In-depth Business Intelligence
Books on North Korea
22,224,195 (July 2002 est.)
North Korean won (KPW)
Update No: 033 - (30/01/06)
Under China's wing?
The most significant event regarding North Korea in the first month of 2006
was another trip to China by Kim Jong-il: his fourth since 2000. These follow a
consistent, if somewhat eccentric pattern in two respects. Averse to aircraft,
the dear leader takes his own personal armoured train; and the
"unofficial" visit is never announced until he is back in Pyongyang.
Slow train to China
Such whims hardly help portray the DPRK as a normal 21st century country.
They also rub off on his hosts. In a more outspoken Russia, during a brief phase
from 2000-02 when Kim and Putin met annually - it did not last - there were
complaints that in 2001, when Kim's train rolled right across Siberia to Moscow,
it played havoc with local railway timetables.
No such complaints were heard out loud in China. But trains, 30-car motorcades,
and hotels suddenly cleared of all guests are hard to hide - especially in
Guangdong province close to Hong Kong. So journalists played spot the leader,
while foreign ministry spokespersons in Beijing fended off the questions - for
over a week, until January 18 when it was all over.
That China remains happy to humour its awkward neighbour is significant, for
right now it has double reason to be cross. First, Kim is again stalling on
returning to six-party nuclear talks (both Koreas, China, the US, Japan and
Russia). His latest excuse is US sanctions and charges of financial crimes,
including money laundering and counterfeiting. Second, China - specifically
Macau - is one alleged centre of such shady activities, embarrassingly.
Red carpet welcome
Despite this, President Hu Jintao rolled out the red carpet for his guest:
personally hosting a banquet, and ensuring all nine members of the Communist
Party of China (CPC) Politiburo standing committee were involved. This included
guiding Kim in Hubei province in central China, where he visited Wuhan city and
the giant Three Gorges dam near Yichang; and on to the south, his main focus
this time. In Guangdong, China's richest province, Kim toured the capital
Guangzhou and the Shenzhen and Zhuhai special economic zones (SEZs).
As this suggests, matters economic were a main theme of this trip. In this it
resembled his earlier visit to Shanghai in 2001, also in January. (Kim commented
on the warmth, climatic as well as political; no doubt escaping the grim Korean
winter was a pleasure in itself.)
In Shanghai his itinerary included several high-tech plants - at least one a US
joint venture with General Motors (GM) - and even the stock exchange. This time
too, most of the 17 sites Kim was reported as visiting were high-tech
enterprises; making inter alia smart cards, optical fibre cable, lasers and
financial software. In Beijing he praised China's "astonishing
changes" and specifically its "shining achievements in
high-tech." More intriguingly, he endorsed Jiang Zemin's "three
represents" theory: contentious within China as legitimating the CPC's
recent outreach to capitalists as embodying the most advanced productive forces.
Is Kim a closet reformer?
What to make of all this? Despite disappointment, hope springs eternal that
the dear leader may yet be a closet Deng Xiaoping and aspire to serious reform.
If so, it was not ever thus. Back in 1983, Deng was a younger Kim's guide, then
as crown prince, on his first public visit to China; important as the first
foreign endorsement of his father Kim Il-sung's highly heretical hereditary
succession plan. While no doubt grateful politically, the DPRK dauphin was
reportedly aghast at China's reforms at that stage. In a knee-jerk reaction of
orthodoxy, albeit without naming names, Pyongyang fulminated at revisionist
backsliding; also aimed at Gorbachev's perestroika in the then USSR. In the
early 1990s, both were excoriated for the ultimate betrayal of recognizing South
Korea. Moscow bore the brunt, but with China too exchanges of top-level visits
ceased for a decade.
Times change, but on reform Kim remains hard to pin down. His Shanghai trip
followed what by DPRK standards was a radical outburst. Kim declared that
"things are not what they used to be in the 1960s. So no one should follow
the way people used to do things in the past." Yet whereas Deng Xiaoping's
"To get rich is glorious" ushered in a consistent adjustment of
ideology to a changing reality, what might be called Kim's Max Bygraves moment
was a one-off. Pyongyang media rapidly reverted to stale old themes of loyalty
and fidelity, which by contrast reinforce the status quo and militate against
change as betrayal.
In July 2002 North Korea without public fanfare introduced so-called economic
adjustment measures (the word reform is still largely taboo): sharply raising
prices and (less so) wages, while giving enterprises more autonomy - or ending
subsidies and making them pay their own way. Though small beer compared to
China's rampant neo-capitalism, this first halting step may have been inspired
by Shanghai; so perhaps Guangdong will have a similar effect.
