North Korea happy after China just bailed them out, say analysts
After recent meetings with China, North Korea seems to have its own version of trickle-down economics and emerging markets.
North Koreaâ€™s small ruling class probably has reason to rejoice even if no one seems to know if the Workersâ€™ Party is about to name new leaders, which presumably would include Kim Jong-ilâ€™s third son and heir apparent, Kim Jung-un.
Long-time Korea watchers offer that view after recent uncertainty as to whether the party is staging its long-awaited â€śconference of delegates,â€ť the first such gathering in more than 40 years.
Mr. Park, who directs the instituteâ€™s Korea working group, believes Kim Jong-il solidified deals with Chinaâ€™s President Hu Jintao during visits to China this spring and again last month that are buoying the countryâ€™s devastated economy and bolstering the tight-knit circle around him.
â€śHu Jintao has just bailed out North Korea,â€ť says Park, citing deals in economic development, tourism, and education that manage to circumvent the resolution adopted by the United Nations Security Council after North Koreaâ€™s second underground nuclear test in May 2009.
Although the relatively small number of people who run the country and control the economy are the main beneficiaries, he says, â€śthe market benefits from cooperation with the Chinese side.â€ť
Trickle-down economics, North Korea-style
In a North Korean version of trickle-down economics, Park finds â€śformal and nonformal tradeâ€ť going on in a system in which free markets are inevitable regardless of regulations banning or highly limiting their activities.
â€śMarkets are opening up,â€ť he says. â€śIt looks like the Chinese are moving in,â€ť exporting a wide range of items, providing food, fertilizer and other necessities and investing in distant mountainous regions rich in coal and other minerals.
Ha Tae-keung, president of Open Radio for North Korea, which broadcasts news and views into the North for two hours every day, credits the deals struck by Kim Jong-il with forcing the North to ease up on customs control.
â€śThatâ€™s why businessmen feel itâ€™s easier to trade with China,â€ť says Mr. Ha, whose station picks up information from cellphone contacts inside the North, â€śBecause of loose customs control, the markets are more open.â€ť
Food shortages still abound
The image of somewhat improving conditions, however, is highly anecdotal, say analysts, and does not reflect the suffering of a majority of the countryâ€™s 24 million people, always short on food, medicine, and other daily necessities. Life inside North Korea differs widely depending on the geographical setting as well as the social and economic class.
â€śThereâ€™s a lot of conflicting information coming out of Pyongyang,â€ť says L. Gordon Flake, executive director of the Mansfield Foundation in Washington. â€śYou have a sense the government is reining in a lot of individuals in preparation for the succession.â€ť â€“ that is, the presumed eventual takeover by Kim Jong-un of the power held by his father.
Motorcycles are replacing bicycles inside the capital, inhabited mostly by privileged people who owe their livelihoods to one of the three central power groupings â€“ the Workersâ€™ Party, the government, or the armed forces. Kim Jong-il dominates the power structure as chairman of the national defense commission â€“ and also is general secretary of the party.
Officially, says Mr. Flake, a long-time analyst of events and trends in North Korea, the North has reverted to the economic policies of the 1960s when Kim Jong-ilâ€™s father, the long-ruling Kim Il-sung, who died in 1994, was holding sway. A number of ministers, now in their 80s, he says, have been making â€śold school socialist moves,â€ť since the failure of a plan to revalue the currency that was introduced late last year.
Still, he says, inside Pyongyang cellphones have become a common sight since Orascom, the big Egyptian company, got the contract two years ago to introduce mobile telephone service. By now, 250,000 North Koreans are said to have cellphones.
Talk of economic change
â€śRecent videos show theyâ€™ve eased up considerably,â€ť says David Straub, associate director of Korean studies at Stanfordâ€™s Shorenstein Asia-Pacific research center. â€śThey are at least talking more about trade and investment.â€ť Still, says Mr. Straub, a former U.S. diplomat in Seoul, â€śI donâ€™t see any fundamental change in North Koreaâ€™s economic policies.â€ť
David Kang, professor of international relations at the University of Southern California, sees the people living in provinces along the Chinese border as benefiting the most from shifting policies. â€śIf you are caught in illegal trading, you can bribe your way out,â€ť says Mr. Kang. â€śThereâ€™s an active black market.â€ť
The cross-border trade is vital to the two Chinese provinces across the Yalu River border on the west and the Tumen River border on the east. â€śThe Chinese are queuing up for hundreds of millions of dollars in investment,â€ť he says.
'Rising generation' of leaders
In the bargain with China, Kang is confident that Kim Jong-il has won Chinese approval of Kim Jong-un as his heir. The evidence, he says, is that Kim Jong-il and Hu Jintao agreed on a statement referring to â€śthe rising generation of the Workersâ€™ Party.â€ť
That phrase echoes similar wording thatâ€™s been appearing on billboards and in the North Korean media. With delegates to the conference of the Workersâ€™ Party believed to have already arrived in Pyongyang, the delay in staging the event has set off endless speculation, none of it substantiated, as to the reasons.
Among other theories is that Kim Jong-il is recovering from medical setbacks suffered during his recent visit to northeastern China, that flooding has prevented delegates from getting to Pyongyang and that Kim Jong-il is fending off grumbling within the party ranks about his choice of his third son as his successor.
â€śThe temptation is for everyone to lead to conclusions as to whatâ€™s going on,â€ť says David Straub. â€śI take all these unsourced media reports very gingerly.â€ť
From what heâ€™s read in the North Korean media, Park senses â€śa great deal of disappointment that the party conference is delayed.â€ť Still, â€śthe conference is going to happen,â€ť he says, citing the presence for the past two or three weeks of military units outside the city waiting to parade in celebration.
If North Korea is in a mood for celebrating, however, one aspect of life there has not changed â€“ the draconian system in which thousands are sent to prison for political crimes and public executions are commonplace.
â€śThere have been more public executions than before,â€ť says Ha Tae-keung. â€śThatâ€™s because, before the succession, theyâ€™re afraid an antisocial situation will break out.â€ť Most recently, he says, â€ťWe got news of the execution of one person trading in South Korean CDs, and some woman was executed for using a Chinese cellphone.â€ť
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