It is clear that change is underway in North Korea and that China will play an important role, though the jury is still out on where it will all end up. The survey that Steph Haggard and I did indicates that Chinese enterprises are unhappy about the North Korean regulatory environment and corruption, and last week I wrote about the unfolding issue of commercial dispute arbitration (and threw in a tasty mash-up by the Arbiters). Now Japan’s NHK is reporting that roughly 200 North Korean officials have been trained in economic reform in several locations in China.
Maybe Chinese willingness to foot the training bill was prompted by their experience in negotiating accords for the Hwanggumpyong and Wihwa Islands project. The Japanese news agency Kyodo first reported that the Chinese government told the North Koreans that it was putting the project on hold, though whether this was on economic grounds or to signal displeasure with the missile launch is unclear. South Koreans sources said that the North Koreans were resuming rice planting. Adam Cathcart at Sino-NK has the full blow by blow.
Nevertheless, the North Koreans are permitting Chinese traders to set up in the market at small town of Namyang, not far from the border crossing associated with Tumen City, ground zero for the North Korean refugee exodus. Bob Collins, author of the excellent songbun report sent along the photo at the top which I believe originally appeared in the Daily NK. The direct presence of the Chinese traders is expected to lower prices as well as boost the fortunes of Namyang by attracting traders from other parts of North Korea. While the presence of the Chinese traders within official North Korean markets appears to be more or less unprecedented, it is unclear if it signals a wider opening. The Chinese and North Korean authorities have successfully increased policing of the border in recent years, and this may amount to a managed compensatory controlled opening in reaction to the general crackdown on decentralized cross-border trade over the past year or two.
And while the Chinese are sending their folks over to North Korea, according to the Chosun Ilbo they have also issued 20,000 work visas for North Koreans to work in China. The paper claims that the workers will make more in China than at the Kaesong Industrial Complex. Barbara Demick supplies the color. At the same time it is expanding visa issuance, DailyNK cites Xinhua to the effect that China enacted a new law covering the treatment of illegal foreign workers and those who assist them, including employers. Scheduled to come into force on 1 July 2013, the law specifies fines for employers who hire illegals, as well as fines and jail time for the illegal aliens themselves. The report does not indicate if the Chinese authorities are planning to hire consultants from Arizona to assist in implementation.
More controlled opening.
And what happens when cross-border commerce goes awry? According to Good Friends, last month a drunk Chinese investor was involved in an automobile accident in which one of his passengers, a North Korean, was killed. Article 9 of the Act governing the operation of the Rason economic development zone states that, “A foreign investor may not be imprisoned or arrested without a legal basis and their residence may not be searched. With respect to personal security and criminal matters, the treaty between North Korea and the corresponding nation, if any, will preside.” However, as Good Friends observes, “this legal provision was established to attract foreign investment more proactively so that, in the event of any incident, a foreign investor would not be interrogated, imprisoned, or arrested without an arrest warrant. However, cases often arise where punishment is waived even though a foreign investor was obviously at fault because of the risk of alienating the foreign investors.” In the case at hand, “since the law prohibits North Koreans from riding a foreigner’s vehicle for personal reasons, the court, after much consideration, found that the Chinese driver would not be held liable for the woman’s death. Although the local governmental party respected the ruling of the court, it advised the perpetrator to pay a reasonable compensation to the victim’s family as he was morally responsible for the victim’s death.” Good Friends then describes the dickering that ensued until “the case was finally settled with compensation, in the amount of $10,000, after the governmental party conducted an aggressive arbitration in June. “In the end, the case was settled with a large compensation but, had the party not intervened, the Chinese investor would have been freed without any punitive action. Something like this occurs frequently because the court is not abiding by the rules but instead tries to avoid antagonizing China. It seems like this is because China is prosperous and we receive a lot of financial help from China,” said an official in Rasun.”
No R2P for them. A few months ago I reviewed the comprehensive volume edited by Jared Genser and Irwin Cotler on the right to protect doctrine. Events in Libya seem to have soured China, India, and particularly Russia on liberal interventionism contributing to the ongoing turmoil in Syria. This would not seem to bode well for the application of this approach in North Korea.
Finally, the Chinese have started their own Love Boat to Mount Kumgang. It does not sound like the most propitious initiative: overland from Hunchun to Rason where they catch the ship. The North Koreans will make a little money off of this, but South Koreans are the natural market for Mount Kumgang, and the big bucks won’t start rolling in until the South Korean tourism is re-established.