OPINION: China's flagging economic aid to North Korea

Jakarta (The Jakarta Post/ANN) - North Korea's new leader, Kim Jong-un, has ambitions to revive the country's collapsed economy as it is the only way to preserve his family's control over the country.

He has taken an important preliminary step by reducing the military's control of the economy. But his ambitions may backfire as the country has been under a military dictatorship for a very long time and the regime has little knowledge about market-based development, the key to China's economic might today.

In a meeting with Kim's special envoy last Friday, Chinese President Hu Jintao and Premier Wen Jiabao delivered a clear message urging the North Korean leader to prioritise efforts to reviving the country's frail economy.

Perhaps this is an indication of Beijing's growing concern about Pyongyang's dependence on Chinese economic assistance, and the little gratitude it has received in return for its extreme generosity.

Pyongyang's stubbornness to go ahead with its nuclear weapon development programme is alarming, not just for its neighbours such as Japan and South Korea, but eventually also for China.

North Korea has little experience in opening its market to foreign investors and the few foreign companies allowed in, including those from China, have complained they were cheated.

The continuously increasing number of starving people represents a major potential threat to China's national security in the event of a regime collapse and a subsequent flood of refugees spilling over the border.

The failure to achieve food security in North Korea could destabilise the already fragile Korean Peninsula and the broader East Asia region.

During Friday's meeting, the two Chinese leaders emphasised the strategic importance of North Korea as they sat down with Jang Song-thaek, Kim Jong-un's uncle and chief of the central administrative department of the Workers' Party of Korea (WPK), but also underlined the need to follow in China's footsteps in developing the North Korean economy.

According to China Daily, President Hu reiterated Beijing's full support for Pyongyang's economic development. "The President expressed a wish for both sides to [...] explore new ways of cooperation and advance key projects including cooperation and development of economic zones," the official newspaper reported on the meeting.

Meanwhile, Premier Jiabao assured Jang Song-thaek that China "resolutely supports the DPRK [North Korea] developing its economy and improving people's livelihoods".

Jong-un himself has recently told a Chinese official that "developing the economy and improving people's livelihoods so that the Korean people can lead happy and civilised lives is the goal that the Korean Workers' Party is working toward."

While military tensions escalate between its three powerful neighbours - China, Japan and South Korea - with Japan moving closer to direct confrontation with China and South Korea over territorial claims, North Korea's Kim Jong-un is focusing on how to salvage his nation from bankruptcy.

The young leader has apparently realised that he has no choice but to take quick action to rebuild the economy, as it is only a matter of several years before his regime will collapse if nothing is done to get the military-controlled economy back on track.

North Korea is now totally isolated following the decision of fellow dictator state Myanmar to drastically distance itself from Chinese economic backing and begin a series of political reforms.

The two countries were allies in terms of their isolation from the outside world at the expense of starving millions of their own citizens and forcing millions of others to endure extreme poverty.

Just days after the meeting in Beijing, The Associated Press (AP) had a rare economic report from Rason, North Korea, located near the Chinese city of Yanji, on Tuesday.

The American news agency was invited to cover a trade fair in Rason, one of the country's special economic zones. Local officials boasted that foreign investment would receive maximum facilities and incentives. They also promised to amend more restrictive laws to ensure the comfort of foreign investors, mainly from China.

North Korea has created special economic zones since 1991. In 2004, it opened a similar facility near the Demilitarised Zone (DMZ) for South Korean companies.

But trading with North Korea is not easy, as Indonesia already knows. While Soeharto was in power, he wanted to boost trade ties with Pyongyang as part of his strategy to boost his international stature.

However, he soon realised that Pyongyang's limited foreign exchange reserves made it difficult to continue his plan. Until today, Indonesian companies remain reluctant to make major deals with the communist country.

South Korean conglomerate Hyundai also had a bitter experience there, although it continues to maintain a presence for long-term purposes.

Likewise, Chinese companies have experienced difficulties in dealing with the North Korean bureaucracy. Xiyang Group complained via a website that "investment in North Korea was a nightmare. Business with North Koreans over the past four years has taught us that they are swindlers and robbers."

The company lost its US$37 million investment there. Last year, Chinese trading authorities reportedly cautioned private companies to be extra wary about investing in North Korea.

