Southern Weekend Reporter Qin Xuan
The Rason region of the DPRK has now become the Hong Kong of Northeast Asia if the plan of 21 years ago is realized. It is not only a hub for the DPRK to connect with the global trading system, but also a symbol of the revitalization of the national economy of this socialist juche kingdom.
The problem is that the political and security environment in the DPRK has never remained stable for more than two years since the DPRK’s announcement of its withdrawal from the Nuclear Non-Proliferation Treaty (NPT) in 1993, and the constraints of the Juche system have made it so that few dare to invest in Rason for the long term.
Successive generations of North Korean leaders have plotted the future of Rason, but today it remains a drab town, with power outages at all hours and rain, mud and dry dust. The biggest change from 21 years ago is that the renminbi, rather than the North Korean currency, has become the daily currency of circulation, and locals are learning Chinese, trading with Chinese traders in mintail, timber, gold dust, wigs and heroin, or working in factories run by the Chinese.
Dazzling Songs Shining Second Ginza
In 1932, the same year as the establishment of the pseudo-Manchukuo, the railroad authorities of the Chosun-Manchu Railway announced that the terminal of the Duntu Line (Dunhua-Tumen) would be located at the port of Rajin, making it the terminal at the northern end of Chosun in the railroad system of the Manchukuo State and the Korean Peninsula. Two years later, when the railroad was built to Rojin, the place had already been transformed from a small fishing village with a few hundred people to a large port with an annual throughput of 3 million tons of goods.On April 1, 1936, a through train from Changchun to Rojin began to run. Previously, it took 70 hours to travel from Changchun to Tokyo by train and ship via Dalian port. However, the whole journey through the port of Luotsu took only 39 hours.
In 1933, Katsushika Keitaro, a Japanese, visited the east coast of Korea to inspect the port and recognized that the conditions of the port in Rajin were significantly better than those in other parts of the Korean Peninsula. At the beginning of the following year, he published “What is the Future of Great Rajin” in a Japanese publication, praising Rajin’s present field of weeds and trees, and convinced that it would become the second Ginza that would dazzle and shine in the future.
For Japanese developers, Rozin has an equivalent status to Dalian. While Dalian was a rival to Japan’s Kansai region, Chubu, and Kyushu, Rojin was a rival to central, Tokyo, and northern Japan. If Japan had held on to its position in East Asia, the size of the port of Rojin in the late 1940s would have expanded to 9 million tons of annual throughput, a size close to that of Dalian.
Wang Yutong, a scholar of the Republic of China, devoted a section of his monograph “The Recent Northeast Economy and Japan” to the Dunto Railway and the port of Rojin. Chinese scholars of that era had already realized that the “Second Ginza”, once realized, would become two shackles of Northeast China, together with the port of Dalian.
Luotsu’s geography and harbor conditions are unique. With the Soviet Union in the north, pseudo-Manchu in the west, and Japan in the east, the Sea of Japan can be turned into an inland lake between the Japanese mainland and the continent, and warships and freighters under the sun will flow endlessly. In terms of harbor conditions, although the east coast of North Korea there are also ports such as Cheongjin and Woonggi, which are also unfrozen harbors with good harbor depths, there are two islands at the port of Rojin, Dagusa and Kogusa, which allow large ships to sail in to avoid the wind and block the wind and waves of the Sea of Japan.
Nam Young, dean of the College of Science and Technology at Yanbian University, explained that Rojin was developed by the Japanese and was the “original city of urban planning and land planning” on the Korean Peninsula. Japanese railroad missionary Omura Zhuoyi planned the railroad network is still the most scientific choice. In terms of port size, the combined annual throughput of Woonggi Port and Cheongjin Port was only half of that of Rajin Port, which was 1.5 million tons.
Kasai Keitaro certainly did not foresee the defeat of Japanese imperialism. He once predicted that the future of Orokazu would depend on the fate of security in Manchuria. Either he ignored the factors behind law and order, or he was pressured by censorship to speak frankly.
