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North Korea: Witness to Transformation

Sources: Adam Cathcart on Hwanggumpyeong and Wihwa

by | July 15th, 2014 | 07:22 am
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Adam Cathcart’s SinoNK is one of our go-to sources, in part because Cathcart and the writers for the blog visit the border zone frequently, and in part because they draw heavily on Chinese sources others don’t pick up. Cathcart was recently in Washington where he presented a new paper at the Korea Economic Institute on the Hwanggumpyeong and Wihwa SEZ’s. (A direct link to the full text is here; for further background, see our own posts on the two zones and investment more generally.)

A new look at the zones is warranted by the fact that they appeared to fall under the management of Jang Song-thaek; as we noted at the time, Jang’s fall raised the question of whether North Korea’s commitment to the zones would continue. Cathcart provides an excellent overview of the troubled history of the two islands. He details early Chinese critiques, including that North Korea was not investing in basics such as flood control, as well as ongoing institutional and legal squabbles. Outside of investment in a costly bridge—Cathcart estimates as much as $350 million—the lack of Chinese investment in the zones reflected ongoing problems even prior to Jang’s demise. Cathcart details negative reactions to Jang’s purge in China, but he also makes an interesting and obvious link we had missed: that North Korea’s push to set up SEZ’s occurred at the same time as the Jang purge and effectively sidelined all of the effort that the Chinese had invested in the two islands; as Cathcart points out, one of the proposed SEZ’s in Sinuiju would be directly competitive.

Cathcart concludes that there are still political forces in China that are seeking continuity with the zone projects, in effect trying to calm the waters. But the larger arc of Cathcart’s narrative is that the North Koreans seem unable to commit to such projects in a sustained and credible way. The open questions are “why.” Possible answers include fear of Chinese dominance, ongoing struggles over rents, and interference from conservative forces opposed to the effort. Our favored explanation, however, is simple failure to understand the institutional and physical infrastructure required to make such projects work. A must-read piece for anyone interested in the prospects for reform.

Comments (2)

Have a look beyond China, which influence on North Korea obviously is diminishing:
nk news is wondering about the sharp decline of North Koreas imports of oil from China – and has no explanation for that fact.
Maybe the barter-deals with Mongolia meanwhile are in place and working. (By the way: High level delegation of Mongolian government is in Pyongyang at the moment to further deepen economic ties)
And later this week Rajin terminal officially will be inaugurated by a Russian delegation. A South Korean business delegation is expected to take part in that event.
And you know: The Japanese delegation with Antonio Inoki some days ago visited Kaesong industrial zone.
North Korea systematically is developping its options.

Roland July 16, 2014 | 1:16 am

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thank you for the link

ZacharyT July 15, 2014 | 7:50 am

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