However, in spite of the impressive growth in trade volume, in purely economic terms North Korea is of very secondary importance to China. Loud talk of a Chinese “economic takeover of North Korea” should not obscure the fact that the volume of trade between the North and China is a paltry $5.6 billion, while the volume of trade between South Korea and China is $246 billion—an impressive 44-fold difference.24 To put things in a more global perspective, China’s trade with Chile ($29 billion in 2011) is roughly five times larger than its trade with North Korea, even though Chile has a smaller population and, needless to say, is far more distant both politically and geographically.
To the extent China’s economic interests exist, they can be divided into three groups. First, Chinese companies are interested in North Korea’s mineral resources. North Korean deposits of coal, iron ore, and copper might not be exceptionally rich by world standards, but nonetheless are of considerable value to the resource-hungry China. Thus, over the last decade Chinese companies have negotiated a number of concessions on mining rights issues.
Second, China is interested in the use of North Korea’s transportation infrastructure. Three North Eastern Provinces of China are landlocked, so if a Chinese company in the vast and populous area wants to ship goods overseas, the nearest port is either Dandong or Dalian, about 1,000 km away. If China obtains the right to use port facilities on Korea’s East Coast, it will dramatically shorten the land routes and save much in transportation costs. It seems that the June 2011 decision to revitalize the special economic zone in Rason is related to this goal.
Third, Chinese small businesses are increasingly interested in outsourcing to North Korea, where wages are well below what would be acceptable for Chinese unskilled and semiskilled workers. In North Korea, local girls are willing to work at a Chinese-operated sweatshop for $20–25 a month. In China, an entrepreneur would have to pay some $100 a month for the same job.25
Growing economic dependency on China worries Pyongyang. For decades, the North Korean government has been very good at avoiding exclusive dependence on just one donor, since Pyongyang politicians liked to use the donor countries’ rivalry to its advantage.
Therefore, one should not be surprised that China is not treated too favorably by internal North Korean propaganda (this was also the case for the Soviet Union when it was the major donor to North Korea in the 1980s), and the North Korean minders do express their dislike for the Chinese even to trusted (sort of) foreign visitors. The North Korean public and, especially, North Korean officials are frequently reminded by their superiors that they should not get too cozy with the Chinese. In 2007 North Korea’s state media reported on alleged spies of an unnamed foreign country being unmasked by the North Korean security service. No details were given at the time, but hints indicate that these real or alleged spies were working for China.
The North Korean elite has good reason to be cautious. It is true that China would prefer to see Korea divided and hence favor a separate regime in Pyongyang, but this does not mean China has to maintain the Kim family in power. China seems to be the only power that has the potential to intervene in North Korean domestic affairs when and if it sees some serious need to do so. The North Korean leadership seems to take seriously the probability of another Chinese-backed conspiracy, somewhat similar to the August conspiracy of 1956. China is not eager to intervene directly in the internal politics of Pyongyang, since it has no reason to jeopardize the status quo that, on balance, serves China’s interests reasonably well. But things may very well change eventually.
As we will see later, there might be situations in which the North Korean elite changes its attitude toward China. However, that will most likely be a last resort—if, for instance, an acute domestic crisis arises. For the time being, however, Pyongyang clearly prefers to keep Beijing at arm’s length.
The degree of not-so-hidden mistrust between Pyongyang and Beijing is well demonstrated by what David Straub once aptly described as “the strategic partnership fantasy,” quite widespread in North Korean ruling circles. In spite of all the anti-American rhetoric, frequently of almost comical bellicosity, in confidential talks North Korean dignitaries often suggest that North Korea does not really mind becoming an ally of the United States, thus helping Washington to deter China (for a hefty reward, needless to say). When I myself first heard such remarks from a North Korean official, I was taken aback, but then it became clear that such hopes are regularly expressed to foreign interlocutors, including influential Western diplomats or ex-diplomats (of whom David Straub is one). This dramatic reorientation is not going to happen, to be sure, but the existence of such unrealistic expectations speaks volumes about the actual attitude toward China in Pyongyang’s ruling circles.
Many in the United States, especially in the last few years, have expressed a hope that China can use its alleged influence in Pyongyang in order to somehow press North Korea into denuclearization. Alas, this hope is unfounded since China has very limited leverage when it comes to dealing with North Korea. As all major partners of North Korea (including Seoul, Moscow, and Washington) have learned to their dismay, significant economic involvement with and assistance to North Korea does not translate into comparable political leverage.
Theoretically China could make the economic situation of North Korea extremely difficult by halting aid and putting severe restrictions on cross-border trade. If China wished to do so, it could plunge North Korea into another economic disaster that might even exceed the Arduous March of the late 1990s. However, China cannot fine-tune North Korean politics and squeeze concessions on the issues North Korean leaders see as vital for their survival. A senior South Korean diplomat once told the present author, “China doesn’t have leverage when it comes to dealing with North Korea. What it has is not a lever, but rather a hammer. China can knock North Korea unconscious if it wishes, but it cannot really manage its behavior.”
