North Korea happy after China just bailed them out, say analysts

North Korea’s small ruling class probably has reason to rejoice even if no one seems to know if the Workers’ Party is about to name new leaders, which presumably would include Kim Jong-il’s third son and heir apparent, Kim Jung-un.

Long-time Korea watchers offer that view after recent uncertainty as to whether the party is staging its long-awaited “conference of delegates,” the first such gathering in more than 40 years.

“I don’t think it’s hunkering down,” says John Park at the US Institute of Peace in Washington. “It’s a celebration, and the celebration is well founded.”

Mr. Park, who directs the institute’s Korea working group, believes Kim Jong-il solidified deals with China’s President Hu Jintao during visits to China this spring and again last month that are buoying the country’s devastated economy and bolstering the tight-knit circle around him.

“Hu Jintao has just bailed out North Korea,” says Park, citing deals in economic development, tourism, and education that manage to circumvent the resolution adopted by the United Nations Security Council after North Korea’s second underground nuclear test in May 2009.

Although the relatively small number of people who run the country and control the economy are the main beneficiaries, he says, “the market benefits from cooperation with the Chinese side.”

Trickle-down economics, North Korea-style

In a North Korean version of trickle-down economics, Park finds “formal and nonformal trade” going on in a system in which free markets are inevitable regardless of regulations banning or highly limiting their activities.

“Markets are opening up,” he says. “It looks like the Chinese are moving in,” exporting a wide range of items, providing food, fertilizer and other necessities and investing in distant mountainous regions rich in coal and other minerals.

Ha Tae-keung, president of Open Radio for North Korea, which broadcasts news and views into the North for two hours every day, credits the deals struck by Kim Jong-il with forcing the North to ease up on customs control.

“That’s why businessmen feel it’s easier to trade with China,” says Mr. Ha, whose station picks up information from cellphone contacts inside the North, “Because of loose customs control, the markets are more open.”

Food shortages still abound

The image of somewhat improving conditions, however, is highly anecdotal, say analysts, and does not reflect the suffering of a majority of the country’s 24 million people, always short on food, medicine, and other daily necessities. Life inside North Korea differs widely depending on the geographical setting as well as the social and economic class.

“There’s a lot of conflicting information coming out of Pyongyang,” says L. Gordon Flake, executive director of the Mansfield Foundation in Washington. “You have a sense the government is reining in a lot of individuals in preparation for the succession.” – that is, the presumed eventual takeover by Kim Jong-un of the power held by his father.

Motorcycles are replacing bicycles inside the capital, inhabited mostly by privileged people who owe their livelihoods to one of the three central power groupings – the Workers’ Party, the government, or the armed forces. Kim Jong-il dominates the power structure as chairman of the national defense commission – and also is general secretary of the party.

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