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NORTH KOREA NEWSLETTER NO. 106 (May 13, 2010)
*** TOPIC OF THE WEEK

Kim Jong-il Earns Economic, Diplomatic Assistance from China Trip

SEOUL (Yonhap) -- North Korean leader Kim Jong-il wrapped up his five-day trip to China last week, where he is known to have gained economic and food aid from its biggest benefactor and reaffirmed his country's commitment to denuclearization through multilateral talks.

   The 68-year-old Kim received red-carpet treatment from Chinese President Hu Jintao and other key officials. North Korea watchers expected the North will move closer to Beijing for economic cooperation as well as for a security alliance.

   In his summit meeting with the Chinese president on May 5, Kim said his country will work with Beijing "to create favorable conditions" for resuming six-nation nuclear talks that have been stalled since 2008, according to official news reports from both countries.

   President Hu made a series of proposals when he met with Kim, including deepening economic cooperation and a regular exchange of high-level visits to share views on domestic and diplomatic issues.

   Kim's visit to China demonstrated that Beijing remains Pyongyang's most trusted partner. The relationship between China and North Korea is often referred to as a "special one," forged in blood by their armed forces, which fought together during the 1950-53 Korean War.

   North Korea's financial hardships and economic difficulties are the main reasons for Kim's trip. International sanctions on the socialist country for its missile and nuclear test last year have hampered the country's arms trade.

   Economic problems were exacerbated last fall by a botched currency reform. Since late last year, there have been reports of riots across North Korea, and key economic bureaucrats responsible for the currency denomination have allegedly been sacked or executed.

   China is North Korea's biggest benefactor, although Kim's trip also came after China-North Korea bilateral trade was found to have fallen for the first time in a decade. Nevertheless, China agreed earlier this year to build a bridge to North Korea over the bordering Amnok (Yalu) River and signed a deal to use North Korea's Rajin Port for the next decade.

   When meeting the North Korean leader, Hu made five proposals to cement ties between the two countries -- to maintain high-level contacts, reinforce strategic coordination, deepen economic and trade cooperation, increase personnel exchanges and strengthen coordination in international and regional affairs. Kim accepted all these proposals, according to China's official Xinhua News Agency report.

   On one point, the Chinese leader suggested the two countries should exchange views on "major domestic and diplomatic issues and the international and regional situation." Hu also said China and North Korea should "strengthen coordination in international and regional affairs to better serve regional peace and stability."

   Although Kim expressed his commitment to denuclearization, the reclusive North Korean leader fell short of presenting a timeline for the North's return to the talks.

   Kim's visit to China was primarily focused on winning economic aid and attracting investment. North Korea's desperate efforts to prop up its crumbling economy through cooperation with China are deepening its reliance on the giant neighbor.

   Although the details of China's economic aid package to its impoverished ally are not available, Kim is believed to have gotten what he requested.

   There is also the possibility of some economic benefit to China. According to a Xinhua report, Chinese Premier Wen Jiabao promised Kim that "China will, as always, support North Korea for developing the economy and improving people's livelihood and is willing to introduce to North Korea the experience of China's reform and opening-up and construction."

   In addition, Wen noted the "big potential" for trade cooperation between the two countries and urged Kim to work to push major cooperative projects, build infrastructure in border areas and seek new cooperative opportunities that will be mutually beneficial.

   During his trip, Kim spent a considerable portion of his time touring the northeastern port cities of Dalian and Tianjin, both examples of the effects of China's economic reforms. His visit to the two port cities was intended to demonstrate North Korea's readiness to open up part of its economy to Chinese investors. Kim and his delegation are known to have met with business leaders to discuss further investment opportunities.

   Kim's delegation was the largest ever in terms of the scale and number of people in his entourage, which included key figures from the party, military and the Cabinet. Major figures included economy-related officials such as Kim's brother-in-law Jang Song-thaek, who oversees foreign investment as a member of the powerful National Defense Commission, and Kim Yang-gon, a director of the Unification Front Department at the Workers' Party, who doubles as the chief of the (North) Korea Taepung International Investment Group that provides funds for a new state bank in North Korea.

   Kim's visit came just three days after the North's nominal head of state, Kim Yong-nam, met with Chinese President Hu Jintao in Shanghai during the opening ceremony of the 2010 World Expo.

   China is expected to advance major cooperative projects agreed upon during Premier Wen Jiabao's visit to the North last year and quicken the construction of infrastructure in border areas. Dalian is a logistical center in northeast China and could serve as a model for development for North Korea.

   In January, North Korea merged two northern cities, Rajin and adjacent Sonbong, to form its first "special city," known as Rason. It later lowered corporate tax rates and simplified administrative procedures to help speed development and attract more foreign investment.

   In March, North Korea opened the Rajin port to China and allowed it to use one of its five docks for 10 years. Companies based in Dalian have begun restoration work on the dock and will build large warehouses there.

   According to Chinese customs statistics, trade between the two neighbors was $2.8 billion in 2009, down 4 percent from a year earlier.

   Kim may be looking to increase the flow of oil, food and goods that he depends on to keep the economy going. In 2009, China shipped 519,814 tons of crude oil to North Korea, a fall of 1.7 percent from 2008. China's trade and aid have become crucial to North Korea's survival, especially as ties with South Korea have frayed. In 2009, bilateral trade between China and North Korea was worth $2.8 billion, a fall of 4 percent compared with 2008, according to Chinese customs statistics.

   The Sino-North Korean summit also came amid rising tensions on the Korean Peninsula after a South Korean warship, the Cheonan, sank near the western sea border with North Korea in March, killing 46 sailors.

   There has been no report that Kim and Hu discussed the Cheonan issue. Investigators here have tentatively concluded that an external blast split the naval vessel in half, and South Korea's Defense Minister Kim Tae-young has said he believes a torpedo attack was the most likely cause of the explosion.

   In the diplomatic arena, Kim also appeared to have secured firm support from China. Beijing confirmed its alliance with Pyongyang by ignoring complaints from Seoul regarding the timing of Kim's visit. China invited Kim only three days after Hu's summit with South Korean President Lee Myung-bak in Shanghai during the World Expo, and amid the probe into the Cheonan sinking.

   During Kim's stay in Beijing, the Chinese foreign ministry said that the visit and the Cheonan probe are entirely different matters. A ministry spokesman advocated for North Korea, saying that the media are behind speculation of the country's involvement.

   Kim Jong-il also appeared to have received Chinese approval for the transfer of power to his third son, Jong-un, during his China trip. According to Xinhua, Kim said the China-North Korea friendship "has stood the test of time and will not change due to the change of time and alteration of generations."

   Since Kim reportedly suffered a stroke in August 2008, it has seemed increasingly likely that Kim Jong-un will be his father's successor. Jong-un reportedly did not accompany his father on the China trip.

  (END)