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The last year has seen a series of moves—to re-centralize cross-border exchange between China and North Korea, and possibly shield Chinese investors from North Korea’s endemic and cascading corruption. These include the launching of a new State Development Bank to partner with foreign investors and the designation of the Taepung Group, with close ties to the military, as an implementing arm for the new 10-year plan. But by far the most ambitious plan to reaffirm bilateral ties has been the effort to revitalize the Rajin-Sonbong economic zone, renamed Rason in 2009. Launched in the early 1990s, the zone never managed to attract much investment. That began to change with the lease of port facilities to a Chinese firm in 2009. Following Kim Jong Il’s visit to China in May 2010, the regime began to push a vision of Rason as an international freight brokerage, export processing and even financial hub, replete with a promotional video. With Hu Jintao in Washington, the Asian Wall Street Journal broke the story of a $2 billion letter of intent between between China's Shangdi Guanqun Investment Co. and North Korea's Investment and Development Group. The letter of intent mentions investment in infrastructure, including docks, a power plant and roads over the next two to three years, followed by various industrial projects, including an oil refinery, over the next five to 10 years.
But by far the most curious story to come out of Rajin is the stationing of Chinese troops in the zone. The claim that they are there to provide security for Chinese citizens and property seems far-fetched. China has a long-standing strategic interest in port facilities in the East Sea, but the troops could also be a hedge against a renewed exodus of refugees in the region.
