As North Korea's economy grows, Kim tries to wield a double-edged sword
| Beijing
When R眉diger Frank听visited a shopping center in the North Korean capital in February, he was amazed to find not one, but at least 10 different kinds of toothpaste for sale. Customers could buy whitening toothpaste, children鈥檚 toothpaste, and toothpaste made with 鈥渘anotechnology鈥� that sold for 30,000 won, about $33.
鈥淲e need to understand that North Korea is in the middle of a consumerist transformation,鈥� Professor Frank, the head of East Asian studies at the University of Vienna,听, a website on North Korea news. For decades, North Korean leaders viewed too much variety in consumer products as wasteful and, even worse, capitalistic. 鈥淭oday, 10 types of toothpaste? Fine, if customers buy and a profit can be made,鈥� Frank wrote. 鈥淭his is the new thinking in North Korea these days. Competition is everywhere.鈥�
Like many things about North Korea, the exact causes of new economic trends are something of a mystery. Obtaining official data is virtually impossible. But analysts who closely follow the country鈥檚 economy say it has shown signs of growing prosperity 鈥� a major goal of its leader, Kim Jong-un, to secure his grip on power. But there's a catch: Every step toward economic reform risks looking like a step away from core principles of a centrally planned, socialist state.
Of course, North Korea鈥檚 economy is far from booming, and poverty among the country鈥檚 25 million people remains widespread. Two in 5 North Koreans are undernourished, and more than 70 percent of the population relies on food aid, according to a听听published in March. A sudden听听this month has sparked price hikes and raised fears of an economic slowdown.听
But the economic growth North Korea has achieved 鈥� however incremental 鈥� underscores that Mr. Kim鈥檚 ambitions extend beyond developing a nuclear warhead capable of reaching the US mainland.
The escalation of rhetoric over the North鈥檚 weapons program has rattled the world, which roundly condemned an April 29 test missile launch, though the test failed. The North has also said it will continue to test its nuclear weapons, which it has done five times before, including twice in 2016.
Still, establishing a nuclear deterrent is only half of Kim鈥檚 鈥渂yungjin鈥� strategy, or 鈥渟imultaneous progress.鈥� Economic development is the other half 鈥� and the one that鈥檚 arguably more ambitious.
Andrei Lankov, a historian of North Korea at Kookmin University in Seoul, says Kim is eager to听听by pushing it away from a state-dominated system. The young leader is gradually dismantling a Soviet-style command economy in favor of promoting private business and entrepreneurship, Professor Lankov says, much as China did starting in the late 1970s.
That already-risky move is further complicated by the history of North Korea's private markets.听As widespread famine took hold in the 1990s听鈥� a disaster estimated to have killed between several hundred thousand and 1 million North Koreans听鈥� families turned to informal, illegal bartering as the state-controlled food rationing system thinned.
罢辞诲补测,听听the private sector accounts听for 30 to听50 percent of North Korea's gross domestic product. By allowing it to grow, Kim hopes to reduce the risk of a popular uprising sparked by economic stagnation 鈥� the risk of which could increase as North Koreans catch more glimpses of dramatically better-off lifestyles across the border.听The challenge he now faces is figuring out how to pursue deeper market reforms while maintaining at least the appearance of state control.
鈥淚f he admits it, it will be bad for stability. That would mean admitting the system created by his grandfather is not perfect,鈥� Lankov says, referring to Kim Il-sung, the founding leader of North Korea. But pursuing reforms 鈥渋s exactly what he鈥檚 doing, and the policy is working.鈥澨�
The economic changes are evident on the streets of Pyongyang. Traffic on the capital鈥檚 wide avenues has gotten heavier in recent years as听听and taxi services have increased, according to听. Electric bicycles have become more ubiquitous, too, another sign of rising affluence among the emerging middle class.
Lankov says one of the biggest changes has occurred in agriculture, where family farms have taken the place of many state-owned farms and led to an increase in food production. Yet some analysts are听听听such reforms have been. Others question whether many of Kim鈥檚 economic policies qualify as reforms at all. Marcus Noland, an expert on the North Korean economy at the Peterson Institute for International Economics in Washington, says the leader has relaxed restraints on domestic economic activity rather than remove them.
鈥淚 would say Kim has not actually done reforms,鈥� Dr. Noland says. 鈥淲hat he鈥檚 done is stop enforcing the law and effectively decriminalize a lot of economic activity.鈥�
For example, while it remains illegal to open a private business, the law is seldom enforced. Noland says well-connected entrepreneurs can buy the status of a state-owned company for the right price.听Such practices started in the 1990s under the late Kim Jong-il, but Noland says they have picked up under his son.
鈥淯nlike his father and grandfather, Kim Jong-un appears to be comfortable with bling,鈥� Noland says. 鈥淗e appears to be comfortable with a degree of social division based on access to money and wealth.鈥�
It is uncertain if Kim鈥檚 acceptance of a widespread illicit economy could lead to formal policy changes. Although it remains difficult to predict, Benjamin Katzeff Silberstein, an associate scholar at the Foreign Policy Research Institute in Philadelphia and co-editor of the blog North Korean Economy Watch, says the leadership appears to be heading in that direction.
鈥淭he overarching trend, especially since Kim Jong-un came to power, is one towards the formalization of market mechanisms,鈥� he says. 鈥淥verall the government is in much more control over something that used to be antithetical to the socialist system.鈥�
In what is perhaps a sign of North Korea鈥檚 shifting economic principles,听听in a newspaper published by Kim Il-sung University, the country鈥檚 top school, stressed the importance of increasing corporate profits.
鈥淣et profits gained by individual corporations are fundamental to the establishment of a powerful economy,鈥� the article said, according to South Korea鈥檚 Yonhap news agency. But the article was careful not to suggest an end to the state-controlled economy, adding that 鈥渋n our country's socialist system, corporations' independent management activities are to be carried out under the guidance of the party right down the line.鈥�
