Last week, Marc Noland posted on Jang Song Thaek’s China visit, and noted the effort to institutionalize cooperation around the two special economic zones. Although it clearly had higher political purpose, the trip was nominally made to attend 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. According to Xinhua, the “Steering Committee” was upgraded to a Management Committee (or to be precise, two management committees, the Rason Economic and Trade Zone Management Committee and the Hwanggumphyong and Wihwa Islands Economic Zone Management Committee.”
Thanks to Justrecently and Adam Cathcart’s SinoNK blog and, we now have line-by-line translation of the Chinese and English press releases on the visit, and if we peer underneath the hood we can see pretty clearly why the projects have been slow to yield fruit. The Wen-Jang joint communique contained the following quiet zinger, annotated by us:
“Wen Jiabao said that in recent years, Sino-North-Korean economic and trade cooperation had achieved positive results. As the next steps, the two sides should implement the Joint Guidance [Steering] Commission’s consensus within the Rason Economic Zone and Hwanggumpyong Island / Weihua Island at the focus of cooperation:
(1) to strengthen the two countries’ governments’ leadership in cooperation and planning, to improve law and regulations;”
SH. Translation: “law and regulation” are in need of improvement.
“(2) to encourage the active participation of the regions in question, to maintain close contacts and coordination;”
SH. It may be reading too much in, but an ongoing issue is whether more authority might be delegated to local officials with a greater interest in courting investment. According to friends who have visited Rason, the local management committee is way ahead of Pyongyang.
“(3) to create good conditions for the role of market mechanisms, land, taxation etc.;”
SH. Translation: such conditions are lacking, and we are not talking about trivial issues here: land, taxation, the market.
“(4) to encourage companies to invest, and to solve their practical problems and difficulties [鼓励企业投资,为他们解决实际问题和困难],”
SH. As Cathcart notes, this could well be a reference not only to the now-notorious Xiyang case, (Haicheng in Cathcart's version) but to the numerous disputes which plague bilateral trade and investment relations. If North Korea wants investment, it has to “encourage companies to invest” and guarantee that they can “solve their practical problems and difficulties.” Our firm surveys reveal that investors and traders put virtually no stock in dispute settlement procedures whatsoever, but with important implications for their willingness to engage in longer-term and larger investments.
“(5) to improve customs, quality control and other services to provide benefit for the cooperation. The Chinese side wishes, in common efforts with North Korea, to build and manage the economic zones well, to promote the achievement of a higher level by the Sino-North-Korean economic and trade cooperation.”
SH. Again, if something is flagged it is not happening to Chinese satisfaction, including "customs, quality control and other services." Is there any doubt that when the “Chinese side wishes” to push things to a “higher level” it is being constrained by North Korean practice? Jang Song Thaek drops the true purpose of the visit, “that the deep bilateral friendship will surely be passed on through the generations,” read from Kim to Kim to Kim. But this sure looks like a dressing down to us.
A final bibliographic note. I wrote a preface for a fascinating collection of documents assembled by Cathcart and Michael Madden on Sino-DPRK relations in the last several months of Kim Jong Il’s life and in the first eight months are so of the Kim III government. (Warning; it's a large file, with a lot of embedded pictures).
According to the documents, Kim Jong Il was focused like a laser on the relationship with China, seeing it quite rightly as the sine qua non for the regime’s survival. To cite Cathcart and Madden:
“In the last eight weeks of Kim Jong-il’s life, the Dear Leader:
- presided over movement on a full-scale range of economic initiatives geared toward China,
- met (and introduced his son to) the incoming PRC Premier,
- invited the Chinese Ambassador for dinner,
- visited two Chinese-North Korean joint ventures,
- and had discussions with a top People’s Liberation Army general in the middle of a brewing controversy over border security.”
I speculate that these moves were embedded in a broader effort on the part of the Chinese to steer North Korea back toward the bargaining table. The Kim Jong Un record vis-à-vis not only the US but China is more modest to say the least: the imposition of a flurry of cumbersome border controls; the missile launch; the protracted fishing boat incident and relatively low-level contacts. Again, the evidence converges: the Jang visit was aimed at fixing up the relationship, and the Chinese appeared to have said “your move.”