Establishment of a “free economic and trade zone” with reference to Shenzhen
In the summer of 1990, the United Nations Development Program (UNDP) led consultations on the Tumen River development project among China, the DPRK, South Korea, and Mongolia, with the Soviet Union and Japan as observers.
At a meeting in Pyongyang in October of the following year, the United Nations Development Program (UNDP) launched a program for the development of the Tumen River, the centerpiece of which was a $30 billion investment over 20 years to create an “international city” linking Hunchun, China, Rojin, North Korea, and the Russian port of Zarubino.
Two months later, the DPRK announced the establishment of the Rojin Free Economic and Trade Zone, which was also the first “special zone” opened by the DPRK, and soon Ro less than two years later, in September 1993, the DPRK incorporated the oil port of Pioneer Port in the northern part of the port of Rojin to form the Rojin-Pioneer Economic and Trade Zone, and the freedom was removed, and the merged area of Roxian was upgraded to the status of municipality directly under the central government. According to Kim Sung-nam, a scholar at Yanbian University, the DPRK was the first member state to respond to the Tumen River Development Project program.
Under the socialist economic system of the DPRK before 1990, the port of Rajin had a low status, and the largest trading ports on the east and west coasts of the DPRK were the ports of Chongjin and Nampo, respectively. According to the book Economy of the Democratic Republic of Korea, written by scholar Yang Xuezhong, the main functions of the port of Rajin were limited to ship-repairing services, domestic trade transportation, and sometimes unloading of some of the Soviet Union’s oil at the port. The port of Cheongjin, the capital of North Hamgyong Province, located in the south of Rajin, is one of the most important trading ports in North Korea. It was also the port of entry for Japanese Koreans returning home. After the Korean War, the port was expanded from 1 million tons of annual throughput during the Japanese occupation to a reported 8 million tons. The port of Rajin, on the other hand, remained at the level of 3 million tons during the Japanese Occupation. This size remains practically unchanged to this day.
Therefore, some Chinese scholars believe that the conditions at the port of Chongjin are better than those at the port of Rajin. Various other scholars believe that the opening of Rajin, in addition to its geographic proximity to China and Russia (USSR), also takes into account the fact that it is farther away from Pyongyang and on the periphery of North Korea.
In the era when the Cold War ended and the DPRK was constantly pushed to the margins of the world system, Rason was an extremely rare bright spot in its national economy.
Like the vast majority of socialist countries in the world, the national economy of the DPRK came to a standstill after the end of the world oil crisis in the 1970s. The economic system of unified production planning and distribution by the state lost its vitality. The second and third seven-year plans of the national economy designed by Pyongyang’s power elite with the help of calculators and loudspeakers failed. The shortage of light industrial goods became a problem that Pyongyang had to pay attention to in the 1980s. In fact, by the time the new generation of North Korean leaders, Kim Jong-un, came to power, the banners hung in the square still included slogans such as light industry first and people’s living standards improved.
The year 1990 was a nightmare for the DPRK. The national economy went into nine years of negative growth, and floods and famine led to the deaths of dozens, perhaps even millions, of people.
The disintegration of the socialist camp deprived the DPRK of its dependence. In the past, relying on the traditional friendship of the socialist camp, the DPRK was able to obtain oil and technology from the USSR, China and other countries at a “half-buy-and-give” membership price, which was much cheaper than that of the international market. However, since no man in the Soviet Communist Party stood up to defend the system, the concessions were completely abolished and the prices were marked up and converted into dollar bills.
While China, Vietnam and other waterist countries are planning to join the WTO and gain a position in the world economic and trade system, the DPRK is trying to hold on to the bottom line of its independent economy. Self-reliance is both the most reasonable conclusion drawn from the history of resistance on the Korean Peninsula for more than a hundred years and the solid cornerstone of the Juche idea, which embodies the superiority of the Juche idea. Leader Kim Il Sung once said that economic self-reliance is the material foundation of political independence. If you are economically dependent on other countries, you have to be politically dependent on others.
