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 (
[email protected]) is a Seoul-born columnist and journalist; he has degrees from the US and China.
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