Sandip Kumar Mishra is an associate professor at the Centre for East Asian Studies.
North Korea's economic desperation
By Sandip Kumar Mishra
COVID-19, a once-in-a-century kind of pandemic, seems to have dealt an unprecedented blow to the North Korean economy. Even before the pandemic, North Korea's economy was reeling under the weight of U.S.-led sanctions over its nuclear program.
The bilateral trade with China was one of the key drivers of the sanctions-impaired North Korean economy. Trade with China constituted about 90 percent of North Korea's external commerce.
But with the sealing of North Korea's border with China to prevent the spread of the COVID-19 pandemic, there was reportedly an 80-percent plunge in bilateral trade. Not surprisingly, the pandemic, coupled with sanctions, may have broken the backbone of the North Korean economy.
To deal with the pandemic-induced economic hardship, North Korea has announced several desperate measures during the past year, beginning with admitting the failure of its five-year plans in August 2020.
Sacking the director of North Korea's Department of Economic Affairs, Kim Tu-il, on Feb. 5 of this year, who was appointed just a month before, was one such desperate measure. After the Workers' Party four-day plenary meeting, he was sacked for not being innovative enough in drafting the goals for the first year of the new five-year plan.
The goals set out for the next year in the action plan, presented by Kim Tu-il in the plenary meeting, were considered to have “passive and self-protecting tendencies.” Kim Jong-un reportedly said that “the Cabinet failed to play a leading role in mapping out the plans of key economic fields, and almost mechanically brought together the numbers drafted by the ministries.”
The 8th Congress of the Workers' Party was held from Jan. 5 to 12, and a new five-year plan was announced. North Korean leader Kim Jong-un openly expressed his disappointment with the past five-year plans as they “failed tremendously in almost every sector” and cited it as the reason for the premature conclusion of the previous five-year plan last December, which otherwise was supposed to have ended in April 2021.
The appointment of Vice Premier O Su-yong to replace Kim Tu-il means that North Korea is trying hard to find a way to move forward. Since external trade has dried up, domestic activities and innovative strategies are considered to be the only ways out.
North Korea wants to increase iron and steel production and investments, as well as focus on infrastructure, transportation, construction and commerce. There have been several reports specifically on how North Korea set its sights on the cement and construction industries. Kim Jong-un appears to be mindful that these goals do not remain just on paper, but are realized on the ground.
North Korea has recently been making efforts to reform its economic system. Kim Jong-un wrote a letter to the labor organization of North Korea for an “uncompromising struggle” against anti-socialist and non-socialist practices.
He also appealed for a “great leap forward” every five years to reactivate the national economy and improve people's standard of living. On the ground also, there are reports that the regime has begun to interfere with individual economic activities and is trying to eradicate private business outside the public market.
These measures have recently intensified. There are also reports that North Korea has ordered curbs on privately cultivated land (sotoji) in mountainous areas.
Fortunately, after partially opening its border trade with China, North Korea's imports from the neighboring country increased up to $12.97 million in March from just $3,000 in February. A further jump of 120 percent was seen in April when imports reached $28.75 million.
However, even with the revival of North Korea-China trade, everything will depend on the future course of the pandemic, while the North will have to keep struggling to revive its economy in the coming months.
Actually, North Korea appears to be doing a lot within its narrow framework, but the possibility of any real revival is very thin as the framework itself is being reviewed. Promoting innovation, suppressing individual market activities and stressing socialist collectivism are not consistent with one another.
It's being said that Kim Jong-un has focused more on the economic leg of the “byungjin” policy of simultaneously developing the military and the economy from early 2018, but the outcome has been dismal, at least so far. Similarly, these desperate moves in the past year may make lots of news, but their probable impact will not be substantial.
It is important to underscore that the economic performance of North Korea will have significant bearings on its strategic choices. The new U.S. administration of President Joe Biden has been in the process of unveiling its North Korea policy, and the moribund North Korean economy will restrict Kim Jong-un's negotiating positions.
The author (sandipmishra10@gmail.com) is an associate professor at the Centre for East Asian Studies, in the School of International Studies, the Jawaharlal Nehru University, New Delhi, India.