According to the DPRK’s development plan for the Rason – Pioneer area, the first phase of the plan, 1993-1995, was for the basic construction of the trade zone; the second phase, 1996-2000, was for the trade zone to become a meeting point for exchanges in Northeast Asia; and in the 10 years after 2001, the Rason area will become a platform for international exchanges. According to the plan, the area will integrate manufacturing, export processing, finance and services.
In planners’ dreams, scholars’ papers and media reports, the Rason region will become the Hong Kong and Rotterdam of Northeast Asia, and comparisons will also be made with Shenzhen in China.
According to Dr. Cui Jun, a doctor of economics at Jilin University, in 2004, there were 78 laws and regulations on Luo Xian at the beginning of the 21st century. Kim Sung-nam, a scholar at Yanbian University, explains that among them, the regulations on sole proprietorships, joint ventures, and joint ventures refer to China’s special zones law. The DPRK adopted China’s special zone construction model after comparing the characteristics of China’s special economic zones and Ireland’s Shannon Export Processing Zone.
More than 20 countries are involved in the investment
In July 1994, North Korean leader Kim Il Sung died and his son, Kim Jong Il, became the new leader of the DPRK, and three months later, the DPRK and the United States signed the Agreed Framework for the Settlement of the Korean Nuclear Issue. Three months later, North Korea and the U.S. signed the Agreed Framework for the Resolution of the Korean Nuclear Issue, bringing the Korean Peninsula to a short-lived and, I am afraid, the closest thing to peace to date. The development and investment in the Rason area then entered the spring.
Today’s investment is more or less a repeat of the Rason story of the 1990s. Also in the early days of the DPRK leader’s new term in office, a specialized investment promotion agency was set up at the national level outside the government structure, a joint venture bank was set up with a Hong Kong institution, and investment briefings were held in Beijing and even in Seoul.At an investment briefing in Beijing in 1995, the chairman of the DPRK’s Committee for the Promotion of Foreign Economic Cooperation, Kim Jong-woo, appealed to foreign investors to seize the chance to invest in the DPRK’s first Special Economic Zone (SEZ), stating: “In evaluating the investment environment in our country, some people used to be very worried about the tense political and military situation on the Korean Peninsula, but with the progress in the talks between the DPRK and the United States, and with the apparent normalization of relations between the DPRK and Japan, a more favorable environment is being created today.”
The DPRK held a much larger investment fair in Rason in 1996, with the participation of enterprises from 29 countries, with remarkable results. According to the American scholar of Korean studies Hy-Sang Lee’s book, “North Korea – A Strange Socialist Fortress,” that year Rason attracted 83 percent of the investment that had been made since the establishment of the Free Economic and Trade Zone (FETZ). In addition, business delegations from South Korea and Japan visited Rason during the period. Re-export trade using the port of Rajin was also realized, with South Korea shipping steel to China through Rajin.
In addition to the establishment of specialized schools to train export-oriented economic personnel and translators and service personnel, the establishment of a comprehensive university in this economic zone is also included in the plan.
If the wages of Korean workers in Rason were converted into dollars at the official exchange rate of the DPRK at that time, and calculated on the basis of six working days a week, the monthly salary would be roughly the same as that of today, which is less than $100.
By July 2000, the contracted investment volume of foreign enterprises in the Rason region amounted to $520 million, and actual investment amounted to $220 million. The rate of investment realization was higher than today.
In the 1990s, when North Korea’s factories were mostly shut down, and city dwellers went to the countryside to farm en masse or to trade stockings and grain privately in nooks and crannies of alleys, Rason had a relatively better time. Rason’s officials were also a bit more open-minded. At that time, they followed the principle of facing up to the current reality, encouraging foreign investment, focusing on the introduction of foreign capital, but not relaxing independent development, coexisting with both, and raising funds to speed up infrastructure.
Among the legacies left by President Kim Il Sung to his successors, Roshon did not enter the core vision. According to some statistics, in the seven years from the beginning of 1995 to the eve of 2002, Kim Jong Il traveled more than 177,000 kilometers and visited and inspected more than 700 military units. He did not visit Rason once, until 2009.
