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N. Korean economic conditions appear to be improving: CRS report

North Korea's economic conditions appear to be improving thanks to a series of economic and agricultural reforms the impoverished communist regime has introduced, a U.S. congressional report said Monday.

The assessment by the Congressional Research Service could suggest the North's "byeongjin" policy of simultaneously pursuing economic and nuclear development may be working, albeit on a limited scale, though U.S. and South Korean officials have dismissed the policy as a nonstarter.

"Since early 2015, reports have trickled in about modest economic growth in North Korea. A series of tentative economic reforms announced in 2014 appear, according to some sources, to have lifted the living standard for a portion of ordinary North Koreans," the CRS said in a report.

"The reforms, which appear to apply market principles to some sectors of North Korean business and agriculture, have created opportunities for economic growth in the impoverished country," the report said.

In North Korean cities, such practices as allowing managers to set salaries and hire and fire workers are permitted while agricultural reforms in the countryside allow for farmers to keep a larger portion of their harvests, the report said.

The agricultural reforms may have contributed to unusually strong harvests in 2013 and 2014, but a drought in mid-2015 threatens to reverse those gains, and the North's food security situation remains "tenuous," it said.

Along the border with China, the report said, journalists have reported a bustle of commerce and trade, including scores of labor compounds on the Chinese side that employ North Korean workers in factories, and large-scale construction taking place on the North Korean side.

"Economists caution that these reforms are modest in scale and are far from irreversible, but they may be enough to lift North Korea's moribund economy from its low base," the report said.

The Unification Ministry said that the North's economy seems to have recovered based on the data, but it is questionable whether North Koreans' livelihoods have improved.

"The North's economy seems to have gotten better as it has carried out the agricultural reforms and there have been no (severe) natural disasters in recent years," Jeong Joon-hee, the ministry spokesman, told a regular press briefing Monday.

Korea's central bank said that the North's economy grew 1 percent last year, slightly slowing from a 1.1 percent on-year gain in the previous year. It posted economic growth for the fourth straight year in 2014 after contracting in 2009 and 2010.

On the North's internal stability, the report said that leader Kim Jong-un appears to have consolidated power though uncertainty remains about the regime and its priorities, given the opaque nature of the country.

It also noted that 20-30 percent of senior party officials and over 40 percent of senior military officials have been replaced since Kim took power.

"Many analysts interpret this trend as a sign of Kim's insecurity and argue that the regime might become unstable, as top officials within the regime face more uncertainty with regard to their positions and lives," the report said.

"On the other hand, the purges may have eliminated potential rivals to Kim's absolute control over the North Korean state," it said.

The report said the North's relations with China have been "unusually poor" since 2013, compared with the pattern over the previous two decades. The souring ties may have spurred the North to expand its relations with Russia, but Moscow is unable to provide the economic ballast that Beijing has traditionally given the North, it said.

"The rhetorical emphasis Chinese leaders now place on denuclearization of the Korean Peninsula -- reportedly even in meetings with North Korean officials -- may suggest that Beijing's patience could be waning," the report said.

"In what is viewed by many observers as a diplomatic snub, Chinese President Xi Jinping has had several summits with South Korean President Park Geun-hye but has yet to meet with the North Korean leader Kim Jong-un." (Yonhap)

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