North Korea moves against a tiny pocket of capitalism

In the markets of Kilju, a city of 100,000 near North Korea’s eastern seacoast, the ruling Korean Workers’ Party has ordered the removal of Chinese-made cookies, candies and pharmaceuticals.

Even soybeans, many articles of clothing and shoes are now forbidden.

It is all part of a great leap backward taking place in the secretive autocracy. North Koreans interviewed in China in recent weeks say that the regime of Kim Jong Il has made a concerted effort to roll back reforms that had over the last decade liberalized the most strictly controlled economy in the world.

“They’re telling us that we don’t need markets and that socialism provides everything we need,” said an unemployed factory worker in her 50s, who gave her name as Lee Myong Hee. (North Koreans outside their country often give fake names because speaking to foreigners can be considered treason under North Korean law.)


Lee sneaked across the border last month into China, hoping she could make some money for her family. Thin and nervous, her body sculpted by a diet of two bowls of porridge each day, she said the party’s unbending ideology has squeezed the life out of the city’s economy.

“If they don’t give us food and clothing and we’re not allowed to buy things, how can we survive?” Lee said, tears rolling down hollowed cheeks.

The Korean Workers’ Party has banned the sale and swapping of apartments, practices that were widespread for more than a decade. The open-air markets where people do most of their buying and selling are now open only from 2 p.m. to 6 p.m. The only people permitted to sell at the markets are women older than 50; everybody else is required to spend their days at their official jobs at government-run businesses.

So many Chinese goods are now taboo that markets stock only about 35% of the merchandise previously available, some say.


“They want to promote our own products made in North Korea, but since everything is ‘made in China,’ there is nothing to buy,” said Kim Young Chul, a civilian working for the North Korean military who had come to China to sell wild ginseng on behalf of his employer.

The economic restrictions reflect the rising power of the hard-liners within the staunchly communist regime and go hand in hand with the belligerent mood that led to North Korea’s May 25 nuclear test. Those jostling for power in the scramble created by the failing health of 68-year-old North Korean leader Kim Jong Il are raising the banner of juche, the term coined by his father, Kim Il Sung, the country’s founder, for an ideology emphasizing self-sufficiency.

North Korea has in effect scuttled dialogue with the United States, South Korea and Japan, shut down South Korean business interests within its borders and evicted many humanitarian aid operations.

“The North Koreans want to close off their country so they will not be hurt by sanctions. They think everybody is out to ruin their country and they are getting rid of anything that could be a threat,” said Cho Myong-chol, a former economics professor at Pyongyang’s Kim Il Sung University who defected to South Korea in 1994.


Kilju is an agricultural and industrial city in North Hamgyong province, known to the outside world for its proximity to North Korea’s Musudan-ri missile base and to the underground site of the May nuclear test, about 30 miles to the northwest.

Like other remote North Korean cities, it was decimated by famine in the mid-1990s when the public distribution system for food broke down. As a consequence, the government was forced to loosen its grip on the economy.

Farmers markets that had been permitted to sell homegrown vegetables, usually laid out on tarpaulins on the ground, gradually expanded. Traders (many crossing the border illegally) started importing Chinese goods, including children’s sneakers, bananas and DVD players. North Koreans brightened up their famously drab landscape a bit by wearing pinks, polka dots and paisleys, occasionally sporting T-shirts with English writing.

In 2002, the North Korean regime belatedly legalized the markets and in many cities built stalls and enclosures to rent out to vendors.


The dismal state-owned stores closed their doors and mysterious North Korea began to look a little more like other countries.

But then, the pendulum started to swing backward. In ideological sessions compulsory for all North Koreans, the Workers’ Party railed against markets as “hotbeds of anti-socialism.”

In recent months, the North Korean government has become as strict about what is exported as what comes in. The sale of soybeans -- a staple in the North Korean diet -- has been banned, with the explanation that they might be taken out of the country for re-sale in China.

“They tell us the army needs the soybeans and that our soldiers won’t be strong enough to lift their guns,” said Lee, the unemployed factory worker.


Kim Chol Hee, a trader from Yanji, a Chinese city near the border with a large ethnic Korean population, said it was harder now than at any time in the 10 years he’s been in business to import from North Korea.

“I used to bring in squid, crab, steel parts from Chongjin. We can still buy seafood, but the North Korean government won’t let us buy steel,” he said Kim. “They say they need to keep all their resources for themselves.”

Along the Tumen River, which runs along the border and which traders and defectors used to cross freely, North Korean guards are now posted every 10 yards instead of every 100 yards as they were a few years ago, residents say.

The crackdown has mainly targeted North Hamgyong province, which has had the most vibrant markets in the country because of its proximity to the Chinese border and its distance from Pyongyang, the capital.


Edicts from Pyongyang often have been met with resistance. In the province’s main city, Chongjin, vendors held a rare public protest in March 2008 outside the main Sunnam market after officials tried to ban younger women from trading, according to Good Friends, a Seoul-based Buddhist charity.

“Give us food or let us trade,” hundreds of woman reportedly chanted.

The protests forced Chongjin officials to reverse the order. But this year, Pyongyang has become more insistent.

“The controls are very strict right now,” said Lee. “If they find clothing with a South Korean label, the police will take it away. They’ll confiscate Chinese clothing too unless it’s old and ugly.”


“They tell us we can’t use Chinese makeup because it will give you blisters. . . . Chinese cookies will make you sick, they tell us.”

Kilju residents have not dared to hold public protests against the restriction. But the Korean Workers Party nonetheless might be fighting a losing battle. Much of the trading is done by people with powerful connections in the provincial government and the military. Many state-owned enterprises do illegal trading to raise cash for their operations.

For example, trader Kim Young Chul says he is responsible for raising about $900 each year for his work unit by selling ginseng, while he and his partners keep any additional profits.

“I have a lot of freedom. They don’t dare ask me too many questions in North Korea, because I work for the ministry,” said Kim.


Just as quickly as the Korean Workers’ Party issues a decree, people find a way to circumvent it. Vendors banned from the market bring out their mothers and grandmothers, while secretly running the businesses from behind the scenes. Others sell banned good from their homes, or simply stash it behind other merchandise.

“If you want to buy cosmetics in Kilju, you still can find them, but they are usually hidden underneath the table,” Lee said.

Once a loyal member of the Workers’ Party, Lee said she had remained devoted to Kim Jong Il up to her departure from North Korea in May, vowing that she would return home as soon as she got money for her family.

“Even the day I left, I was singing songs about Kim Il Sung and Kim Jong Il in my house,” said Lee. “Now that I’ve come to China, I’m not so sure.


“I begin to think isn’t it a waste to be spending money on a nuclear weapon when people are starving.”


Ju-min Park of The Times’ Seoul Bureau contributed to this report.