Contrary to the expectations of some optimists in Washington and Seoul, China has little reason to use this “hammer.” The problems created by North Korea’s risky behavior and its nuclear program are seen in Beijing as less significant than the problems likely to be created by a serious domestic crisis in North Korea and/or by the emergence of a unified Korean state on China’s border. China prefers to maintain a status quo, which has many downsides, but on balance seems to be better than any of the likely alternatives.
INTERLUDE
The Contours of a Future: What Might Happen to North Korea in the Next Two Decades
Let’s be frank: it is beyond humans’ power to predict the future. History has a very long (and still growing) list of prophets whose confident predictions have been proven completely wrong. Many widely anticipated events never happened, while a number of pivotal changes came absolutely out of the blue.
Having made these necessary precautionary remarks, the author nonetheless intends to engage in some speculations on the likely future (or rather futures) of North Korea. Of course, the reader should not forget that this discussion is speculative by its very nature, so the author will make generous use of such adverbs as “plausibly,” “probably,” and “perhaps” as well as such verbs as “might” and “seem.”
It seems that the future development of North Korea will consist of three stages. The first stage is the present stage of stability. It might be called “Kim Jong Il’s stability” but it is likely to continue for a while under Kim Jong Un as well. However, the current system is both unsustainable and unreformable, so “Kim Jong Il’s stability” is likely to end in a dramatic crisis.
There are a number of triggers that might unleash this crisis, as well as a number of ways in which it may unfold. However, North Korea will not, probably, remain unstable for any length of time. There are good reasons to believe that the crisis period, as chaotic and dangerous and violent as it might be, will be relatively short, so some sort of new and relatively stable political and economic regime will emerge.
WHY NORTH KOREA IS LIKELY T
O CONTINUE FOR A WHILE (BUT NOT FOREVER)
If one reads newspaper reports about North Korea, one cannot help but get a very dire picture of an insane dictatorship whose leaders enjoy a seemingly meaningless saber-rattling while their subjects live under the constant threat of another murderous famine. This is not true: in North Korea, the saber-rattling is actually a carefully premeditated component of diplomacy, and the internal economic and political situation is not as grim and unstable as most newspaper reports tell us (but grim nonetheless).
From time to time newspapers shower readers with the predictions of a looming mass starvation in North Korea (often with an implicit—and unfounded—assumption that it might provoke regime collapse). These headlines come out more or less every year, usually in spring. In March 2011 the New York Times wrote: “North Korea: 6 Million Are Hungry.” One year earlier, in March 2010, the Times of London warned: “Catastrophe in North Korea; China must pressure Pyongyang to allow food aid to millions threatened by famine.” In March 2009, the Washington Post headline said: “At the Heart of North Korea’s Troubles, an Intractable Hunger Crisis.” In March 2008, the International Herald Tribune ran a predictable headline: “Food Shortage Looms in North Korea”1 The predictions of the gloom come every year, but famine does not.
Indeed, over the last years there have been times when the food situation deteriorated, perhaps nearly to the point of another famine outbreak. Nonetheless, on balance the last 5 to 10 years can be described as a time of modest but undeniable improvement of the economic situation in North Korea.
Economic statistics are murky, but they seemingly indicate that by 2005 North Korean GDP has roughly returned to the pre-crisis level of the late 1980s. According to the estimates of the Bank of Korea, widely believed to be the most reliable (or, better, the least unreliable) assessments of the North Korean economy, the GDP growth in 2000–2011 averaged 1.4 percent per annum.2 A moderate increase, to be sure, but an increase nonetheless. Of course, one can and should be skeptical about the exactness of the figure—Marcus Noland, one of the world’s best experts on the North Korean economy, loves to repeat: “Never trust a datum about the North Korean economy that comes with a decimal point attached.” However, anecdotal evidence and observations generally support such mildly optimistic estimates.
Malnourishment remains common (this has been the case for decades), but after 2000, few if any North Koreans have starved to death. “Capitalism from below” brought social stratification, but the new middle class can now afford items that were unheard of in Kim Il Sung’s time. DVD players are common. Refrigerators remain rare, but are no longer exceptional, and even a computer in a private house is not seen any more as a sign of extreme luxury.
The improvement is especially noticeable in Pyongyang. The huge avenues of the North Korean capital, once infamous for their complete lack of traffic, are now reminiscent of the streets of 1970s Moscow—traffic is not too heavy, but clearly present. In older parts of the city, where streets are not that wide, one can occasionally even encounter traffic jams, once completely unthinkable. Visitors and richer Pyongyangites alike can feast on numerous delicacies in a multitude of posh restaurants, which have popped up around the city in recent years. Expensive shops stocking luxury goods are becoming more numerous as well. Gone are the days when a bottle of cheap Chinese shampoo was seen as a great luxury, since nowadays one can easily buy Chanel in a Pyongyang boutique.
This slow improvement of the economic situation might actually prove to be dangerous for the regime. Without radical reforms North Korea might grow moderately, but it is not going to achieve a growth rate that would be compatible with that of China or South Korea. Therefore the huge income gap, the major potential source of political trouble, will keep growing. At the same time, less daily economic pressure means more time to think, talk, and socialize for the North Korean citizens—and this is not good news for the regime. Contrary to the common perception, people seldom start revolutions when they are really desperate: in such times they are too busy fighting for physical survival. A minor but insufficient improvement in people’s lives is what authoritarian regimes should fear most.
