Russian Goods Replacing Chinese Products in North Korea’s Local Markets

Russian products, including food and medicine, are rapidly replacing Chinese goods at North Korea’s local unofficial markets since late last year, as they are generally seen to be of better quality at cheaper prices, according to sources inside the country.

A resident of Yanggang province, along the border with China, said customers at North Korea’s “jangmadang,” or black markets, preferred goods from Russia, despite China’s advantages in transport of products and trade relations, due to the country’s proximity to the North and role as the hermit kingdom’s biggest ally.

“Russian goods began to appear at the jangmadang last December, and demand for Chinese goods has since fallen, while Russian products have gained a following,” the source told RFA’s Korean Service, speaking on condition of anonymity.

Russian food products—such as cooking oil, flour, powdered milk, sugar and dried fruit—are particularly outperforming their Chinese counterparts, according to the source, while Russian medicine is also preferred over similar products from China.

At a jangmadang in Yanggang’s Hyesan city, 4.7 kilograms (10.4 pounds) of Chinese canned cooking oil is selling for 45 Chinese yuan (U.S. $7.24), while 5 kilograms (11 pounds) of Russian cooking oil—which the source said is of “far superior quality”—sells for 43 yuan (U.S. $6.92).

One kilogram (2.2 pounds) of Chinese flour is selling at the market for 6 yuan (U.S. $0.97), while the same amount of Russian white flour and rye flour costs 2.80 yuan (U.S. $0.45) and 2.20 yuan (U.S. $0.35), respectively, he said, adding that while the quality of the Russian flour is slightly lower, it is almost undetectable.

A second source from Jagang province, which—like Yanggang—lies along the border with China, confirmed the growing popularity of Russian goods over Chinese ones.

“Russian goods have been increasingly found at jangmadang [in Jagang] since January,” he said.

“Chinese cooking oil, sugar and flour are not really selling anymore because of Russian products.”

Additionally, the source said, goods produced in North Korea are increasingly absent from jangmadang.

Many domestic companies—such as Ryeonmot Co. and Gold Cup Athletes Comprehensive Food Factory—used to produce confectioneries, but now only Songdowon General Food Factory does so, he said, citing an example of why fewer North Korean products could be found at the markets in recent months.

The increase in Russian products and scarcity of domestic products at jangmadang comes amid recent orders by regime leader Kim Jong Un for the public to purchase locally-produced goods.

The instructions, which are seen as part of a bid to improve an economy hampered by international sanctions over illicit nuclear and ballistic missile tests, have been satirized by North Koreans, who say “the only domestic item I own is my own body, yet I manage to take care of myself,” the source said.

He said that the influx of Russian imports, despite Kim’s call for North Koreans to only purchase domestic products, was part of a ploy by the regime to reduce its reliance on China.

“While we have been told to use domestic products, Kim Jong Un has railed against foreign-made goods, even as North Korea imports many Russian products,” the source said.

“The government command was a mere excuse to remove Chinese products and bring Russian-made goods into the country.”

Boosting relations

North Korea has designated 2015 “the year of friendship with Russia,” and a recent agreement between the two countries aims to boost annual bilateral trade to U.S. $1 billion by 2020.

In March this year, sources in North Korea told RFA that the country’s economy was likely to improve this year on the back of deliveries of Russian oil and grain under the terms of favorable loans.

Crude oil shipments sent from Russia had caused the price of gasoline and diesel to fall sharply in North Korean markets, and whole wheat sent from Russia had helped to stabilize food prices in the reclusive, nuclear-armed country.

Russia also promised to supply North Korea with electricity for this year’s farming season, after a drought last year stalled much of the country’s production of hydroelectric power, the sources said.

In March last year, Russia and North Korea agreed to ease visa procedures as part of an agreement to boost bilateral trade, which also includes settling payments in Russian rubles as well providing for Russian access to proposed special economic zones in North Korea, Russia's Far East Development Ministry said.

The move came following a visit of a Russian delegation to North Korea for talks in conjunction with the 65th anniversary of a bilateral cooperation agreement.

