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On the Chinese border, optimism for increased trade, better relations

May 18,2018
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Trucks wait to pass customs at the Friendship Bridge connecting Dandong, China, and Sinuiju, North Korea, on May 7. [KO SOO-SUK]
DANDONG, China - Traffic once again clogs the Friendship Bridge connecting China and North Korea. Most of the freight trucks here have Chinese license plates, but here and there, plates from North Korea’s North Pyongan Province can also be seen.

Trade between the two countries took a nosedive after China ramped up sanctions on North Korea, but the recent mood of detente has revived commerce on the border. According to the Korea International Trade Association, North Korean exports to China reached $12 million in March, up from about $9 million in February. Imports rose to $143 million from $127 million.

The black market has also been doing well. Choi Chol-nam, an ethnic Korean with Chinese citizenship who runs a textile business using North Korean labor, said smuggling across the border has intensified since March.

In Dandong, North Koreans are populating the city’s hotels. An employee at the Furuide Hotel in Dandong’s downtown said the number of North Korean guests increased 40 percent between March and April. It was at the hotel’s lobby on May 7 where this reporter decided to meet with a high-level North Korean official for a conversation on the country’s relations with China and the rest of the world.

The official introduced himself as an employee in the Ministry of External Economic Affairs. The ministry handles foreign trade and was formed in 2014 from a merger of the Joint Venture and Investment Commission, which oversaw foreign investment, and the State Economic Development Committee, responsible for managing the country’s special economic zones.

The North Korean official opened our conversation by saying, “Seventy percent of the recent changes can be attributed to the success of our nuclear weapons development, while 30 percent is owed to UN sanctions.” It was an admission that leader Kim Jong-un’s decision to make overtures with South Korea and the United States stemmed from his confidence in the country’s nuclear weapons program and pressure from sanctions that have crippled the country’s economy.

The North sees nuclear weapons as the bargaining chip that brought the United States to the negotiating table. Soon after testing its Hwasong-15 intercontinental ballistic missile in November 2017, North Korea claimed it had completed its nuclear program even though the missile’s ability to re-enter the atmosphere and hit the United States has remained unproven.

“Since we have assessed that the Hwasong-15 is already capable of reaching the U.S. mainland, there was no need for further development and delay in our announcement,” the official said.

When the topic of sanctions came up, his face flushed. “As long as they don’t cut off our sunlight and water, we will always have the fortitude to continue,” the official said, repeating a line of defiance from North Korean state media that sanctions will not hold back the country.

But even in the country’s own publications, there are signs that the trade embargo is negatively impacting daily life. Ri Cheol-ho, a high-ranking official at Room 39, an agency that generates foreign currency, wrote in an op-ed in the December edition of the Workers’ Party’s internal bulletin that “sales have completely come to a halt at gas stations.”

When asked how the country was able to continue after China joined international sanctions, the official pointed to money stored by North Korea’s emerging entrepreneurial class.

After the Soviet Union dissolved in 1991, aid dried up, the central planning system collapsed and North Korea suffered a massive famine estimated to have killed millions. Those who survived resorted to trading on the black market, and in time, a few emerged as business owners and lenders in a market system largely tolerated by the state. They became known as donju, or “masters of money.”

Nevertheless, the lack of guarantees on private property led many donju to hoard their cash in the form of foreign currency, in turn stagnating growth. The state tried to pull this money into circulation through currency reforms in 2009 but failed.

Under Kim Jong-un, the North Korean government in 2012 instituted a series of policies designed to breathe new life into the economy. According to Radio Free Asia, the state now pays farmers above the nominal grain price after collecting 70 percent of their production, giving their livelihood a significant boost.

Although North Korea still does not acknowledge the validity of private possession, investors are now allowed to take in a portion of profit after investing in factories and firms under a collective ownership title.

“Though slow-paced at first, the domestic economy steadily revitalized itself after donju and other investors opened their wallets,” the official said. “Hoarding money used to be a crime, but now it’s proving useful to the government.”

On the subject of China, there was no love lost between the official and North Korea’s closest ally. Sanctions on the reclusive country had little effect until China joined them at the end of last year under pressure from the United States. North Koreans’ opinion of China soured. The official characterized the feeling as betrayal.

“Before the summit in March between Kim Jong-un and Xi Jinping, the Chinese ignored Kim for being too young and inexperienced,” he said, “but they have changed their tune since the North-U.S. summit was announced. Now they want us on their side since we’ve reached out to the Americans.”

The official’s stern comments betray common expectations about the closeness of Beijing and Pyongyang’s relationship.

“By contrast, the South’s relationship with the United States is tight,” the official said. “The United States helps out South Korea in so many ways because of their alliance.” There was a hint of admiration in his voice. “We hope the Americans can help us live like the South if we join hands with them,” the official said.

With regard to Kim’s overtures toward Seoul and Washington, the official said, “At first I thought it was a temporary measure to alleviate the difficulties following the sanctions, but the radical measures taken by the central government convinces me that there is little likelihood of relapse.”

In the past, North Korea’s zealous focus on building its military has come at the cost of its economy, but the official believes this time around, no one can challenge Kim’s focus on reform and growth.

“Chairman Kim swiftly clamped down on the military during his rise to power and removed challenges to his rule through frequent purges and personnel changes,” he said. “Currently, there is no force in the military capable of resisting change, and the military establishment itself is worn out from nearly 70 years of tension with the South.

“The elite class in North Korea makes up around 10 percent of the population, and many of them quietly oppose systematic change,” he said, “but Chairman Kim knows that 90 percent of the population does support the change we have now and therefore will not change course.”

BY KO SOO-SUK, SHIM KYU-SEOK [shim.kyuseok@joongang.co.kr]