Thu, Apr 13, 2017 - Page 6 News List

N Korea reforms economy while denying any change


Street vendors wait for customers on Mirae Scientists Street in Pyongyang, North Korea, on July 11 last year.

Photo: AFP

On the side streets of Pyongyang, small traders sell vegetables from impromptu stalls. At markets, dealers offer imported household goods — even Coca-Cola — and in state-owned department stores hard currency is openly exchanged at black-market rates.

Officially, North Korea denies it is reforming and declares it remains guided by the juche, or self-reliance, philosophy of founder Kim Il-sung, whose 105th anniversary of his birthday is being marked this weekend, but under his grandson, Kim Jong-un economic change is quietly happening in the impoverished, nuclear-armed nation, analysts say.

The North was once better off than the South, but decades of mismanagement saw it descend into stagnation and food shortages, while its neighbor propelled itself into one of the world’s leading economies.

Pyongyang remains almost entirely devoid of commercial advertising, its wide avenues instead lined with propaganda posters of heroic soldiers and striving workers, or slogans such as “Let us follow the decisions of the 7th Congress of the Workers’ Party of Korea.”

“We are a socialist country so we stick to our socialist principle economically,” said Ri Sun-chol, head of the economic research institute of North Korea’s Academy of Social Sciences. “We do not push for national reforms adopting a market economy.”

However, a series of rulings under Kim Jong-un is taking the North in exactly that direction, diplomats and researchers say.

Many agricultural collectives have been effectively dismantled and farmland management distributed between individual households referred to as “family-based work units,” sending food production climbing.

Beyond what they must produce for the state, factory managers have been given freedoms to find suppliers and customers of their own.

Enterprises are often still set up under state entities to ensure political protection, but analysts estimate that the private sector, broadly defined, could be responsible for anything from a quarter to half of North Korea’s GDP.

All such figures are riven with uncertainty, as the North Korean government does not publish meaningful economic statistics.

“My rule of thumb is to never trust a datum about the North Korean economy that comes with a decimal point attached,” said Marcus Noland, director of studies at the Peterson Institute for International Economics in Washington.

The changes are similar to the first stages of China’s “reform and opening” under then-Chinese leader Deng Xiaoping (鄧小平) in the early 1980s, which laid the ground for the decades-long boom that turned the Asian giant into the world’s second-largest economy.

“Of course they are copying China, because China was so damn successful,” said Andrei Lankov, director of specialist service NK News and professor at Kookmin University in Seoul.

“They never admit that they are learning from anybody,” he said, but Kim Jong-un “understands very well” that market economy systems have produced stunning growth in multiple East Asian nations over the past half-century.

“The current North Korean leader is absolutely free of ideological sympathy towards the state socialist model,” he said.

Pyongyang’s reluctance to talk openly about economic changes gives it room to maneuver while preserving its political foundations, analysts said.

“As long as much of this activity remains technically illegal, and in many cases subject to the death penalty, the state can always reverse course if it sees fit,” Noland said.

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