Market Reforms In North Korea

Timesman Howard French, who has been their man in China for quite a while, continues his series from the North Korean border.  The theme is that North Korea is experimenting with market reforms inspired by the experience of China, but some of the reforms are quite novel - he saves the best for last, and so shall we.  Some excerpts:

The view from China, though, in cities like this, where small groups of North Koreans can be found in the downtown shops and hotels, scouring the city for bargains, is of a country already well into an experiment, however uncertain, aimed at rebuilding its economy and even opening up, ever so gingerly, to the outside world.

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.

"It seems they are learning from the Chinese model of the 1980's, giving land to farmers and not allowing people to depend on the central government for everything," said Yu Zhongde, a Chinese businessman whose company operates bus routes in North Korea. "The rate of change is speeding up, and the aspiration for wealth among the people is really growing."

..."The standard of living is improving, not just in Pyongyang, but throughout the country," said another Chinese businessman who has been a frequent visitor to the country since 1997. "Nowadays, if you have money you can buy whatever you want. The problem is that most people still don't have much money."

Similar comments about the recent availability of goods were repeated in numerous interviews with North Koreans who had illegally slipped across the porous border, taking a risk in hopes of earning some money in China and buying goods to carry back and sell.

The difference in the remarks of Chinese business people and the North Koreans is one of tone, with the North Koreans almost universally asserting that life has gotten tougher, not better, since the introduction of the economic changes.

"The government has no money, and everything has become much more expensive," said a woman from the northeastern city of Chongjin, who sneaked into China three months ago. "Many people steal things to survive."

...North Korean officials have used the state's propaganda machine to spread the new market-economy gospel, including quotes from the supreme leader, Kim Jong Il. They began with an article attributed to Mr. Kim published in the state press in 2001 under the headline "Gigantic Change," in which he called for making "constant efforts to renew the landscape to replace the one which was formed in the past, to meet the requirements of a new era."

Unsurprisingly, corruption is an issue:

"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."

And here is an unusual currency reform:

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."

An Economist reporter toured North Korea a year ago and discussed the reforms. 

Droll excerpt:

Now, pay is supposed to be linked to output, though becoming more productive is not easy for desk-bound civil servants or workers in factories that have no power, raw materials or markets.

Shocking excerpt, discussing the after math of the mid-90's famine:

To a westerner's eye, a class of 11-year-olds in Hoichang is a shocking sight. At first, your correspondent thought they were seven; the worst-affected look to be only five. Ri Gwan Sun, their teacher, says that apart from being stunted some of them still suffer from the long-term effects of malnutrition. They struggle to keep up in sports and are prone to flu and pneumonia. They are also slower learners.

Tell Daniel Okrent that his paper is following the right story here: public@nytimes.com

Comments

[MattJ]

Tell Daniel Okrent that his paper is following the right story here: public@nytimes.com

I have no idea what you mean by this. Why should we tell him that his paper is following this story?

[Dave Schuler]

Walter Duranty would be proud.

[MattJ]

Thanks, Dave.

Now I get it. Duh.

[sammler]

There was a story on StrategyPage (HT: Instapundit) about Afghan army recruits, almost identical to your last paragraph on malnourished students. In the absence of numbers, it's hard to see how the two really compare. And journalists are probably the most innumerate profession in the world...

[sammler]

There was a story on StrategyPage (HT: Blogfather) about Afghan army recruits, almost identical to your last paragraph on malnourished students. In the absence of numbers, it's hard to see how the two really compare. And journalists are probably the most innumerate profession in the world...