As the rest of the world gets accustomed to seeing Kim Jong-un walk with a cane, we might do well to figure out what, if anything, is changing about the way that the broader North Korean state engages with the economic powerhouses that engulf its southern and northern peripheries. KEI’s Director of Research recently assessed the outlook for improved inter-Korean economic relations in the aftermath of the surprising visit of a high-level North Korean troika to the closing day of the Asian Games in Incheon. And while there have been no equally high-level trips to Beijing from Pyongyang, North Korea’s economic relations with China, particularly developments along the shared frontier, are arguably as important to the future of the DPRK economy.
There has been an awful lot of ammunition provided lately to proponents of the point of view that Chinese-North Korean relations are in a downward spiral. The North Korean hijacking of a Chinese vessel from a small port outside of Dalian in September certainly did not help matters. But to point only to the problems and disputes — while they are many — should not blind us to the ongoing daily interactions and transactions that fuel the North Korean consumer economy and keep the DPRK afloat.
This past June, I prepared a research paper for KEI that showed that North Korea’s strategy for Special Economic Zones with China was changing rapidly, and argued that the power struggle around Jang Song-taek was intimately tied to the lack of progress on the Yalu River showcase SEZs at Hwanggumpyeong and Wihwa Islands. The new Economic Development Zones that Pyongyang proposed in lieu of these Chinese-financed zones have since made very little headway. In the meantime, the North Korean government has welcomed a University of British Columbia professor again to Pyongyang to lecture on SEZ law, small-scale training programs are going forward (often off-site, in places like Singapore), and the Rason Special Economic Zone has hosted very small seminars on SEZ set-up. In general, however, SEZs remain extremely peripheral to the broader economy and in many cases are nascent and conceptual at best.
The upcoming Sino-DPRK trade fair in Dandong, scheduled for October 16-20, thus should serve as an ideal test case for a number of things. (The formal title of the event is ‘The Third China-North Korea Trade, Culture and Tourism Exhibition Fair / 第三届中朝经贸文化旅游博览会.)
Read the rest of the essay at The Peninsula, the Korean Economic Institute blog.