As we have seen before, the most rational survival strategy for the North Korean government is to avoid reforms, to continue the zero tolerance policy in dealing with internal dissent, and to inhibit and, whenever possible, roll back the spontaneous growth of the capitalist institutions. Kim Jong Il seemingly understood this well enough, but it remains to be seen whether his young successor will fully realize the importance of these requirements.
It is quite possible that for a decade or two the regime will succeed in its efforts to maintain the status quo. However, this political success will come with a deadly price: it will prolong economic stagnation. The longer the center will hold, the greater the gap between the North and its neighbors—above all South Korea—and the greater the potential for a future explosion.
It seems that no amount of government effort can possibly roll the situation back to what it used to be under Kim Il Sung in the 1960s and 1970s. In those days, North Korea’s version of “national Stalinism” was viable because at that time many North Koreans were willing to accept and even support the system and because Korea still had a lot of untapped resources that could be mobilized for the needs of the industrial economy. The international environment was also very different half a century ago. In the 1950s North Korea then boasted the most advanced economy of continental Asia and was surrounded by poor and dictatorial regimes. Last but not least, it was so much easier to keep people isolated and ill-informed before the advent of the digital age.
The situation has changed. The initial popular enthusiasm for the promises of Stalinism has long evaporated. North Korea is lagging hopelessly behind all its neighbors in terms of both economic performance and individual freedoms (even China looks like a true democracy to the average North Korean). Information is getting inside the country thanks to the development of new media—DVD players, tapes, transistor radios, and, increasingly, computers. The North Koreans are slowly losing their fear of the government and are increasingly willing to raise dangerous political topics in their private interactions. This does not bode well for the long-term future of the regime. Its final crisis can be postponed but by no means prevented.
The ongoing generation shift might be especially dangerous for the regime. Those North Koreans who are now below the age of 35 are very different from their elders. They have not been subjected to intense ideological indoctrination, and they lived in a world where everybody knew that newspapers were not telling the complete and only truth. They do not remember the times when the state was seen as a natural giver of all things—for many of them, the state and its officials are merely a swarm of parasites. They know that the outside countries are doing well, and most of them are aware that the North is lagging hopelessly behind the South. They also grew up in more relaxed times, when state terror was scaled down, and hence they are less afraid to speak about dangerous topics. This new generation might constitute a serious problem for the Kim family, but it will take a decade or two before this problem will become acute.
CONTOURS OF A COMING CRISIS
Currently it seems that there are four likely scenarios that might bring an end to the era of “Kim Jong Il’s stability,” triggering a dramatic crisis. These scenarios are attempted reforms, factional clashes in the leadership, spontaneous uprisings, and the contagion of a revolt in China.
The first scenario of the final crisis is an attempt at reforms more or less similar with those of China and Vietnam. This statement might appear to contradict what I said earlier: I have argued that the North Korean leadership understands the inherent danger of Chinese-style reforms and will not take the risk.
However this was said in the context of the Kim Jong Il era’s North Korean leadership—and this leadership is changing. It is true that Kim Jong Un inherited most of his advisers from his father, but these people are now well in their 70s if not 80s,
so they are likely to be replaced in the near future. Indeed, it has been reported that some very young North Korean princelings, grandchildren of Kim Il Sung’s comrades-in-arms, have begun their meteoric ascendancies to high-level positions. Even though Kim Jong Un’s advisers and confidants will be largely children or close blood relations of his father’s advisers, this does not preclude them from having vastly different views on many important issues. These people—including, above all, Kim Jong Un himself—might be seduced by the glamour of Chinese reforms. They might hope to emulate the success of the great neighbor while enriching and empowering themselves in the process (pretty much like the Chinese party cadres have done). They also might feel sorry for the plight of North Korean commoners—after all, the history of many an aristocracy has shown that the descendants of brutal robber barons and sadistic warlords sometimes have surprising bleeding hearts.
Therefore, these people might take the risks their fathers considered unacceptable. A “Pyongyang Spring” might be initiated by the new rulers, out of greed, idealism, and naivety. Such a “Pyongyang Spring” will surely generate a great wave of enthusiasm and rosy hopes in the international media. One can easily imagine CNN journalists running enthusiastic reports about, say, a McDonald’s outlet opening next to Kim Il Sung Square or, perhaps, broadcasting an interview with an iconoclastic North Korean academic who will courageously tell his students that Kim Il Sung occasionally made mild mistakes, so the Great Leader’s policy should be considered as merely 85 percent correct.
Such changes are likely to be greeted with much enthusiasm by the international media, which will perceive (and present) these news items as a proof that the North Korean problem is solving itself. But one should not be fooled by this hype and rosy expectations. A reforming North Korea will be less, not more stable than the repressive and stagnant North Korea of the late Kim Il Sung and Kim Jong Il eras.
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