Downgrading of trade zones
Rason’s good times didn’t last long. in late 1996, a North Korean submarine was spotted in South Korean waters, not far from the port of Rojin. For investors, the news was more frightening than an infectious virus. In addition, with the outbreak of the Asian financial crisis, foreign companies took a direct hit. This included both Hong Kong’s Peregrine Bank. This bank is known for helping Chinese companies go public overseas and has unique skills in dealing with the socialist system.
The surrounding economic landscape is not favorable either. State-owned enterprises in northeastern China are busy laying off workers, and the price advantage of North Korean workers over laid-off workers has yet to emerge. According to scholar Kim Sung-nam, the low level of private capital in China in the 1990s also worked against Rason development. The economic turmoil of Russia’s transition is no better than North Korea’s, and Far East development has been a thunderclap. The hostage issue heated up, binding the Japanese Korean diaspora to North Korea. South Korea in the south, on the other hand, has focused its development on the mine-strewn borderline between the two countries and the tourist area of Mt. Geumgang.
Although the United Nations Development Programme and national economic and trade officials remain in regular contact and have brokered several agreements, including in New York, there is no consensus at the senior level in the countries.
From 2000-2002, scholar Nam Ying made three visits to the region. He believes that the Rason Free Economic and Trade Zone has been reduced to a simple intermediary trade and tourism development zone. According to Nam Ying, most of the investments in Rason are investment projects mainly for small and medium-sized enterprises, and they are mainly focused on tertiary industries, road construction, communication facilities and other infrastructures, with very little investment in manufacturing or export processing industries.
Rason has not become the Shenzhen of North Korea, but North Koreans in the area are beginning to have a sense of market economy, and there are even groups of retail vendors traveling across the region. According to Nam, this is the biggest achievement for the region.
Another fruit of realization is the casinos invested by Hong Kong companies. Normally, when Chinese businessmen cross the border at the Loop River Crossing, they can see yellow Hummers staying on the side of the road waiting to pick up their customers. However, sources say that the casino has recently suspended its operations.
In 2001, Rajin-Pioneer Municipality was simply abolished and later incorporated into North Hamgyong Province, and in 2002, the Sinuiju Special Administrative Region was established and the DPRK shifted the center of gravity of its foreign trade to the west coast, where it dovetailed with China’s Liaoning Province. This was preceded by a visit to China by North Korean leader Kim Jong-il, but for various reasons the district, which appointed a Chinese as its chief executive, failed to materialize.
This is the year that the photo of the 2-year-old defector from North Korea and the United States of America “breaking into the embassy” was circulated around the world. When the people vote with their feet, the superiority of the system is threatened.
Rossian Development Relaunch
At the end of 2009, two years before his death, Kim Jong Il, the former leader of the DPRK, made a public visit to the city of Rason, encouraging local enterprises to contribute to the economic prosperity of the DPRK by continuously developing export sources, expanding the scale of exports, and ensuring the quality of export products and the credibility of trade.
Zhang Yushan, a scholar at the Jilin Academy of Social Sciences, in his paper “The Impact of North Korea’s Economic Policy Changes on the Construction of the Changjitu Corridor,” suggests that this is the first time Kim Jong-il has made a public inspection of Rason since the DPRK set it up as a free trade zone in December 1991, and that the policy change is worthy of China’s attention.
Pyongyang’s top brass seems to be thinking differently about the economy. According to the Korea Economic Research Institute, 2010 was the lowest number of visits to military institutions since Kim Jong Il succeeded his father, Kim Il Sung, with 33 visits, compared to 58 visits to economic institutions.
In September of the same year, Kim Jong-un, who was to become the new leader of North Korea, made a public appearance. The following month, the DPRK enacted the Company Law, which gives companies more autonomy, although wage levels and sales are still regulated by the state.
