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NORTH KOREA NEWSLETTER NO. 223 (August 16, 2012)
*** TOPIC OF THE WEEK (Part 2)

North Korea, China Agree on Developing Economic Zones in the North

SEOUL (Yonhap) -- North Korea and China have agreed to accelerate their joint development of economic zones in the North as Pyongyang's new leader is stepping up efforts to boost his country's struggling economy.

   Under the agreement, the two sides will set up two management committees to push forward with the development of special economic zones in Rason City of North Korea's northeastern area, and the Hwanggumphyong and Wihwa islands bordering China.

   Pyongyang and Beijing also plan to expand cooperation on agriculture and technology as well as set up telecommunications, supply electricity and train personnel.

   They signed the deal during a meeting between China's Commerce Minister Chen Deming and North Korea's Jang Song-thaek, a powerful aide of young North Korean leader Kim Jong-un. On Aug. 13, Jang became the first top-level Pyongyang official to visit Beijing since the death of longtime strongman Kim Jong-il last December.

   "Both sides reached the consensus that the cooperation in developing the two economic zones has yielded impressive results and entered the stage of substantial development," China's commerce ministry said in a press release.

   The agreement comes on the heels of a high-level meeting between the two allies attended by China's commerce minister Chen Deming and North Korea's Jang Song-thaek, the powerful uncle and key guardian of its leader Kim Jong-un.

   Pyongyang said Aug. 13 that a North Korean delegation led by Jang, the vice chairman of the North's National Defense Commission, left for Beijing to attend the third meeting of the North-China Joint Guidance Committee, which deals with the two's joint development of special economic zones.

   A day later North Korea's official Korean Central News Agency (KCNA) announced the result of the guidance committee meeting on Aug. 15, saying the meeting reviewed the work done for developing the economic zones since the second meeting of the joint guidance committee.

   In the Rason Economic Trade Zone, reconstruction of ports and railways made brisk headway, the KCNA said, adding the project for reconstructing Rajin-Wonjong highway is nearing its completion. "And a work has made brisk headway in various fields, including tourism and agricultural cooperation, and measurement for the transmission of electricity from China was finished."

   In the Hwanggumphyong Economic Zone, favorable preconditions were created for substantially starting the development project, including the fixing of the spot for border passage according to the drafted detailed plan, according to the KCNA report.

   The meeting stressed the need to quickly start development on the Wihwado Zone and show the world the will of both sides for the development of both zones.

   Last year it established the Hwanggumphyong and Wihwado Economic Zone, located on two islands in the estuary of the Amnok (Yalu) River and has boosted cooperation at the North's Rason Economic Trade Zone in the northeast.

   Under the agreement, the sides will push to make the zone at Hwanggumphyong and Wihwado an area for tourism and information technology. The zone at Rason will "gradually develop into an advanced manufacturing base for North Korea and an international logistics and regional tourist center for Northeast Asia," the statement said.

   At the guidance meeting, both sides appreciated the amendment, enactment and announcement of the law on the two economic zones and the agreement of their development plans, the KCNA said.

   "Both sides reaffirmed that it plays an important role in consolidating and developing the traditional relations of the DPRK-China friendship to invariably implement the historic agreement on the joint development and management of the two economic zones reached between the top leaders of the two countries in line with mutual interests," the KCNA stated.

   The news agency also reported that both sides said in unison that to develop the two economic zones of weighty significance in boosting exchange and cooperation in all fields between the two countries, developing the economy, and achieving regional stability and prosperity is in line with the common interests of the two peoples.

   They agreed upon a series of matters of jointly pushing forward the top priority processes in creating an environment favorable for the investment in the two economic zones to meet international standards and mutual interests.

   They agreed to make sure that the two governments support and encourage local governments and enterprises to push forward this work now that all the matters related to the development of the two economic zones were agreed upon and have reached the phase of implementation.

   They agreed to hold the fourth meeting of the Joint Guidance Committee in Pyongyang in the first half of 2013.

   Seoul officials had said the ongoing China visit is most likely to be focused on ramping up economic cooperation between the two allies.

   The unusually large delegation of about 50 officials may "appeal for China's generous investment and support" for the economic zones, which largely remain moribund since being jointly launched with China, an official said on condition of anonymity.

   Jang's signature role as a promoter of North-China economic cooperation projects in the North also indicates his delegation, largely composed of economy officials, may try to secure sufficient investment from its closest ally.

   "The interesting point to focus on is to what extent China decides to meet the North's (investment demand)," the official said, indicating the North may be expecting "bold" investments from its ally.

   "But China may not be able to give the North everything it wants" because of the superpower's international reputation, he said. "It will be an effective idea for the North to take steps that the global community welcomes" to help secure more overseas investment, he added.

   Responding to media speculation that Jang may meet China President Hu Jintao and Vice President Xi Jinping, the official said it is "likely."

   North Korean watchers said Jang's six-day visit may encompass broader economic and political assistance requests than what the visit appears to be targeting.

   "Viewing from a wider perspective, the latest North Korean delegation visit seems to be focused on securing funds to be used for general economic upgrade (efforts)," a source in Beijing said, referring to the North's so-called "June 28 new economy management system" adopted to reform its sickly economy.

   "Vice chairman Jang and his delegation are likely to contact China's party, political and military officials to appeal for comprehensive measures," the source said.

   North Korea seems to be trying to use the Rason and Hwanggumphyong joint economic zones to secure legitimate investment from China, but China may have a different idea, the source also noted.

   "The ongoing visit only appears to be targeting North-China economic cooperation, but this meeting can be expanded to cover discussions on diplomatic issues like the North's nuclear programs," said Zhang Liangui, the director of the Research Institute for International Strategic Studies at the Party School of the Communist Party of the China Central Committee.

   Meanwhile, the delegation led by Jang is reported to have departed Beijing for Changchun, the capital of Jilin Province.

   Jang is expected to visit Liaoning and Jilin provinces ahead of meeting with China's President Hu Jintao and Premier Wen Jiabao in Beijing. The North Korean official is likely to return home on Aug. 18.

   The visit by Jang Song-thaek, the vice chairman of the North's powerful National Defense Commission, came after Kim met with Wang Jiarui, the chief of the Chinese Communist Party's international affairs office, in Pyongyang early this month and reportedly placed priority on developing the North's moribund economy.

   In 2011, North Korea and China broke ground on Hwanggumphyong Island to develop it into an economic zone, a move that came on the heels of the late leader's trip to China to study the neighboring country's economic development.