Russian officials said in April that business transactions between North Korea and Russia reached 3.5 billion rubles (U.S. $67 million) in value since the two countries began using the currency last October.

China remains king among North Korea’s trading partners, however, with an annual volume of U.S. $6.5 billion—some 60 times the reclusive nation’s trade with Russia, last valued at U.S. $113 million in 2013—and Pyongyang is unlikely to abandon its main benefactor.

Reported by Sung-hui Moon for RFA’s Korean Service. Translated by Soo Min Jo. Written in English by Joshua Lipes.

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Families of Prisoners Bribe Judicial Officials Ahead of North Korean Amnesty

North Koreans with family members in jail are engaging in an intense campaign to bribe judicial authorities to release their relatives as part of an amnesty program for prisoners that will be held in commemoration of two political anniversaries, sources inside the country said.

The standing committee of the Supreme People’s Assembly, the unicameral legislature of North Korea, announced on July 9 that prisoners who had been found guilty of offenses against the state and were currently serving prison sentences would receive amnesty on August 1 in celebration of the 70th anniversaries of national emancipation from Japanese rule and the founding of the Korean Workers’ Party, according to a recent report by state-controlled Korean Central News Agency.

“We will grant amnesty for the people who committed offenses against the homeland and those who have been found guilty,” the report said, citing the committee’s statement.

North Koreans anticipated the amnesty even before the government made the announcement, the sources said, although it only would apply to those who had been arrested before the standing committee issued the statement.

“The news report said that people who were sentenced to ‘labor detention centers’ for drugs, gambling and prostitution all would be released to their families, so the families are greatly welcoming this ‘amnesty,’” said a source from North Hamgyeong Province, the country’s northernmost province.

Some of the families of convicts arrested after July 9 are working hard to bribe judicial officials to change the arrest dates of their jailed loved-ones to before that date, he said. 

The going rate to bribe officials to change an arrest date is about 1,000 Chinese yuan (U.S. $161), he added.

After the government announced the amnesty, high-ranking officials and residents alike from all over the country gathered around the notorious detention center that locals refer to as Jeonguri prison in Hoeryeong, a city in North Hamgyeong province, the source said. 

The center houses the North Korean police’s 12th rehabilitation facility, he said.

“This facility’s Workers’ Party committee will create the list of prisoners to be released under the amnesty,” he said. “The families of the prisoners are paying bribes to Jeonguri prison authorities to get their relatives or siblings onto the list.”

Another source from North Hamgyeong province, who declined to be identified, said authorities would grant amnesty to first-time offenders, but not habitual ones because they are financially unstable.

The amnesty also would apply to inmates whose sentences are less than three years, he said, although authorities may reduce jail time up to three years for those with sentences longer than three years and who are repeat offenders if they are cultivated enough.

Authorities also plan to release North Koreans who were jailed for trying to defect to South Korea, he said.

“But there is one condition: They are included in the amnesty category only if they do not have family or relatives in either China or South Korea,” the source said.

Many convicts would be released from prison during the amnesty, he added.

Reported by Sung-Hui Moon for RFA’s Korean Service. Translated by Soo Min Jo. Written in English by Roseanne Gerin.

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North Korea Discharges Soldiers Amid Wider Military Downsize

North Korea’s military has discharged a vast number of soldiers since early last month, according to sources inside the country, amid reports of a drastic reduction in the hermit kingdom’s army—widely considered to be among the world’s largest.

A source in Yanggang province, along the border with China, told RFA’s Korean Service that the majority of soldiers from the region had been sent home as part of a wider downscale of the Korean People’s Army (KPA) between June 5 and July 10 this year.

“The majority of soldiers from Yanggang province have returned home since early June,” the source said.

“Currently, however, there is a delay in discharges because of preparation for local elections, which will be held on July 19,” he added, referring to regional polls held every four years at the city, county and provincial levels to appoint candidates to local people's assemblies.

Local elections in North Korea are not competitive, because all candidates are elected by the Democratic Front for the Reunification of the Fatherland, which is led by the Workers' Party of North Korea. The public is urged to vote “yes” during the polls to legitimize the regime’s political appointments.