In a way, the change of power in the DPRK has been almost synchronized with the realignment of economic policies. in April 2013, Park Bong-joo, who had led the DPRK’s economic adjustment measures a decade earlier, was re-instated as the cabinet’s prime minister.
From 2009 until his death in 2011, a variety of data and information suggest that the DPRK’s steps towards liberalization were taking place at a breakneck pace. The DPRK restarted the Rason project and announced plans for the development of eight new special economic zones in one go.
If the supreme leader of the South Manchuria Railway Society during the Japanese Occupation, Chuichi Omura, were still alive, he might have smiled. Because most of these eight special economic zones, located on the east and west coasts of Korea, were being built along the Korean Railway that he had planned.
According to the DPRK’s new plan, each SEZ will have its own focus, i.e., Pyongyang and Nampo will concentrate on the development of cutting-edge technology and the pharmaceutical industry, respectively; Sinuiju will mainly develop textile and other light industries; Wonsan and Hamhung will develop international tourism, shipbuilding, and coal and chemical industries, respectively; and the city of Rason, which is located at the border of China, Russia, and North Korea and is facing the Tumen River, will focus on the development of the petrochemical industry and international logistics.
The problem is that there were also detailed plans for the Rason area in the 1990s, including the construction of 10 industrial zones. Getting these special zones to materialize will require more than just a directive from Pyongyang.
In 2010, Rason District was upgraded to a special city under the direct administration of the central government, and its main operations are managed by the Korea Joint Investment Commission, a ministerial-level organization.
Compared to the previous Rosen development, the new management idea of Rosen looks changed. After the Rossian Economic and Trade Area Act was revised again, further tax reductions.
At the same time, the DPRK has opened the door wider to attracting medium- to long-term and large-scale investments on favorable terms.
Rason’s new model of direct administration also differs from the previous one in that Rason City is under the responsibility of Pyongyang’s Joint Venture Investment Committee, but direct administration is vested in a semi-autonomous economic cooperation agency subordinate to the Rason City People’s Committee. According to a report by the Korea Economic Research Institute, a North Korean official in Rason City has said that 80 percent of the decisions are made autonomously by Rason City, and only the most important decisions are referred to Pyongyang. Individual companies in Rason are also able to negotiate and even finalize cooperation projects with foreign partners on their own before making final applications to the government. Approval of foreign investment legal entities has also been decentralized to the Rason ETZ’s supervisory body.
Chinese businessmen told reporters that, in general, to do business in Rason must cooperate with local associations, head of familiar, do procedures as long as two weeks.
However, at this time, due to the severe international sanctions resulting from the North Korean nuclear issue, it is no longer possible to attract investment in Rason as it did in the 1990s when 29 countries were attracted to invest in Rason.
Sino-North Korean co-management and co-development?
Around 2010, the DPRK adjusted the idea of the Rason Free Economic and Trade Zone, which was originally based on the Tumen River development project, and even announced that it was withdrawing from the UN development program. At the same time, China enacted the Changjitu Development Pilot Zone Program, which aligned the development of Jilin Province with that of the city of Rason.
During the same period, China reinforced the cross-border bridge from the border city of Hunchun to the port of Luoshen, and Chinese companies leased wharves 1 and 2 at the port of Luotjin. The highway from Hunchun Loop River crossing to Luoyang is also under construction by China. Some scholars have told reporters that this highway project is still the largest investment project actually implemented in Rason after 2010.
At the same time as Premier Wen Jiabao’s visit to the DPRK and the DPRK leader’s visit to China, the two countries reached a consensus to jointly develop and manage the Rason area. Scholar Hy-Sang Lee has argued that one of the major problems in Rason is that the DPRK’s overemphasis on being the sole guarantor of foreign ventures scares away investors, and since the 1990s there have been numerous instances of investment failures due to non-compliance with contracts on the part of the DPRK.
According to Chinese scholar Guo Rui, co-development and management can circumvent many of the shortcomings of North Korea’s planned economy to a certain extent, thus allowing market factors to partially play a regulatory role.