Indonesia has always had a strong interest in playing a prominent role in bringing peace to the Korean Peninsula, and it has maintained good relations with North Korea for decades, which has in turn built Pyongyang's confidence in Jakarta.

President Susilo Bambang Yudhoyono, with the help of the Foreign Ministry, needs to launch a new mission to share its experience with North Korea in dealing with foreign investment.

Indonesia's experience shows that cheating foreign investors will only benefit a few government officials and private companies, while the costs have to be paid by the whole nation.

The writer is Senior Managing Editor at The Jakarta Post.


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippines backs support for small enterprises at APEC meet

    MANILA, Philippines (AP) — The Philippines' top trade official on Saturday called for support for the integration of micro, small and medium enterprises in global trade, which he said would help reduce poverty and inequality in the Asia-Pacific region. …

  • US renews travel warning to Mindanao
    US renews travel warning to Mindanao

    The US State Department renewed its warning about the risks of travel to the Philippines, in particular to the Sulu archipelago, certain regions and cities of Mindanao and the southern Sulu Sea area. In an update on Wednesday of a travel warning it issued Nov. 20, 2014, the State Department said US citizens should continue to defer non-essential travel to the Sulu archipelago due to the high threat of kidnapping of international travelers and violence linked to insurgency and terrorism there. …

  • Phl gains support for APEC Action Agenda
    Phl gains support for APEC Action Agenda

    The Philippine initiative to put the interests of micro, small and medium enterprises (MSMEs) front and center in global and regional trade has made significant progress following the conclusion on Thursday of the 2nd APEC Senior Officials’ Meeting (SOM2) and Related Meetings in Boracay, Aklan. Called “The Boracay Action Agenda to Globalize MSMEs,” the Philippine proposal calls for a host of specific, concrete and practical interventions that APEC economies can implement to provide MSMEs wider …

  • Phl to join Bangkok meet on Rohingya crisis next week
    Phl to join Bangkok meet on Rohingya crisis next week

    The Philippines will join a 15-nation meeting in Bangkok, Thailand next week to address the migration crisis involving thousands of Rohingyas who escaped persecution in Myanmar and Bangladesh. Justice Secretary Leila de Lima bared this yesterday after meeting with United Nations High Commission for Refugees (UNHCR) representative to the Philippines Bernard Kerblat. In an interview, De Lima said the Philippine government has been invited to the meeting. …

  • Magnitude 4.2 quake jolts Sorsogon
    Magnitude 4.2 quake jolts Sorsogon

    LEGAZPI CITY—A magnitude 4.2 earthquake hit Prieto Diaz town in Sorsogon before dawn yesterday, the Philippine Institute of Volcanology and Seismology (Phivolcs) said. …

  • Drought-resistant rice breeds bared
    Drought-resistant rice breeds bared

    SCIENCE CITY OF MUÑOZ, Nueva Ecija – Amid the searing heat, the Philippine Rice Research Institute central experiment station here has identified nine rice breeds which have been proven to be drought-resistant and produce high yields in temperatures as high as 38°C based on a recent study. Thelma Padolina, lead researcher of the study titled “Screening of rice-induced mutants for heat and drought tolerance,” identified the breeding lines as the Ballatinaw lines, PSB Rc72H and Azucena lines. …

  • Phl, US assert rights, ignore China warning
    Phl, US assert rights, ignore China warning

    The United States military will continue air and sea patrols in international waters even after the Chinese navy repeatedly warned a US surveillance plane to leave the airspace over artificial islands China is creating in the disputed South China Sea. The Philippine government also declared it would continue activities in the region, calling on China to respect freedom of navigation and aviation. “Our position on the importance of letting freedom of navigation, freedom of aviation and …

  • MM shutdown eyed for quake drill; 6 schools warned
    MM shutdown eyed for quake drill; 6 schools warned

    Electricity and mobile phone services would be cut throughout Metro Manila, and all private and government offices and businesses, including shopping malls, would be closed. That would be the situation on July 16 between 3 and 8 p.m. to simulate the scenario of a 7.2 magnitude earthquake. The Philippine Institute of Volcanology and Seismology (Phivolcs) has warned that an earthquake of that magnitude could occur and kill at least 33,500 people and injure at least 113,600 others following a …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options