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

The manager of a Yanji Korean trade association who sells food packaging bags to North Korea also said it was difficult.

“We are doing less and less business with them now,” he said.

While China has halted some overland tourism into North Korea in the wake of the recent tensions, businessmen in Yanbian said most curbs came from North Korea.

“Their demands are higher and higher. Visas are difficult to get, crossing the border is difficult and they limit the things that can go across,” said the trade association manager, who also declined to be identified.

Some Chinese firms were also starting to lose confidence in investing in the Rason zone, said an official at the Jilin government who had knowledge of the matter. South Korea’s Yonhap news agency said last year the zone would get US$3 billion in investment from Beijing.

CHINA’S REBUILDING

While decades of market reforms sparked an economic boom in China’s coastal regions, the dismantling of many state firms as part of those measures took a toll on northeastern provinces such as Jilin and Liaoning.

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

That, in turn, depends on Pyongyang.

“For the relatively impoverished North Korean government, China’s northeasterly drive ought to represent a golden opportunity,” Adam Cathcart and Christopher Green, editors of SinoNK.com, a Web site that specializes in ties between North Korea and China, wrote in an article this month.

“However, the response to date has been a complex mix of enthusiasm, investment and retrenchment, fear, and paranoia, abject confusion and even a certain strategic ambivalence,” they added.

China shares a 1,400km border with North Korea, roughly two-thirds of which belongs to Jilin. More than a million ethnic Koreans live in the province. The government hopes they can one day act as a bridge with North Korea but has instead exported Korean-speaking labor to work in South Korean factories since the early 1990s.

Jilin accounts for 28 percent of Chinese investment in the North, with 34 percent from Liaoning.

Experts say one of Beijing’s top objectives in hosting Kim Jong-il multiple times from 2000 to the time he died was clear: to showcase the fruits of China’s economic reforms.

Indeed, a source with ties to both Pyongyang and Beijing told Reuters last July that the North was gearing up to experiment with agricultural and economic reforms. However, nothing was announced and then North Korea conducted a long-range missile test in December and its third nuclear test in February, prompting fresh UN sanctions.

A pro-Pyongyang newspaper last week said North Korea, which has suffered chronic food shortages, had a surge in agricultural production due to a new pay-based incentive system for farmers last year.

The World Food Programme, which has an office in Pyongyang, said it was not aware of any changes in agricultural policy.

LUXURY GOODS

Across the border, it is hard to gauge the impact of deepened economic ties with China.

A child nutrition survey carried out last year by North Korea with UN assistance showed results in North Hamgyong Province, which abuts Jilin, that appeared better in some cases than in South Hamgyong, next to Pyongyang. The usual assumption is that North Koreans live better the closer they are to Pyongyang.

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