In Chinese academia, the establishment of a co-management agency has long been discussed, as suggested by Dr. Cui Jun of Jilin University in 2004 in his doctoral dissertation, “Research on Northeast Asian Geo-Economic Cooperation”. In the paper, Cui Jun envisioned the formation of a Sino-Korean Hunchun-Luoshan Border (Transnational) Economic Cooperation Zone, an international economic region based on bilateral acts of consultation, cooperation and coordination between the central and local governments of China and the DPRK, spearheaded by the cooperative development and construction of infrastructure, logistic and communication networks, and through the productive development of industrial cooperation.
In the spring of 2012, the leading group of the China-North Korea Rason Economic and Trade Cooperation Zone (Rason ETCZ) was launched in Changchun, the capital of Jilin Province, with Cui Jun as its head. Officials at all levels in Jilin Province and North Korean officials in Rason City are responsible for docking and coordinating work. However, according to the reporter’s understanding, the joint management and development still remains on paper, and there are great difficulties from implementation.
Chinese support for Rason has also been disrupted by other factors. Plans for the Chinese border city of Hunchun to take on part of the task of supplying electricity to Rason have so far failed to materialize.
In addition, the experience of multiple countries co-managing special zones is rare, both in China and in the history of “special zones” around the world. Indeed, the development of the Shenzhen Special Administrative Region for foreign investors in the early 1980s, when China was opening up, sparked discussions about whether it would become a colony. The good news is that, according to published reports, there has been no similar criticism in North Korea. This may be because decisions come from the top leadership. But for the DPRK, which has always emphasized its independent economy, this issue is probably one of its most sensitive topics. When Jang Sung-taek, a former top North Korean executive, was executed not long ago, one of his offenses was selling the country’s land to foreign countries.
A number of Chinese businessmen who have been engaged in border trade with Rason for a long time told the reporter that Chinese businessmen who violate North Korean laws in Rason are basically punished by the local Ministry of Defense, so Chinese businessmen who encounter actual disputes in Rason will still take the old way of engaging in relations with the personnel of the Ministry of Defense of the city of Rason.
The DPRK still has absolute influence over foreign-owned businesses. To open a business in Rason, you must hire North Korean workers, who are paid more than $500 per month, most of which must be given to the state. And the accountant in charge of the accounts in the business must also be a North Korean. A Chinese businessman described that the accountant will have two books, one for the business owner and one for the North Korean managers.
Since 2010, China and the DPRK have stepped up cooperation in the development of Rason. The DPRK has opened offices in Beijing and Hangzhou to attract investment and has signed billions of dollars in agreed investment. However, according to the reporter’s understanding, the real implementation of the project is very few.
The project to transship Chinese coal through the port of Luotsu was a hit. Under the program, coal resources from northeastern China could avoid Bohai Bay and be transshipped to cities in southern China via the Luotsu export, thus shortening the distance and saving capital.
At the end of 2010, 20,000 tons of the first batch of Hunchun coal was shipped to Shanghai through the port of Luozin. According to the reporter’s understanding, so far, a total of only 100,000 tons of coal transported. The design capacity of the No. 1 wharf of Luotsu Port invested by Chinese enterprises is 1.5 million tons of annual throughput for coal handling capacity.
In June 2011, the foundation stone of Jilin Yatai Group’s cement project with an annual production capacity of 1 million tons was laid in Rason. However, the project has been progressing slowly, and in September 2013, the Chairman of the People’s Committee of Rason City, DPRK, Mr. Cho Jong-ho, paid a visit to Yatai Group. Chairman Cho hoped that Yatai Group could speed up the construction of the project and contribute to the development of Rason City.
Yanbian University scholar Jin Qiangyi introduced, only from the one-way freight calculation, transshipment freight is cheaper than bypassing the Bohai Bay, but after unloading the ship, there is not enough proper goods back to the northeast, empty and return to increase the cost, so it is not cost-effective.
