North Korea looking for an economic jump-start

• Source: Global Times
• [21:18 April 01 2010]
• Comments

Jin Hualin

Editor's Note:

After decades of economic isolation, North Korea may be on the brink of significant changes. In January, the North Korean city Rason, bordering China's Jilin Province and the Russian region of Primorsky Krai, was given the status of a "directly governed city," meaning it will be administered directly by the Korean central government and is receiving supportive economic policies. China is reportedly preparing to invest over $10 billion in the country, and another $800 million for the 50-year development right of two North Korean islands, as well as continuing to rent a pier at Rajin port for another decade. Global Times (GT) reporter Li Yanjie talked with Jin Hualin (Jin), dean of the College of Economics and Management, Yanbian University, on what these changes imply.

GT: What does the change in Rason's status mean for North Korea's economic development?

Jin: North Korea has made the city an administrative region under the central government's direct management. VIPs from the central government are now the highest officials of the city.

This, combined with the recent efforts at currency reform, as well as the establishment of the Taepung International Investment Group and State Development Bank and eight special economic zones, means that North Korea is making major strategic changes.

I learned from a North Korean official that the country is planning to design a comprehensive development program. I think that the country, which is suffering economic difficulties as a result of the highly planned economy, is searching for a road for economic growth.

The Taepung International Investment Group is a government-led but public-involved and market-oriented company. The country is establishing a modern enterprise system, open to the world and to foreign capital without any political bias. Foreign stakeholders will be given priorities in development programs. North Korea has decided to promote development to adjust its economic structure and to satisfy people's needs for food and clothing.

Park Chol-su, the chief of the Taepung International Investment Group, has said that North Korea will establish a construction bank, an import and export bank and an investment credit guarantee bank.

China's northeastern regions will enjoy some of the benefits in this area, where China and North Korea have common economic and political interests. Rason is the best access for China's northeastern regions and Inner Mongolia Autonomous Region to the Sea of Japan, while Rason can best perform its function as a port only when it has China's northeastern regions as a hinterland.

Park has said that Rason will become a Northeast Asian logistics center, trade center, tourism center and an international industry zone, based on its excellent harbor. Rason's mayor has also said that as long as an action is good for the country, he's empowered by North Korean leaders to do it.

Rason is the only route that connects North Korean harbors, eastern Mongolia, and Russia's eastern Siberia area and harbors. It is strategically and geographically crucial to Northeast Asia's economic and technical cooperation.

In addition, North Korea plans to construct an expressway and a high-speed rail line to connect Pyongyang and Rajin. There are roads and railways from South Korea to Pyongyang already, and thus a traffic net connecting China, Mongolia, North Korea and South Korea will be established.

GT: What do you think of the reports of China investing $10 billion in North Korea and another $800 million for the development rights for two islands?

Jin: These reports haven't been confirmed. Up to now, China and North Korea have only agreed to build the new Yalujiang Bridge and China has invested 1.8 billion yuan ($264 million) in North Korea.

Both Huangjinping and Weihua islands are ripe for development, and it would be great if Chinese enterprises can have the opportunity.

GT: What about North Korea's active attitude toward attracting foreign investment and its hints that it might rejoin the Six-Party Talks on the nuclear issue?

Jin: For North Korea, foreign investment is the most effective and fastest way to help its economy recover. That's why the Taepung Group and the State Development Bank are focusing on attracting foreign investment.

The North Korea nuclear issue has to be solved in Six-Party Talks, but North Korea will definitely want economic compensation, as it has spent enormous resources on nuclear development. North Korea's hints at rejoining the Six-Party Talks can lure foreign investors to participate in its national development.

I learned from a North Korean official that the country is actively seeking partners in international society and attempting to have UN sanctions lifted. I think this is good for both North Korea and Northeast Asia.