Fri, Apr 19, 2013 - Page 9 News List

China’s freeway to North Korea: A road to nowhere

China has embarked on a program to revitalize its rustbelt northeast, but some economists say a turnaround will partly rely on when it can tap the potential mineral wealth and cheap labor of North Korea

By John Ruwitch  /  Reuters, YANJI, China

Illustration: Mountain People

A new stretch of China’s G12 expressway arcs toward the northernmost tip of North Korea, connecting one of the world’s most vibrant economies to probably its most stagnant. It is a symbol of China’s long-term goal of building economic ties with its unpredictable neighbor.

However, the thin traffic along a highway lined with fallow fields in China’s Jilin Province, two years after it was finished, shows how far there is to go and why plans for high-speed rail links to Chinese cities along the border look misplaced.

The problem for Beijing is twofold: getting Pyongyang to buy into the idea of economic reform and the reluctance of Chinese businessmen to venture into one of the world’s riskiest investment destinations.

While China is frustrated with Pyongyang over its threats to wage war on South Korea and the US, its efforts to build economic links with North Korea from places like Jilin help explain why Beijing is unlikely to crack down hard on the reclusive state.

Since then-Chinese premier Wen Jiabao (溫家寶) went to North Korea in 2009 — just months after Pyongyang’s second nuclear test — China has sought to stabilize the Korean Peninsula by stepping up its effort to steer the North toward economic reform. China is not about to give up that goal even though it is under US pressure to get tough after North Korea’s third nuclear test, on Feb. 12.

“It’s not even shepherding anymore. It’s more of just inundating North Korea with all of these influences from the Chinese side where the idea is to essentially corrupt them, show them what it tastes like to make money,” said John Park, a North Korea expert at the Massachusetts Institute of Technology and the Harvard Kennedy School.

CATALYST

Chinese investment in North Korea was paltry before Wen’s visit, according to researchers.

Recent statistics are hard to find, but his trip breathed life into two economic zones: one at Rason, 50km inside the North Korean border, opposite Jilin, and the other near the Chinese city of Dandong, further south in Liaoning Province. Some factories and farms are operational in Rason. The zone near Dandong is still being built.

Wen’s trip opened the door to mining deals and allowed China to help expand the small port at the North Korean city of Rajin, the northernmost ice-free port in the region. His visit also paved the way for more North Korean state trading firms to do business in China, Park said.

Annual two-way trade is estimated at around US$6 billion, making China the North’s biggest trade partner.

After Wen’s trip, then North Korean leader Kim Jong-il visited China three times before his death in December 2011. Among the places he saw was a flat-screen TV maker, an industrialized farm and a high-tech research and development center. Current ruler Kim Jong-un, the elder Kim’s son, has not visited China since taking power.

However, doing business with North Korea is frustrating, even for those in Jilin’s ethnic Korean prefecture of Yanbian, where many residents speak Korean and have links to the North.

The owner of a car company in Yanji, the region’s main city, would love to see truckloads of his vehicles head along the G12 and into North Korea. In an advertisement, the firm is billed almost exclusively as an exporter, but the reality is different.

“Most of our business is in China now,” said the company owner, who declined to be identified because he was concerned it would make it even harder to work with North Korea.

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