At the same time, Kim Qiang-il said that transshipment with the port of Rajin is not enough to rely on China and North Korea alone, and that Japan and South Korea need to be included in the trade.
According to the reporter’s understanding, most of the current Chinese enterprises in Rason are mainly short-term trade and small investment projects. These enterprises are able to bring foreign exchange earnings to the local area, but they cannot improve technology and institutions. American scholar Hy-Sang Lee has mentioned in his book that what is noteworthy in Rason region in the 1990s is the small-scale raw material processing trade of aquatic products and timber. These were also the main goods in the border trade between China and the Rason region. in 2008, the highest proportion of trade between the Yanbian region and the DPRK continued to be in seafood and timber, with the proportion close to 48 percent of the total trade value. These are resource-based products with low added value.
In addition, some scholars have argued that developing Rason would require a large investment in infrastructure, which companies generally do not invest in, and Chinese local governments do not have that kind of money. On the other hand, the economic structure of Jilin Province itself is mainly agricultural, and the demand for North Korea is limited.
In fact, it was a group of southern private entrepreneurs who ran to Luo Xian to investigate projects because of excess capital.
Social change in Rossian
Every morning at 6:00 a.m., the Rossian radio goes off. Downtown residents would go out and clean the ground outside their doors and then start their day. This way of life has not changed for decades. But unlike the situation seen by scholar Nanying at the beginning of the 21st century, the people of Luosian have moved from an awareness of establishing a market economy to active action.
According to Chinese businessmen, karaoke is more open in Rason than in the past. Though officials still control contact between locals and Chinese businessmen, including no eating alone, riding in cars together on errands, etc. And night market barbecues have popped up in city center squares.
A wide variety of transportation vehicles can be seen at the distribution centers for goods. Locals help merchants transport their goods by cobbling together wheelbarrows made from car tires, wooden wheels without rubber, tricycles or bicycle tires.
Residents of Rason City lead a relatively affluent life compared to those in other parts of North Korea. Prices in the city’s restaurants are no cheaper than in China. In terms of wages, the monthly income of local residents is theoretically only enough to buy two bottles of beer, but they can still afford to patronize restaurants. Even when familiar Chinese businessmen are short of money, some are generous enough to take out a few thousand to ten thousand RMB from their families for short-term loans. This would have been unthinkable 10 years ago.
To some extent, the circulation of the yuan is a departure from the original vision of the DPRK. According to the regulations of the 1990s, the currency in circulation in the trade zones should be the North Korean currency, not the yuan. But this has happened in almost all of North Korea’s “special zones,” and in the 1990s, Korean-American businessman Kim Chan-goo discovered that the won could circulate in the Geumgangsan tourist area.
Theoretically, these private properties do not exist under the Juche socialist system. In his visit to Geumgangsan, Kim Chan-goo lamented that only money can destroy ideas. The Rason Special Zone seems to bear this out. And this will be the North Korean leader’s greatest fear
North Korean women’s dress code has also changed subtly. “In the past, their pants used to be open-mouthed, but now there are narrow pants.” A Chinese businessman told reporters.
Openness also poses certain social risks. In the DPRK, safe sex products such as condoms are not available in the market, but private sex trade also occurs from time to time.
In fact, North Korean society has also changed. Today’s North Koreans are not only market-conscious, but also more mature. Zhu Xianping, a scholar at Jilin University, mentions in his paper, “North Korea in the Kim Jong-un Era and China-Russia-North Korea Cooperation in the Tumen River Region,” that unlike orthodox Workers’ Party officials of the past, a group of bureaucrats at all levels have used their power to engage in economic activities, opening and operating businesses, providing rental services, purchasing motor vehicles and facilities, and even real estate in the country. The primitive capitalist approach has become a means of livelihood for many and is no longer likely to be eradicated. Factory workers made their living by a variety of means: making and selling handicrafts, trading in markets, and some even created formal businesses. After the failure of the currency reform, restaurants, stores, boutiques, hairdressing salons, saunas, etc. grew rapidly. A class of business, logistics and infrastructure operators has emerged.
