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North Korea Wins China Pledge of Faster Economic-Zone Growth

The uncle of North Korean leader Kim Jong Un met Chinese Commerce Minister Chen Deming in Beijing yesterday, with China pledging support for increased economic and trade activity between the two countries.

Chen met with Jang Song Thaek, who is married to late leader Kim Jong Il’s younger sister, the Chinese Commerce Ministry said yesterday in a statement on its website. The nations operate joint economic zones in the North Korean border city of Rason, and on the islands of Hwanggumphyong and Wihwa on the Yalu river.

Jang, 66, may meet Chinese President Hu Jintao and Premier Wen Jiabao before returning to Pyongyang on Aug. 18, Yonhap News reported yesterday, citing unidentified diplomatic officials in Beijing. He will also visit China’s Liaoning and Jilin provinces, which share borders with North Korea, the China Daily reported, citing people it didn’t identify.

Jang is the most senior member of the North Korean government to visit China since Kim Jong Un took power in December, following his father’s death. Kim has listed economic development as the country’s top policy agenda as the nation seeks to overcome chronic food shortages.

The two sides will “speed up infrastructure construction in the zones” to attract more companies to invest in the projects, according to the Commerce Ministry statement. China should support the expansion of corporate economic and trade cooperation with North Korea, Chen Jian, China’s vice commerce minister, wrote in yesterday’s People’s Daily.

Source: AP Photo/Kyodo News

Jang Song Thaek, North Korea's vice chairman of the powerful National Defense Commission, center, gets into a car on his arrival in Beijing, Aug. 13, 2012. Close

Jang Song Thaek, North Korea's vice chairman of the powerful National Defense... Read More

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Source: AP Photo/Kyodo News

Jang Song Thaek, North Korea's vice chairman of the powerful National Defense Commission, center, gets into a car on his arrival in Beijing, Aug. 13, 2012.

‘Quickly Start’

Chen and Jang discussed plans to develop the Rason zone and rebuild ports and railways there as well as the need “to quickly start” development in Wihwa, KCNA said today. Jang requested $1 billion in long-term loans to boost North Korea’s economic development, the Chosun Ilbo newspaper said, citing unidentified sources in Beijing.

It was too early for Kim Jong Un to step onto the global stage and Jang made the trip to China on his behalf, said Lee Seung Yeol, senior research fellow at the Seoul-based Ewha Institute of Unification Studies.

“North Korea wants to open up its economy to the outside world without undertaking reforms, and that means economic development centered around special economic and trade zones and sending its domestic labor force abroad to earn foreign currency,” Lee said. “Chinese companies have not been investing in the western islands and North Korea hasn’t been able to build the infrastructure that will attract business.”

There has been little progress since North Korea created a joint venture investment committee in 2010 to attract Chinese business to these zones, according to Lee.

Food Shortages

Heavy rains and floods in July further compounded food shortages and malnutrition after more than 160 North Koreans died, 400 went missing and about 212,000 were left homeless, the official Korean Central News Agency reported on Aug. 5. The monsoon season this year came after the country’s worst drought in a century damaged wheat, barley and potato harvests.

North Korea hoped Wihwa and Hwanggumphyong islands would be developed into an industrial complex for Chinese companies, Cho Bong Hyun of the Seoul-based IBK Economic Research Institute said. Rason is being developed into a hub for foreign trade and offers landlocked Chinese provinces in the region access to ports, said Koh Yu Hwan, a professor of North Korean studies at Dongguk University in Seoul.

China is North Korea’s main benefactor, accounting for 89 percent of the nation’s foreign trade.

The U.S. canceled a February deal to provide 240,000 metric tons of food aid in exchange for a halt to nuclear weapons and missile tests, after Kim Jong Un launched a long-range rocket. The United Nations Security Council responded by widening its sanctions against North Korea.

About 16 million of North Korea’s 24 million people suffer from chronic food insecurity, high malnutrition rates, and deep- rooted economic challenges, Jerome Sauvage, the UN resident coordinator in Pyongyang, said in a June 12 statement.

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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