The source cited recently discharged soldiers as saying that many more members of the armed forces will be removed from service after the regional elections are over.

While only infantry troops were discharged between June and July, those to be released following the polls will consist of only soldiers over the age of 30 on rear supply and construction details, such as members of sapper (engineer) units and Bureau 8, which serves under the North Korean police.

No technicians or specialists will be discharged from the military, the source added.

Unprecedented downsizing

A soldier from North Hamgyong province who returned home in recent days told RFA that the new bid to reduce the size of North Korea’s military was unprecedented during the rule of Kim Jong Un, who assumed power in 2012 following the death of his father and predecessor Kim Jong Il from a heart attack.

Since 2012, the regime had even stopped discharging 27-year-old men who had completed their minimum 10 years of military service after graduating from high school, he said.

While this policy had confused military commanders about the length of service, the soldier said the recent decision to discharge soldiers over the age of 30 had confirmed that the required term had at least been extended to 13 years.

Kim Jong Un has repeatedly stated his intention to “reunify North and South Korea by force by 2015,” and recently ordered stricter regulations for physical examinations required to serve in the armed forces during a military lecture, the soldier said, in the interest of strengthening the KPA.

The soldier said that, despite lengthening of the required term of military service, the size of North Korea’s armed forces is destined to decrease because few people born during the 1994-98 “Great Famine,” and who are now of serving age, will be able to pass the KPA physical examination.

Nuclear-armed North Korea’s military was founded 82 years ago and is older than the country itself. It began as an anti-Japanese militia and is now the heart of the nation’s “military first” policy.

The country has one of the world's largest armies, with about 1.2 million soldiers, although it hasn’t fought since 1953, when an armistice suspended the Korean War.

Reported by Sung-hui Moon for RFA’s Korean Service. Translated by Yunju Kim. Written in English by Joshua Lipes.

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Kim Jong Un Orders North Korean Markets to Get Rid of Foreign Products

North Korea’s leader Kim Jong Un has issued orders to drive out foreign-made products from markets in the country and prohibit the import of others that the isolated nation can manufacture, sources inside the country said. 

The directive followed on the heels of earlier calls by Kim Jong Un in January and May for North Koreans to use only domestic products. 

“As the rumor spreads that the North Korean government will crack down on all foreign-made products in the local markets after local election for delegates, people making a living from trade have become very worried about it,” a source in Chagang province, who declined to be identified, told RFA’s Korean Service.  

Elections to provincial, municipal, city, county and district people's assemblies are scheduled to be held on July 19 — the first such voting since Kim Jong Un took power in late 2011, the state-run Korean Central News Agency announced last week. North Korean elections offer only one candidate on the ballot.

Security officers and custodians in charge of markets have been checking how many domestic and foreign-made goods — especially daily necessities — are being sold, adding to merchants’ anxiety, the source said. 

An official in North Hamgyong province told RFA that North Korea has cracked down on Chinese products because it intends to drive them out of the country, but has left the customs clearance of such items alone to avoid a conflict with its neighbor that could turn into tariff action.

“I was told by North Korea’s central authorities not to stop travelers from bringing in products from China through customs, but to strictly prohibit the sales of the products in the market.”

North Korea is manufacturing many light industry products such as confectionery, cooking oil, medical supplies and clothes using raw material from China, he said.

Yet, the prices for these North Korean products, which are clearly marked as being made in the country, are much higher than those of similar ones manufactured in China, he said.

Sources inside North Korea also said Kim Jong Un’s instructions to drive out foreign-made goods meant eliminating private business because the government’s intention is to collect all money which is now circulating in the market.

North Korea has intensified its crackdown on foreign-made products since last November when Kim Jong Un declared at a cabinet meeting that the “preference for imports could lead to national ruin.” 

A couple months later during his New Year’s speech, Kim Jong Un encouraged all citizens to use domestic products, saying that it was the “best form of patriotism to love and use our products.”