The appliance of science
Yet other doubts remain, including whether Kim Jong-il truly grasps what is
required. After Shanghai he sent architects for training in France and Germany,
which suggests a category-mistake (as philosophers would say). Pudong's skyline
is sensational, but it is not the point; or rather it is the consequence of more
basic reforms. Does Pyongyang really need yet more grand edifices, most of them
The dear leader's keenness on high-tech may also mislead him into thinking a
technical fix is all his country needs. The real lesson of China, ironically, is
best put in Marxist terms. It is productive relations (state ownership) that
have become fetters on productive forces; so to unleash the latter means
altering the former. Despite the growth of markets, it is unclear whether this
fundamental point is either understood intellectually, or is politically
Alternatively, with China now investing ever more in North Korea, Kim may reckon
that Chinese firms will bring in the capital and techniques needed for economic
recovery; again without having to embrace unpalatable or risky changes in
ownership. While any facilities investment will help, here again the real point
of China's changes is being lost - or evaded.
A political dimension
Needless to say, Kim's trip also had a political dimension. Coming less than
three months after Hu Jintao visited Pyongyang suggests a certain urgency,
doubtless attributable to the now linked issues of the six-party talks and US
financial sanctions. There was no public sign of Kim being pressed on either
front, not even to fix a date for six-party talks. Either China is relaxed about
this, or enjoying US discomfiture, or it is playing a very long game.
In an unexpected twist, the assistant secretary of state for east Asia,
Christopher Hill, who heads the US delegation to the six-party talks, suddenly
returned to Beijing - where he had been just a week earlier - on January 18, the
day Kim Jong-il left. It was later confirmed that he met his DPRK equivalent,
vice foreign minister Kim Kye-gwan; no doubt to discuss how the six-party
deadlock might be broken. For now, both sides look well dug in.
Indeed, Seoul press reports on January 27 claimed that the US is preparing yet
more drastic sanctions, which (as per Cuba) would bar any foreign firms doing
business with the DPRK from the US. Yet this would only further antagonize
Pyongyang, leaving many observers perplexed as to Washington's tactics and
priorities. Moreover it is a blunt instrument, since it would also penalize
foreign investors such as Phoenix (www.pcvltd.com) whose whole aim is to show
North Korea that there is profit to be had from legitimate business.
US-ROK row is grist to the DPRK's mill
If Kim Jong-il returned from Beijing secure in China's political and
economic support, the icing on the cake for him will have been to see the US and
South Korea at loggerheads just days later. The strain of pretending that
presidents Roh Moo-hyun and George W Bush are singing from the same sheet on how
to handle North Korea finally became too much. On January 25 the ROK foreign
ministry criticized a US embassy press release, which implied that a recent
visit by a US Treasury team, bearing proof of North Korea's financial crimes,
had urged its Korean ally to join the campaign to curb these. Seoul said there
was no such urging. Roh weighed in, insisting that "there are no
differences" with the US - but warning that there will be, if "some
forces" in Washington continue to "raise issues about North Korea's
regime, put pressure on it and apparently desire to see its collapse."
While Roh's frustration at neocon games in Washington is understandable, his own
stance of more or less unconditional engagement has flaws of its own. On issues
like crime and human nights, like the three monkeys of Chinese proverb the
current ROK administration is all too disinclined to see, hear or speak any evil
of North Korea. That stance makes Seoul look evasive. With Chinese backing, his
enemies rowing, and the US bogged down in Iraq while crisis brews over Iran, all
in all Kim Jong-il's regime currently looks in a surprisingly strong position
for a rogue state in nuclear and other defiance of the global community.
The new year also saw the sad closing of a key chapter in inter-Korean ties.
On January 6 the last 57 caretaker staff, all but one of them South Korean, were
evacuated from the now terminated light water reactor (LWR) project site at
Sinpo, North Korea, on the Hankyoreh: a vessel which has shuttled fortnightly
between the east coast ports of Kumho (North) and Sokcho (South) for the Korean
Peninsula Energy Development Organisation (KEDO). The Northern authorities made
them leave behind materiel worth US$45m, including some 190 buses and jeeps plus
93 pieces of heavy plant: cranes, excavators, concrete-mixers etc.
If opinions remain divided on how far the October 1994 Agreed Framework (AF)
served its avowed purpose of reining in North Korea's nuclear threat, there is
no doubt that the now moribund KEDO consortium, created under the AF, helped to
bring the two Koreas closer - despite misgivings in both Seoul and Pyongyang -
by forcing them to cooperate practically. Over the past decade thousands of
Southern engineers and others have lived and worked at Sinpo alongside
Northerners; while the Hankyoreh and its ilk, followed by direct flights, were
the first regular North-South transport links. Though inter-Korean ties now have
their own momentum, the pioneering role of this pre-sunshine precursor should
not be forgotten.