February 26, 2011 08:27
North Korea's Rajin-Sonbong special economic zone is seeing a rapid influx of Chinese businesspeople as the impoverished country becomes more desperate amid international sanctions and the aftermath of a botched currency reform. The zone was established in 1991 to attract hard currency but had been practically idle except for a few small traders, due to tight controls by state security.
But now sources say Beijing seems to think it is high time to persuade the North to reform and open up as the economy is on the verge of collapse. It is pressuring the regime to develop Rajin-Sonbong into a model of Chinese-style reform, and it needs to use a port there for its own Tumen River project. This is swiftly attracting Chinese investment to the area.
Beijing reportedly even plans to supply electricity to the Rajin-Sonbong area. "The replacement of transformers aimed at getting electricity from China is underway, and Chinese electricity is expected to be supplied from April," said a North Korean defector.
Beijing has already established an economic mission there that is to handle any conflict with the North Korean authorities. China pressured Pyongyang to sort out traffic, communication and customs issues, and the North apparently agreed to all demands. "Customs clearance took less than 5 minutes," said a Chinese businessman who visited Rajin-Sonbong recently. Previously it took more than three hours and customs officials would extort bribes with false charges. No mobile phone calls to China can be made yet, but landlines are working and mobile phone calls are to be possible soon.
Until last year, not even Chinese people were permitted to watch TV channels from abroad and there were tight limits on what they could say or do. But now Chinese are all but free to do as they please in Rajin-Sonbong, and the security officials stationed there have been brought to heel and told not to interfere with Chinese business activities.
Rajin-Sonbong used to have so many security officials that it was said the population was half traders and half police, and they frequently hauled people off for questioning on groundless charges.
The North is said to have started selling land in the city to Chinese business at US$50 per 3.3 sq.m downtown and $30 in the suburbs. The Chinese still don't trust the North Korean regime and are reluctant to purchase, but the fact that the land is for sale at all is a momentous change.
Pyongyang is in negotiations with Beijing to build a massive industrial park in the area like the joint Korean Kaesong Industrial Complex.
"With its isolation deepening due to its nuclear tests, North Korea is seeking a way out through the opening of Rajin-Sonbong," said a recent North Korean defector. It remains to be seen what a role China will play in reforming the North, which has been trying to earn dollars without making any fundamental change to the system, he added.
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