North Korean Elites: Implications for Commercial Activities with China

Over the past several years, and especially following Kim Jong Il’s stroke in 2008, China has substantially increased economic ties with North Korea, expanding its role as the economic lifeline of the North Korean regime and state.  As Daniel Gearin showed in his extensive report for the US-China Economic and Security Review Commission, Chinese Infrastructure and Natural Resources Investments in North Korea (20th October 2010), China is far and away the main foreign investor in North Korea. Accordingly, China has intensified its involvement with various elements of the North Korean elite structure, seeking to enlarge its base of relations and support within the regime. And, as anecdotal evidence, the last place visited by Kim Jong Il was the first Chinese supermarket in Pyongyang.

Senior and junior politicians in North Korea (politicians from the second and the third generation of elites) are actively trying to bring foreign direct investments to North Korea. The most important elites connected with Chinese businesses are directly connected to the National Defense Commission, the highest guiding organ of the military and the managing organ of military matters in North Korea. These elites are responsible for the management of huge North Korean investment groups (similar to South Korean chaebols) such as the Daepung Investment Group. These types of holdings are coordinating huge investment and commercial projects between North Korea and foreign partners (especially China). At the head of this organization are Jang Song Thaek, the uncle of Kim Jong Un Ri Kwang Nam, a former North Korean businessman who worked previously in Germany, Paek Sae Bong, an advisor to Jang Song Thaek and other people directly connected to Kim Jong Un’s family.

Artist Pete Kirill, in Miami, plays with notions of North Korean capitalism; click picture for link to his evocation of Kim Jong Il’s funeral

Another sign of a shift towards focusing on economic relations with China is the increase of official visits of North Korean prominent figures who are reform-minded. When Kim Jong Il was alive, he used to travel to China always with the same people who were keen on the Chinese economy. Among them we can quote O Su Yong (a North Korean technocrat), Kim Pyong Phae (a former advisor to Kim Jong Il), and Jon Sung Hun. Jon Sung Hun is one of the most important businessmen of North Korea. He’s the CEO of the Korea Pugang Corporation, a North Korean chaebol (a company with around $20 million in capital and an income of $150 million). Jon Sung Hun studied in Tanzania and has excellent English skills. Another important figure of exchanges between North Korea and China is the previously mentioned Ri Kwang Gun.

Ri Kwang Gun has recently been appointed as chief of the Committee of Investment and Joint Venture designed to draw foreign investments to the country. Ri Kwang Gun studied the German language, persevered and worked in the former East Germany as a commercial attaché at the North Korean embassy in Berlin. He’s now also an executive of the Daepung International Investment Group, a manager at the Rajin-Sonbong Special Economic Area, a director of the State Development Bank, director of the Daepung International Investment Group and director of the Daesong International Group. We should also mention Korean-Chinese businessmen (like for example Park Chol Su) who are participating to the development of North Korean Special Economic Zones

Many members of the North Korean elite were born, lived, and worked in China (O Kuk Ryol was born in Jilin, China),  especially in the regions of Shanghai and Beijing. Some of them are still managing branches of North Korean restaurants and of North Korean companies. Many high-ranking North Koreans are also buying properties in China. Some of them studied in China or were educated in economics in Chinese universities. This group of elites is on the central economic stage in Pyongyang and are managing the actual reforms of the North Korean economic system. These elites have to overcome, however, a number of internal constraints related especially to raw materials. This is why they favor the development of projects related to energy and infrastructure. Lifelong ties between North Korea and China still have a bright future.

Kim Jong Il Under the Red Arches of the “Little Forbidden City” in Shenyang (directly adjacent to the city’s smashing new market for luxury goods), Liaoning province, 2010; photo courtesy Naenara, via Spelunker

Le texte fut initialement publié sur sinonk.com

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