inter-Korean economic cooperative venture.

Posted in International trade, South Korea | Comments Closed

DPRK crew re-captures ship from Somali Pirates

June 7th, 2010

In February 2010 Somali pirates seized a North Korean-flagged cargo ship owned by Libya’s White Sea Shipping in the Gulf of Aden. The crew and ship were taken to Somalia to be held for ransom.

Well after several months of captivity, the North Korean crew re-captured their ship and escaped to safety! One member of the crew was injured and required medical assistance.

According to Marine Log (h/t Monster Island):

The crew of the North Korean flagged general cargo ship RIM have regained control of the ship. It had been hijacked on February 3 and was being held at Garacad, off Somalia’s northern coastline.

Yesterday, at 1010 local time, the RIM reported that the crew had successfully retaken control of the ship and that it was headed south. One crew members was seriously injured.

The closest EU NAVFOR warship, the Spanish frigate VICTORIA, which was 100 miles away, was directed to the scene to give medical assistance and immediately launched its helicopter.

The helicopter found that, though the crew were still in control of the RIM, it was being pursued by pirates in another hijacked vessel, the MV VOC DAISY. When the helicopter approached the MV VOC DAISY, it changed her course – no warning shots were fired.

On reaching the scene, the VICTORIA then sent medical assistance to the vessel and took the injured crew member on board for treatment.

It is believed that some of the pirates were killed during the retaking of the ship.

The North Korean government should write a song about these guys! They are way more courageous than a CNC machine!

This means we can take away one point from the Somali Pirates and give it to the North Koreans. This brings the cumulative score to: DPRK (4)* vs. Somali Pirates (1). The * is appropriate because the DPRK crews have received assistance from the USA and, this time, from a medical helicopter.

Previous DPRK VS. Somali pirate posts can be found here.

Posted in Libya, Sea shipping, Transportation | 1 Comment »

Kaesong firms urged to withhold payment to DPRK entities

June 7th, 2010

According to KBS:

The Unification Ministry has asked South Korean companies that trade with North Korea to put off paying for goods manufactured in the North.

Ministry spokesman Chun Hae-sung told reporters Monday that the ministry made the request in consideration of sanctions and the suspension of inter-Korean trade following the North’s sinking of the “Cheonan” naval ship.

South Korean companies operating at the Gaeseong Industrial Complex manufacture labor-intensive goods using North Korean manpower.

The South Korean government suspended inter-Korean trade except for production at the Gaeseong complex last month to punish the North after the Cheonan incident.

Read the full story here:
Firms Asked to Put Off Payments to NK
KBS
6/7/2010

Posted in Kaesong Industrial Complex (KIC), Manufacturing, RoK Ministry of Unification, Special Economic Zones (Established before 2013) | Comments Closed

12th SPA’s 3rd session–second meeting in 2010

June 7th, 2010

The DPRK’s Supreme People’s Assembly (SPA) just held a rare second session this year. According to the Wall Street Journal:

“There was no discussion about the Cheonan stuff,” said Kim Young-soo, a professor at Sogang University in Seoul. “It was more focused on internal politics and administration.”

Jang Song Taek, who is married to Mr. Kim’s younger sister, was named vice chairman of National Defense Commission, the highest state body in North Korea. Mr. Kim is the commission’s chairman, his only title.

In the other prominent appointment Monday, Choe Yong Rim was appointed premier, the job that is portrayed in North Korea as the second-most powerful but that outside analysts consider below the importance of a seat on the defense commission. He succeeds Kim Yong Il, whose travels overseas gave him more contact with foreign leaders than Kim Jong Il has ever had. The two Kims are not related.

Analysts said the change in premiership appeared tied to the economic reform measures from last December that created a backlash noticeable for its volume and visibility to outsiders. Several lower positions were also changed for that reason, said the South Korean professor Mr. Kim, noting the use of the term “recall” in the North’s official announcement.

“In North Korea when the regime ‘recalls’ an official, it means the person wrongly implemented policies and should take responsibility for it,” he said. “So the ‘recalled’ officials, not Kim Jong Il, are publicly blamed for their failed handling of the administration.”

Mr. Jang since 2007 has been seen as Mr. Kim’s closest aide and is believed to be playing a key role in rallying support among the country’s elite for Kim Jong Eun, Mr. Kim’s third son, to succeed the dictator. Mr. Jang, who is 64 years old and whose background is in political operations of the regime, was appointed just last year to the defense commission.

“Kim wants to keep more tight grip on party elites and people by giving more power to Jang,” says Cheong Seong-chang, director of inter-Korean studies at the Sejong Institute, a private think tank in Seoul.

Mr. Jang becomes one of four vice chairmen of the 11-person commission, though is the one closest to Kim Jong Il.

Mr. Choe, 81 years old, has been associated with the ruling Kim family for decades, having served as a confidential secretary to Mr. Kim’s father, Kim Il Sung, who started North Korea in 1948 and led it until his death in 1994.

Mr. Choe most recently served as chief secretary of the Pyongyang City Committee of the Korean Workers’ Party and, in recent months, attended numerous public functions with Kim Jong Il, including a trip to the remote city of Hamhung and opening of an indoor swimming pool in Pyongyang.

Mr. Choe was economic planning minister in the 1980s, mining minister in the 1990s and chief prosecutor in Pyongyang earlier this decade.

This year has been volatile for Mr. Kim’s regime. Not counting Monday’s changes, 11 prominent members of the regime have died, been replaced or been shuffled out of view so far this year, according to a count by the web site NK Leadership Watch. The disappearance of one of those, Pak Nam Gi, is mired in controversy, with some reports in South Korean media saying that he was executed for the economic-reform mess.

Read the full Wall Street Journal story here:

North Korea Shifts Leaders
Wall Street Journal
Woo Jae-yeon
6/7/2010

Posted in Political economy | Comments Closed

UNICEF to Spend $130 Mil. on Aid in N.Korea

June 6th, 2010

According to the Choson Ilbo:

The United Nations Children’s Fund has announced plans to spend close to US$130 million to support children and pregnant and nursing mothers in North Korea from 2011 to 2015.

According to Yonhap News, UNICEF has submitted a proposal to its board of directors outlining plans to provide some $128 million worth of humanitarian assistance to North Korean mothers and children.

Some 66 percent is expected to be spent on improving health and nutrition, while the rest will be used to finance medication for malaria and tuberculosis as well as lowering the mortality rate of newborns and mothers.

Read the full story here:
UNICEF to Spend $130 Mil. on Aid in N.Korea
Choson Ilbo
6/3/2010

Posted in International Aid, UNICEF | 1 Comment »