But a slogan publicized during the North Korean’s ruling Workers’ Party meeting on February 10 best summed up the leader’s goal in eliminating foreign goods from the country: “By getting rid of a preference for imports and localizing raw materials and facilities, our Workers’ Party is determined to create the best civilization that will be the envy of the world!” 

Reported by Sung-hui Moon for RFA’s Korean Service. Translated by Yunju Kim. Written in English by Roseanne Gerin.

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Interview (Part 2): Kim Jong Un Needs 'Summit Training' Before Big Events

In the second part of an interview with Dan Southerland, Russian historian and North Korea expert Andrei Lankov, an RFA commentator, discusses Russia’s ties with North Korea and the drought and food situations in North Korea.

RFA: In recent years we’ve seen a number of statements coming from Russia and North Korea about possible new Russian investments and a railway connection to Russia. Is Russia stepping up its involvement in North Korea?

Lankov: I expect that trade between Russia and North Korea will gradually increase. But the economies of the two countries are not that compatible. And I don’t think that Russia is willing to subsidize North Korea.  The volume of trade between China and North Korea is now about 75 times greater than Russia’s trade with North Korea. There’s a lot of talk out there but not much walk.

RFA: What about the agreements to get Russia’s help in building a railroad linking both North and South Korea with Russia’s trans-Siberian railway?

Lankov: Talks on such a railroad connection began in 1998—17 years ago—with virtually nothing at all accomplished so far. I can’t imagine that Russia will invest large amounts of money in an unstable environment that could in the end make the project unviable.

RFA: Might Russia decide to give North Korea more support simply to cause trouble for the United States?

Lankov: It’s possible that they would use strengthened ties with North Korea to distract the Americans and create a bargaining chip. That might depend how things go in Ukraine and elsewhere. But I don’t think it’s very likely to happen.

RFA: Kim Jong Un was invited to the World War II victory celebration in Moscow in May, but he sent another official, a powerless one, to represent North Korea. Why didn’t Kim Jong Un take advantage of this opportunity?

Lankov: Kim Jong Un is summit shy. In Moscow he wouldn’t have been in the spotlight but on the margins. A number of East European leaders wouldn’t have shown any deference to him. At the same time, journalists and other observers would have noticed any mistakes made or clumsiness on his part. So before taking on a multinational summit like this one he’ll need some summit training. He should start by meeting foreign dignitaries on a one-on-one basis back in Pyongyang.

RFA: How big a blow is it for North Korea to have its application to join China’s Asian Infrastructure Investment Bank rejected?  We’ve seen a news report saying that they were turned down.

Lankov: That shouldn’t have come as a surprise to North Korea.  Their economic system is not transparent and they don’t have reliable statistics. So they definitely don’t qualify for membership in an international bank. But they are experimenting with some agricultural and industrial reforms.

RFA: You’re talking about experimental moves toward allowing more of a private economy?

Lankov: In some areas they’re allowing farmers to keep 30 percent of the crop for their own use before turning the rest over to the state. In a few other areas it’s 70 percent.

RFA: But RFA has obtained video from inside North Korea showing that some farmers are still far from enthusiastic about their work and evidently have to do it without the aid of the most basic farm equipment.

Lankov: Standards do vary from one area to another, but according to U.N. statistics, food production has gradually increased….The biggest change in recent years has been toward private markets. Officially, there is no private economy. But the government policy toward these markets seems to be one of benign neglect.

RFA: But we also have reports from inside North Korea showing that the police and the military frequently harass people working in the markets and demand fees and bribes from them.

Lankov: Of course, those selling in these markets do have to pay fees and bribes to the police and military, particularly at checkpoints.

RFA: For weeks now, we’ve seen reports of a widespread drought in North Korea and how it might affect the North Korean food supply. Please comment on how serious the drought is and what impact it might have.

Lankov: The reports about the drought are true. We’ve seen a lot about this from foreigners visiting the countryside.

RFA: What impact is this likely to have on the food supply?

Lankov: Famine is unlikely. The harvest will be less impressive than last year. But it’s not likely to be a disaster.

