China puts a hand on North Korean
wheel By Sunny Lee
BEIJING - Recently embarked Sino-North
Korean economic projects are seen as the most
significant event between the former Cold War
allies since fatal incidents surrounding the
Korean Peninsula last year - the sinking of South
Korea's Cheonan corvette and the shelling
of Yeonpyeong Island - were blamed on North Korea.
The joint development of special economic
zones has drawn uncommon attention because it
received the Chinese central government's
blessing. China in the past participated in other
joint economic projects with North Korea, but
preferred to have local governments and civilian
enterprises take the driver's seat, while the
central government largely sat back with its arms
folded.
The most well-known among past
initiatives was the Tumen River
Project near the Chinese and
North Korean border, which also involved Russia,
Mongolia, South Korea and Japan. This project
started in 1991, a time when China was
experimenting with reform and opening-up. China
was using the market to play a major role in its
own economic development, so the same mentality
was applied in their joint project with North
Korea.
"In other words, China applied a
market principle to North Korea in the past, but
it did not work out well. So now the central
government is pulling up its sleeves to lead the
projects," said Piao Jianyi, a North Korea expert
at the Chinese Academy of Social Sciences in
Beijing.
The Chinese central leadership's
interest in the projects this time was
unmistakable. For the June 8 groundbreaking
ceremony on one of the joint economic zones,
Hwanggumpyong Island, China's commerce minister,
Chen Deming, and North Korea's Jang Song-taek, the
most powerful person in North Korea outside the
two Kims - leader Kim Jong-il and his heir
apparent son Kim Jong-eun- was in attendance. The
duo also attended another ceremony the following
day to build roads connecting the Chinese city of
Hunchun with the North Korean port city Rajin.
With such high-profile launch ceremonies,
attention has mounted on the prospects of the
special economic zones. Will they bear fruit? A
more important question is how the expected
economic improvement, if it succeeds, will
reconfigure North Korea's strategic calculations
in dealings with the US and its Asian allies,
including South Korea and Japan?
Jo
Dong-ho, an analyst on North Korean economy at
Ewha Womans University in Seoul, believes the
projects will fare well. "This time, it was sort
of a 'qualitative upgrade' from previous ones
because the central government is involved. Even
though China and North Korea have their share of
differences but both sides also well understand
their differences too. So, as time passes by,
things will take up speed."
During the
previous Tumen projects, both North Korea and
China were somewhat lukewarm. North Korea feared
the possibility of inviting capitalism elements
from the economic projects to undermine its social
control. For China, it was a period when it was
putting its major effort on economic development
on coastal regions first, and it didn't have
enough resources to deploy to the second-tier
cities such as those in the northeastern region.
But this time both North Korea and China
found their chemistry. North Korea's usually
hobbling economy has fallen to a further desperate
situation, causing a severe food shortage.
Besides, North Korea really needs a money shot in
the arm ahead of the much-trumpeted national
celebration of becoming a powerful and prosperous
country just next year.
"North Korea needs
money to spend around ever more," said Kim
Young-hie, a senior international affairs
columnist of the JoongAng Ilbo, South Korea's
major daily.
For China, it aims to have a
synergy effect by linking the joint initiative to
its ongoing economic development projects in the
northeastern region near the North Korean border,
Changchun, Jilin and Tumen, which is dubbed the
"Chang-Ji-Tu" plan.
"So, there is a new
chemistry between the two countries that makes
them more enthusiastic this time," said Hwang
Jae-ho, an expert on China at Hankuk University of
Foreign Studies in Seoul. "But that doesn't make
it automatically a guaranteed success."
Establishing a bona-fide special economic
zone requires a huge dose of investment to set up
the relevant infrastructure. But so far, little
has been done. Hwanggumpyong largely remains a
sandy mass of land next to a river, where expects
say it would be difficult or very expensive to set
up an industrial facility.
The road
linking Chinese Hunchun to North Korean Rajin, is
being paved. In addition, North Korea doesn't have
a financial system that can be used for
international transactions, let alone a set of
legal measures that can govern the projects. "It
will take a long time for things to get some
traction," said Hwang.
A North Korean
document outlining the two joint special economic
zones, obtained by this writer, listed a number of
specific ambitious plans to locate auto and
high-tech industries and tourism, among other
sectors, in the zones. Of particular attention was
the stipulation in page 10 of the document that
the economic zones will be run as a "joint
development and joint management" format.
"This is the first time for China and
North Korea to try this," said Piao in Beijing.
"They think doing this way will produce a better
result. So, I remain optimistic."
Xie Tao,
an expert on North Korea at Beijing Foreign
Studies University, disagreed. "Given the limited
potential of the North Korean economy and given
its political regime, I don't think economic
activities can go on successfully. I think the
projects have more symbolic political significance
than its economic merits," he said.
Xie
believes that China is mainly driven by political
reasons to keep the stability of its poor
neighbor. China, he added, also wants to establish
economic leverage with North Korea. "China used to
be regarded as the number one country that can
shape North Korea. But six-party talks, long
stalled, proved otherwise. These days, people have
come to think that China actually doesn't have
much influence over North Korea." In other words,
China wants to establish an economic leverage over
North Korea, which it will use to gain torque in
dealing with the North's nuclear issue.
Yoo Dong-ryul, a senior analyst on North
Korea at the Police Science Institute in South
Korea, doesn't think the joint projects will be
sustainable. "The same old problem of guarding
against capitalistic elements will play havoc with
the plan. North Korea will be only willing to open
a small hole, as seen in the mosquito net. It
won't let a bug called 'capitalism' from getting
in," said Yoo. While China wants to use the
economic incentives to goad North Korea into a
more conciliatory stance on denuclearization and
manage North Korean behavior, Jo at Ewha Womans
University in Seoul believes that North Korea has
its own calculations too.
"I think North
Korea wants to play a new diplomatic chess game,
by turning closer to China,'' Jo said. ''In the
past, the US was the only superpower. North Korea
was only interested in dealing directly with the
US in the "aid-for-denuclearization" formula. But
today China has become a member of the Group of
Two nations. China has become as useful as the US
is. By strengthening its ties with China, North
Korea wants to balance the US. This is Pyongyang's
new game."
Sunny Lee
(sleethenational@gmail.com) is a Seoul-born
columnist and journalist; he has degrees from the
US and China.
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