The Korea Herald


[Editorial] N.K.’s economic experiment

By 류근하

Published : June 10, 2011 - 18:59

    • Link copied

North Korea appears to have begun to experiment with Chinese-style economic development. The reclusive state and its ally have started work to create two joint economic zones that they plan to develop into commercial and industrial centers by attracting foreign investment.

On Thursday, high-ranking officials of the two countries broke ground in Raseon, a port city at the northeastern tip of North Korea, for the construction of a road that would link it with Hunchun of China. The two countries plan to turn Raseon into a trade, logistics and tourism hub that would also serve as a base for high-tech industries, timber processing and ship repair.

On the previous day, the officials attended a large-scale ceremony on an island located at the western end of their border to launch the construction of another joint economic zone. The plan is to develop Hwanggeumpyeong Island, which abuts Dandong of China, into a center for commerce, tourism, information technology and manufacturing.

Officials who attended the two ceremonies included Jang Song-thaek, the brother-in-law of North Korean leader Kim Jong-il, Chinese Vice Premier Wang Qishan and Chinese Commerce Minister Chen Deming. The presence of these top government officials indicate the importance the two countries attach to the joint projects.

The development scheme is expected to raise economic cooperation between the two countries to a new level because, unlike previous forms of economic cooperation, it will benefit China as well as North Korea. For this reason, the Chinese central government appears to be more willing to involve itself in the project.

For North Korea, the focus is on the development of Hwanggeumpyeong Island, which is close to the border city of Sinuiju. The North has long sought to develop Sinuiju into a manufacturing and commercial center. For instance, in 2002, it designated the city as a special economic zone to create “a Hong Kong in Northeast Asia.” But the plan fell through amid Chinese opposition.

From China’s standpoint, however, Hwanggeumpyeong is not an ideal place for investment. For one thing, it completely lacks the basic infrastructure expected of an industrial park.

But China will be compensated in the form of access to Raseon that would make maritime transportation more available to companies in its northeastern region. In March last year, North Korea allowed Chinese access to Rajin, the largest port in Raseon, and let it use one of its five docks for 10 years. Chinese companies are restoring the dock to make it ready for operation by the time the road between Raseon and Hunchun is complete.

The joint economic zone projects are thus likely to significantlyexpand economic exchanges between the two countries. The expected surge in economic cooperation could be seen as a deepening of North Korea’s already heavy reliance on China. Last year, the North’s trade reliance on China was 83 percent.

But the economic zone scheme needs to be viewed in a positive light as it is expected to promote the opening of the North’s feeble economy to external investment. The Chinese government has long persuaded its isolated neighbor to follow its economic development model. Through the economic zone plan, it is expected to push the North harder.

North Korean leader Kim Jong-il has thus far been extremely cautious about economic opening. But he seems to have changed his mind. The impetus for change probably comes from Kim’s desire to strengthen the credentials of his son, Kim Jong-un, as a new leader. He may want to make the experiment with the joint economic zones a success and give credit to his unpopular heir.

The North Korean leader also faces the need to keep his promise to make North Korea a “strong and prosperous” country by 2012, the centennial of the birth of his father and founder of the regime, Kim Il-sung.

We hope the North Korean experiment succeeds and untimately leads to a full-fledged opening of its economy to the outside world, including the South.