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A number of analysts have underlined the wide divergence of Chinese views about North Korea, including its economic policy; a 2009 report by the International Crisis Group provides a very good overview. However, we found a September piece in Shijie Zhishi, a monthly journal of international affairs loosely affiliated with the Chinese Ministry of Foreign Affairs, to be particularly cogent and pointed about the dilemmas North Korea faces.
The piece characterizes recent policy developments as "internal contraction and external opening up." The market-oriented reforms of the early 2000s had the effect of gradually reducing the dependence of households on the state. The regime quickly saw this as carrying important dangers:
“With large crowds in the markets, information could freely pass around, all kinds of information rapidly spread, and loopholes appeared in the privileged stratum's information blockade on ordinary people and the prevention and control of leaks of sensitive information. The aim of DPRK market regulation was to strengthen economic and social monitoring and preserve the security of the system.”
The strategy of seeking foreign investment and greater openness is interpreted by the author as a way of compensating for the efforts to limit the domestic marketization process. However, he notes a number of fundamental constraints on this strategy. First, opening up poses the same constraints with respect to the free flow of information as does domestic marketization, and arguably even more so. Even the effort to confine these opening experiments to enclaves has not been adequate to alleviate the regime’s fears of contagion, and almost all of these experiments have been characterized by tensions between foreign investors and the state. Second, North Korea’s focus on heavy industrialization and “military first” is not conducive to the opening up strategy. And finally, although the author notes the adverse effects of sanctions, he places primary responsibility on the tensions created by the pursuit of nuclear weapons:
“On the one hand, the conservative forces in the DPRK are very powerful; in order to preserve their vested interests, they advocate self-dignity in possessing nukes, and will not carry out large-scale reform and opening up in the short term; on the other hand, nuclear development has caused tension on the Korean Peninsula and indeed the whole of northeast Asia, and mutual trust between the DPRK and countries on its periphery has declined; this does not help to create the external environment for opening up to the world.”