RFA: But won’t the most vulnerable members of the population, including elderly people in some parts of the countryside as well as the youngest children there, be affected?

Lankov: Yes, and let’s hope that any foreign food aid will reach those most in need and not just the better-off people in the major cities.

RFA: The North Korean media at one point claimed that this is “the worst drought in a hundred years.” That’s obviously an exaggeration, but why did North Korea itself play this up?

Lankov: The North Korean authorities understand that if they need foreign aid, they better prepare the outside world to provide it. In the 1990s when North Korea experienced a real famine, they saw it as shameful to admit to food shortages. Now they’ve learned how to manipulate the donors in China, South Korea, and elsewhere.

(For more detailed comments on the drought from Andrei Lankov, see his recent RFA commentary published on July 8 and titled "North Korea Drought Serious but Not Necessarily a Catastrophe.')

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Authorities Order Punishment for North Koreans Who Trade ‘Double-Portrait’ Lapel Pins

North Korean authorities have issued instructions that residents who engage in the illegal trade of lapel pins of the reclusive country’s founder Kim Il Sung and his son Kim Jong Il, must be punished, sources inside the isolated country said.

The nation’s ruling Workers’ Party held a meeting about the buying and selling of the “double-portrait” pins, which it refers to as the “commercialization of supreme dignity,” sources said.

Authorities concluded that the Party must find and punish all those who “commercialize their supreme dignity” because they are “blinded by money,” a source in Yanggang province, which borders China, told RFA’s Korean Service.

The Workers’ Party disseminated details of its discussion on the lapel pins, whose sale is banned in North Korea, via a nationwide People’s Meeting on July 3, he said.

But there was no mention of when the Workers’ Party held its meeting or what else it specifically discussed, he said.

“Buying and selling insignia pins with the images of Kim Il Sung and Kim Jong Il is a political crime,” said a source in North Hamgyong province, who declined to be named.

The cost of the double-portrait pins, which current leader Kim Jong Un used to wear, has dropped to 4,000 North Korean won (U.S. $0.57) from 200,000 won (U.S. $29) in the country, so that North Koreans now can buy them for less than the cost of one kilogram (2.2 pounds) of rice, he said.

Images of the Kims

Official double-portrait lapel pins used to be manufactured only by Mansudae Art Studio in the capital Pyongyang, which produces all images of the Kims.

But when the popularity of the pins grew, and people realized they could use them in place of currency, others began making imitations, pushing the price down, he said.

Smugglers now circulate imitation double-portrait and single-portrait lapel pins made in China, which are distinguishable from the official ones because their shoddy reverse side, the source in North Hamgyong province said.

Worker patrols have started to extensively inspect the lapel pins to try to find fake ones, he added.

The lapel pins are informally referred to as ggokji, a Korean slang word for “nipple,” because North Koreans must attach them to their clothing every day or risk being called out by authorities, sources said.

RFA reported in January that ordinary North Koreans were illegally buying the highly sought-after double-portrait lapel pins in local markets and using them in lieu of cash to pay for accommodations, meals and drinks.

At that time, a growing supply of pins had pushed down prices from a high of 130 Chinese yuan (U.S. $21) when they were first sold in 2012 to 40 yuan (U.S. $6.40).

One source had said the double-portrait pin was worth about 20 yuan (U.S. $3.20) when used to pay for meals in restaurants or accommodations in North Korea.

The double-portrait lapel pins appeared after the December 2011 death of Kim Jong Il, father of current leader Kim Jong Un.

The Workers’ Party gives the pins to high-ranking executives and military leaders, but not to ordinary citizens who usually wear ones with a single portrait of Kim Il Sung.

Reported by Sung-hui Moon of RFA’s Korean Service. Translated by Yunju Kim. Written in English by Roseanne Gerin.

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Interview (Part 1): Kim Jong Un Purges Show 'He Wants A Docile Military'

In a July 1 interview with RFA’s Executive Editor Dan Southerland, Russian historian and North Korea expert Andrei Lankov, an RFA commentator, discusses how North Korea’s young leader Kim Jong Un consolidates power, purges top military officers, and deals with tensions with China.

