Monday, March 28, 2005

North Korean Economic Reforms?

The New York Times reports from the Chinese side of the border on economic reforms in North Korea. Link.
North Koreans who have recently arrived in China, and Chinese businessmen who have extensive experience in North Korea, speak of significant changes in the economic life in a country with a reputation as one of the most closed and regimented.

They say the changes, which were officially started in 2002 and have gradually gained momentum, have undone many of the most basic tenets of North Korea's Communist system, where private commerce was banned, private property circumscribed, and an all-powerful state the universal employer and provider.

Now in ways that many Chinese say remind them of their own early economic reforms a quarter century ago, North Korean farmers are allowed to take over fallow land and plant it for their own profit, selling their products in markets. (...)

In the cities, Mr. Yu and others say, the changes have been even more noticeable, with people being allowed to trade goods for profit in newly created public markets, including 38 in the capital, Pyongyang. These days, traders sell everything from clothing and bicycles to televisions and refrigerators, mostly imported from China. (...)

On the other hand, there are downsides.
"Pretty much everyone in business is an official of one kind or another," said one Chinese investor who is a frequent visitor to North Korea. "Ordinary people simply don't have the money, and if they had money, they'd be asked where they got it, and get in trouble."

The businessman said corruption, abuse of office and the seemingly arbitrary application of rules were the biggest weaknesses in the country's new policy drive. "Changes are declared," he said. "They are spoken, but it's not put into law, and this makes it very difficult for business." (...)

One city dweller told a story of how the government had engineered the introduction of new banknotes for the won, the currency, as part of the economic changes. With little explanation except a vague discussion of addressing social inequality, people were ordered to turn in their old won for new ones, the woman said.

"No matter how much of the old money you turned in, each family was given 4,500 new won," she said. "You didn't dare complain. If you did, you would be denounced as an enemy of the people."

If it is true, this is encouraging. I wish it came from a more reliable source than the NYT. Remember this is the publication that, for the entire length of the multi-year, Stalin-designed Ukrainian famine that killed over 7 million Ukrainian peasants, failed to see its existence and even denied that it was occurring. Their man in Moscow won the Pulitzer Prize for that reporting.

However, necessity, as they say, is the mother of invention. Starvation is a pretty sizeable necessity, and it may be forcing the North Korean government to ease up a little. I have read many other reports of North Koreans making it into the Chinese border region, and being floored by the affluence there. Compared with North Korea, rural China is affluent.


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