The entry of non-SAR Koreans into Rason City is also strictly controlled. For North Korea, such a special zone model is strictly controlled to this day. Comparing to the history of China’s reform and opening up, Luoyang did not have a strong radiation effect like Shenzhen, which involved the whole coastal area of Guangdong in the SAR economy.
Chinese businessmen told reporters that basically Chinese businessmen can move freely in the Rason area without restrictions. However, leaving Rason to go to the neighboring Cheongjin requires other formalities. However, this does not mean that Rason City is merely an isolated island within North Korea. Chinese businessmen also encounter Rason locals who offer to broker deals for businessmen in Cheongjin.
From the death of former North Korean leader Kim Jong-il to the present, the mindset of the North Korean elite has been changing. Kim Il Sung Comprehensive University in Pyongyang and others have offered to conduct regular academic exchange activities with schools in northeastern China. This is a groundbreaking phenomenon.
At the end of 2013, a delegation from Rojin Maritime University was also visiting Yanbian University. According to the reporter, in the first half of last year, scholars from the Rason region had cooperated with the Law School of Yanji University to study the development of legal bylaws in the Rason region.
Some scholars, however, say that most of the visits to China are by administrators and scientists. At least in the field of social sciences, the DPRK continues to strictly control exchanges with scholars of other ideologies.
The exchanges of officials also appear to be unprecedentedly frequent. According to some sources, in 2012, the DPRK sent more than 1,000 economic and trade officials and some technicians to China to visit places such as Shanghai and Dalian. There are even North Korean officials with North Korean official approvals to the Chinese government to seek project support.
According to scholar Guo Rui, the DPRK has taken advantage of the development of special zones in the previous two years to train a large number of special zone managers, which has provided the basis for the DPRK to open new special zones.
concluding remarks
In late 2013, foreign media reports that the DPRK would open 14 new special economic zones sparked a new round of debate about whether the DPRK would follow China’s path of “reform and opening up”. Interestingly, since announcing the creation of the economic “special zones” in 1991, the DPRK has never taken the initiative to expand the zones or to realize trade cooperation between the zones and their neighboring regions.
China’s reform and opening up is a whole set of changes, and beyond the special zones, the transformation of the whole country. For the DPRK, on the other hand, free economic and trade development should be constrained as much as possible within the special zones without causing structural impact on the national socialist production and distribution system. However, over the past two decades, the traditional national economy of the DPRK has not realized the dream of a strong and powerful country as it should have done, and on the contrary, the malfunctioning of the economic system has led the society in a different direction. The choice of the DPRK, whether influenced by external or internal factors, seems to be the result of forced recognition and compromise.
Some scholars have even argued that the so-called 14 special economic zones are more realistically aimed at forced decentralization, providing localities with imaginary policies rather than tangible benefits.
For a long time, the DPRK has developed a model of rule based on military politics, with a large amount of domestic resources invested in the army and military construction. Some Chinese scholars have suggested that whether the DPRK can transform itself and successfully realize the recovery of its national economy depends on whether it can reduce its investment in the military.
For the DPRK, the current policy of special economic zones is a last resort in order to maintain the system and to save the national economy for foreign exchange. However, it is difficult to be optimistic about its sustainability.
In 2010, there was new news about the construction of an airport on the border between China and North Korea. at the end of 2013, Yanbian’s Tumen River News reported that the project of commuter airport and aviation industrial park in Hunchun International Cooperation Demonstration Zone on the border between China and North Korea was progressing well, and had been included in the 12th Five-Year Plan for the construction of commuter airports in Jilin Province, and the Airport Layout Plan of the Northeast Region of the Civil Aviation Administration. It has been included in the 12th Five-Year Plan of Jilin Provincial Commuter Airport Construction and the Northeast Regional Layout Plan of Civil Aviation Administration.
According to the report, the project is of great significance in promoting cooperation and development among the countries of Northeast Asia, and in promoting the economic development and consolidation of national defense in the ethnic minority areas of the country’s borders.
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