RFA: What has been the extent of Kim’s purges?

Lankov: He’s been purging not only military officers but also security officials on a scale not seen in North Korea since the late 1960s, when his grandfather Kim Il Sung was consolidating power.

RFA: Is this a sign of insecurity? What does it mean?

Lankov:  It means that he wants to be taken seriously. And it means that he wants a docile and obedient military.

RFA: How does this compare with all of the purges carried out in the past by his grandfather and by his father, Kim Jong Il?

Lankov: Since the late 1960s, if you faced a purge you might still escape with your life. You might be sent to work in a coal mine or given a job as clerk in the provinces. You might even get rehabilitated and make a comeback. Now it seems that there’s a good chance that you’ll be executed.

RFA: South Korean intelligence reported a few weeks ago that North Korea’s Defense Minister Hyon Yong Chol had disappeared and was executed.

Lankov: That he was executed seems highly likely, but I’m not 100 percent sure. I am pretty certain that he lost his job and was purged.

RFA: On top of all this, we’ve seen reports of some senior officials defecting to South Korea. Do all of these purges indicate instability at the top of the Kim regime?

Lankov: The common assumption at the moment is that the purges point to instability. I’m not so sure about that….But if the current policy continues, it might increase the chances of a military coup.

RFA: Let’s talk about China. One of the officials executed in 2013 was Jang Song Taek, who was Kim’s own uncle. He was accused of being a traitor. This became a source of tensions with China, since the Chinese considered Jang to be a trusted negotiator and go-between. What are some of the other sources of tension?

Lankov: First, China is seriously unhappy about North Korea’s continuing development of nuclear weapons. China absolutely doesn’t want a nuclear North Korea. And some Chinese officials had pinned their hopes on Jang Song Taek as the man who could introduce Chinese-style economic reforms in North Korea. That hasn’t happened. North Korea’s missile launch and nuclear test in 2012 and 2013 were major causes of tension. Finally, Xi Jinping may be the first Chinese leader to have only a faint memory of the Korean War. He has no sentimental links with North Korea. And there’s a great deal of mutual dislike on both sides.

RFA: You recently visited China. What have Chinese officials told you about this?

Lankov: They want North Korea to do something about the nuclear issue, on which they feel that the North Koreans have broken a number of promises. They note that Chinese businesses almost always have a hard time in North Korea. The North Koreans are constantly trying to squeeze more money out of them. They introduce new restrictions or talk about taxes that never existed before. As a result, many Chinese businesses in North Korea are thinking of pulling out. Finally, many Chinese officials who didn’t grow up with direct experience of the Korean War, such as Xi Jinping himself, consider North Korea to be not a younger brother in arms but a strange, bizarre, irrational, and very stubborn country that creates lots of problems for China.

RFA: What happened to the much-publicized bridge across the Yalu River linking China with North Korea? China promised to finish building the bridge in 2014.  They invested an estimated $350 million in the project, nearly completed it, and then stopped it.

Lankov: The Chinese side expected the North Koreans to do some basic groundwork on the bridge, but they’re not doing it. If the North Koreans themselves invest some money in the bridge, it’ll be completed.

RFA: Some U.S. experts are disappointed that China hasn’t applied many of the sanctions called for by the U.N. against North Korea following its nuclear test and missile launch. Why does China choose to apply sanctions against only a few North Korean banks or companies but not against many of the others?

Lankov: China has a vested interest in keeping North Korea afloat. China needs a relatively stable North Korea. They don’t want to deal with the fallout from a North Korean collapse, which would likely be a messy situation involving thousands of refugees. They don’t want a North Korea under South Korean control. And North Korea serves for China as a buffer zone against the Americans and South Koreans.

RFA: In 2013, China’s four largest state-owned banks were reported to have suspended money transfers to North Korea.  Has China continued those sanctions?

Lankov: China introduced those sanctions after the purge of Jang Song Taek. But the suspension of those money transfers was lifted some time ago. However, plans to establish an office of the Bank of China in the Rason Special Economic Zone have been cancelled.

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