China to North Korea: if you build it, we will come



So maybe Hu Jintao did not literally say “if you build it, we will come,” (I doubt that he's a fan of either baseball or Kevin Costner) but it would seem reasonable to assume a certain degree of Chinese frustration with North Korea’s reluctance to embrace economic reform, and a willingness to support such a process if North Korea were to take the first steps. Chinese state media reported that outgoing Premier Wen Jiabao encouraged North Korea to allow "market mechanisms" help revamp its economy, and laid down other pre-conditions to, as Reuters put it, "wean its impoverished ally off its dependence on Chinese aid." None of the reporting is definitive, but notable was the absence of an announcement of a big aid package.

The last time we checked in on the Hwanggumpyong and Wihwa special economic zone, the Chinese were throwing in the towel, the North Koreans were planting rice, and rumor had it that both sides were sending soldiers to the neighborhood. Rason was not much better off. How quickly things change.

Last week Jang Sung-taek led a delegation of 50 North Korean officials to China for the third meeting of the China-DPRK Joint Steering Committee on Cooperation in Development and Management of the Rason Economic and Trade Zone and the Hwanggumphyong and Wihwa Islands Economic Zone. At least that was the justification. According to Xinhua, “the two sides announced the establishment of the Rason Economic and Trade Zone Management Committee and the Hwanggumphyong and Wihwa Islands Economic Zone Management Committee; and signed agreements on establishing and operating the management committees, on economic and technological cooperation, and on agricultural cooperation; as well as on power supply, zone construction, and detailed plans for the Rason zone.” The press agency reported that Rason “will focus on the development of raw and semi-finished material industry, equipment industry, hi-tech industries, light industry, service sector, and modern efficient agriculture, and will gradually become the DPRK's advanced manufacturing base, as well as an international logistics center, and regional tourism center of northeast Asia. The Hwanggumphyong and Wihwa Islands Economic Zone …will focus on the development of information industry, tourism culture innovation industry, modern agriculture, and garment-making industry to gradually become the DPRK's new economic zone of intensive intelligence.” Not sure what that last part means.

Some South Korean sources claimed that someone as prominent as Jang was not really necessary for these purposes, and speculated that he was a delivering an explanation of the recent removal of armed forces Chief-of-Staff Ri Yong-ho. It should also not be forgotten that Jang has been in the middle of competition to establish a gate-keeper for FDI: given the importance of China, and the family wealth of some of the people with whom he met or was thought to have possibly met, pecuniary motives cannot be completely discounted. Lastly, KREI is now speculating that due to bad weather, North Korea could end up 1 million metric tons short of grain this year. No idea if this emerging possibility was on the agenda, but again, the absence of an announcement of an aid package was striking.

The really critical point, however, is that when it comes to economic reforms, the North Koreans are knocking on an open Chinese door. Tired of supporting their mendicant neighbor, the Chinese are presumably happy to give North Korea a bit of support if it shows signs of pulling up its own bootstraps. And there's the rub: while Xinhua reported that the two governments reaffirmed "government-guided, enterprise-based, market-oriented, and mutually beneficial" cooperation (emphasis mine) there is a real difference from the North Korean perspective of securing more resources from China, and undertaking potentially destabilizing policy changes.

Indeed, Zhang Liangui, professor at the CPC Central Party School, went so far to say in an interview with Zhongguo Tongxun She that the main purpose of Jang's visit is to continue to seek Chinese investment in the DPRK. As for reform and opening up, he asserted that the DPRK still holds a negative attitude, interpreting the series of policy adjustments made by the DPRK recently as different from the outsiders’ understandings of reform and opening up. In essence, the adjustments reflect the DPRK’s shift of the focus of work in different historical periods, the purpose of which is to seek the international community’s ultimate recognition of the DPRK’s status as a nuclear power. Stay tuned.

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