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World & Nation

China launches economic projects in North Korea

In the aftermath of North Korean leader Kim Jong Il’s visit last month, Chinese companies in recent days have held a series of low-key groundbreaking ceremonies across the border for projects designed to jump-start the moribund North Korean economy.

The North Korean regime, largely out of desperation, has leased parcels of its territory to the Chinese. The parcels include grassy islands in the Yalu River, near the crossing made famous in 1950 when China intervened in its communist neighbor’s behalf in the Korean War; and ports at the northern tip of the country that will give China access to the Sea of Japan through North Korea for the first time in 150 years.

Chinese Vice Premier Wang Qishan and Jang Song Taek, Kim’s brother-in-law, attended a groundbreaking ceremony Wednesday for an industrial park on Hwanggumpyong, an island on the Yalu River, that is supposed to take advantage of Chinese capital and cheap North Korean labor.

Businesspeople working in North Korea say a similar ceremony was supposed to be held Thursday at Rajin, the seaport where Chinese companies are building another industrial zone, as well as a new road that leads to the port.

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The Chinese Commerce Ministry issued a brief news release Thursday saying that Chinese and North Korean officials had reached a consensus during three days of meetings this week that the economic development zones would be “government-guided, enterprise-based and market-oriented.” Details remained sketchy.

Pyongyang publicized the ceremonies, but official Chinese news outlets did not send reporters attend and carried just brief dispatches based largely on news releases. The lack of publicity in China may reflect Beijing’s ambivalence about doing business with an unreliable neighbor and a desire to avoid international criticism for propping up a nuclear-armed country with an abysmal human rights record.

“North Korea is under sanctions by countries such as the U.S., so they are looking for a way out,” said Joeng Hyung-gon, a research fellow at the Korea Institute for International Economic Policy in Seoul. “China is the only place they can go to ask for help.”

For the North Korean regime, the deals with China look like an easy fix for its tangle of diplomatic and economic woes. Kim Jong Il has set 2012, the centennial of the birth of his father, Kim Il Sung, as a deadline for North Korea to become a “strong and prosperous nation,” the government’s latest propaganda slogan.

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“In North Korean propaganda, this will be shown as Kim Jong Il’s brilliance,” said John Park, a specialist in North Korea-China relations at the Washington-based U.S. Institute for Peace. “They will say these are the seeds that will blossom into economic reform.”

Chinese businesses have already invested in North Korea with little success, Park said.

“There are a plethora of Chinese companies that tried to enter the North Korean market and got fleeced, and if they didn’t, the money they made was miniscule,” Park said.

North Korea needs to make up for the near-collapse of various joint ventures with South Korea since last year, when the sinking of a South Korean ship and an artillery barrage on an island brought inter-Korean cooperation to a halt.

In structure, China’s long-term leases of border territory are much like the deals North Korea struck with South Korea in the area just north of the demilitarized zone that separates the two countries.

China reportedly signed a 50-year-lease for the 4.6-square-mile Hwanggumpyong, where a 30-minute ceremony was held Wednesday. The South Korean Yonhap news service reported that large balloons flew overhead with the slogans “Friendship between China and North Korea” and “Joint Development.” The low-lying island, south of the Chinese city of Dandong, is currently used for farmland and a North Korean military installation. A smaller island called Wihwa is also part of the deal.

The Chinese are also building a new bridge to the islands that is eventually supposed to be extended to reach to the North Korean mainland.

No doubt the most attractive part of the package for China is the access to the port in Rajin, part of a larger special economic zone known as Rason. In 1860, China’s weak Qing dynasty signed a treaty that ceded a long strip of coastline to Russia, leaving Chinese Manchuria landlocked. The use of the port in Rajin makes it easier to transport raw materials from the resource-rich region of northeastern China to the industrial hubs in southern China. In December, the Dalian-based Chuangli group, which had spent $3.6 million renovating the port, shipped 20,000 tons of Manchurian coal through the North Korean port to Shanghai.

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“It is faster and cheaper to ship through North Korea’s port than to use the railroads,” said a businessman who was in Rajin this week as preparations were underway for the groundbreaking. “Everybody in Rajin is very excited about what the Chinese are doing. They think it will bring jobs.”

barbara.demick@latimes.com

Jung-yoon Choi of The Times’ Seoul bureau contributed to this report.


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