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NORTH KOREA NEWSLETTER NO. 224 (August 23, 2012)

Jang's China Visit Likely to Boost Bilateral Economic Cooperation, Investment

SEOUL (Yonhap) -- Jang Song-thaek, the powerful uncle of North Korean leader Kim Jong-un, returned home Aug. 18 after a six-day visit to China that included Beijing's agreement to help develop special economic zones in the impoverished nation and meetings with China's president and premier.

   The visit by Jang was the highest-level diplomatic exchange since the new leader took the helm of North Korea after his father Kim Jong-il died in December. The trip by Jang was seen as aimed at winning economic cooperation from the North's most important ally to help revive the North's moribund economy.

   A day before the trip back home, Jang met with Chinese President Hu Jintao and Premier Wen Jiabao who both praised him for making great contributions to enhancing the friendly relations between China and North Korea.

   In the meeting with Hu on Aug. 17, Jang thanked Hu for taking the time to meet with him, and extended greetings of the North's leader, the ruling Workers' Party and the people, according to news reports.

   Hu offered congratulations to Jang for the agreement on the special economic zones. The Chinese president offered condolences to the victims of heavy flooding in North Korea, saying he believes the North will be able to overcome the hardship under leader Kim.

   Hu said he was pleased to meet with Jang and praised the North Korean official for playing a big role in moving relations between the two countries forward for many years.

   Jang is the husband of the late leader's younger sister, Kim Kyong-hui and vice chairman of the powerful National Defense Commission, headed by Kim Jong-un.

   Later in the day, Jang had a meeting with Wen during which the Chinese premier expressed condolences over the flood victims, and said he believes the North will get over the difficulties. Wen also said Jang's visit will contribute to strengthening relations between the two countries.

   On Aug. 16, the two countries agreed to accelerate efforts to jointly develop the Rason, Hwanggumphyong and Wihwado economic zones in North Korea, the most tangible outcome of Jang's trip. His delegation of some 50 officials included key economic technocrats.

   China's Commercial Ministry said the two countries signed a four-part agreement: adoption of market economy in the zones, government-led projects, allowing private companies to develop the zones and striving for mutual interests between the two countries.

   Jang arrived in Beijing on Aug. 13 and attended the meeting of the North-China Joint Guidance Committee, where the special economic zones were discussed. He then toured Chinese provinces near the border with North Korea, such as Jilin and Liaoning, before returning to the Chinese capital for meetings with Hu and Wen.

   Jang's trip brought speculation that a possible visit by North Korean leader Kim Jong-un could come soon. Former North Korean leader Kim Jong-il visited China three times in just over two years between 2009 and 2011.

   Analysts said that Jang's trip and his meeting with top Chinese officials clearly showed Beijing's support of the regime's economic development push under Kim Jong-un.

   Beijing remains by far Pyongyang's most important ally, making up an estimated 80 percent of its trade. According to official Chinese data, trade jumped some 25 percent on-year in the first half this year. Analysts say those numbers are driven by Chinese firms extracting minerals from the resource-rich North.

   Beijing believes economic cooperation decreases chances of instability in the North, a major concern for Chinese leaders. While the new regime has given no indication of softening its military posture, it has actively sought foreign investment since Kim's death while his son has pledged to improve the living conditions of the impoverished populace.

   Under the Aug. 16 accord, North Korea and China agreed to speed up development at two economic zones. Rason in the northeast part of North Korea will be developed into a manufacturing base and logistic hub while the other, an island on the shared Amnok (Yalu) River will focus on information technology and tourism.

   The cooperation is tied to Beijing's efforts to revitalize its northeastern region of Manchuria, where China has poured heavy investment into reviving industrial bases.

   Beijing has built a road into Rason, giving landlocked Jilin and Heilongjiang provinces access to Rajin, the region's northern-most ice-free port.

   Jang and his delegation toured Jilin and Liaoning provinces for two days on Aug. 14 and Aug. 15.

   Jang met and had friendly talks with Sun Zhengcai, secretary of the Jilin Provincial Committee of the Communist Party of China (CPC), in Changchun City and Wang Min, secretary of the Liaoning Provincial Committee of the CPC, in Shenyang, according to report by the North's Korean Central News Agency.

   Sun Zhengcai extended congratulations for the successful meeting of the North Korea-China joint committee, saying Jilin Province will make efforts to implement the points agreed to at the joint meeting.

   Wang Min said he was pleased with the achievements made by the Korean people in building a thriving socialist nation under the leadership of the dear respected Kim Jong-un, the KCNA reported. "He underscored the need to contribute to boosting the traditional Sino-DPRK (North Korea) friendly relations provided by the leaders of the elder generations of the two countries by stepping up the joint development of the Hwanggumphyong and Wihwado Economic Zones."

   Under the agreement between the two countries, Jilin Province will provide power and telecommunications facilities to the Rason district, while Liaoning Province will construct roads and attract foreign investors to Hwanggumphyong and Wihwa Island, the source said.

   The North Hamgyong and North Phyongan provincial governments will provide labor in return. So far, foreign investors have been reluctant to put their money into North Korea's two trade zones, Rason and Hwanggumphyong, due to poor infrastructure and insufficient government support.

   But Seoul has remained cautious over the economic deals between the two allies, saying Chinese policymakers may be concerned with how cooperation with the nuclear-armed state may affect its global image.

   South Korean Unification Minister Yu Woo-ik said on Aug. 17 he is still skeptical about claims by some analysts that Pyongyang has moved toward reforms.

   "It's still early to conclude that (actual) changes are taking place based on a few signs," Yu said. "However, there's no reason to ignore those signs either."

   Meanwhile, a working-level official in Seoul stressed that for the moment, nothing has changed in South Korea's policy toward its northern neighbor.

   Seoul policymakers halted all aid to the communist country after it was determined that North Korea torpedoed a South Korean warship in the Yellow Sea in March 2010. The sinking resulted in the death of 46 sailors.

   Still, North Korea wants more investment from state-run Chinese companies to these economic zones, while China tries to attract private companies to the zones.

   "Given the current situation in the North, Jang's visit is apparently intended to resolve urgent economic matters," said Yang Xiyu, a senior research fellow at the China Institute of International Studies. "We need to focus on any changes in Kim Jong-un's new diplomacy from now on."

   Meanwhile, Beijing's ambassador to Seoul said on Aug. 20 that North Korea's deepening economic reliance on China is expected to help maintain stability on the Korean Peninsula and Beijing hopes to continue to play a constructive role in helping Seoul and Pyongyang improve relations through reconciliation.

   In a written interview with Yonhap News Agency marking the 20th anniversary of diplomatic relations between Seoul and Beijing, Ambassador Zhang Xinsen also called for both South Korea and China to make efforts to build a relationship of mutual respect, mindful of oft-strained ties over North Korea, historical issues and illegal fishing near the Yellow Sea. "The economic cooperation between North Korea and China not only helps develop North Korea's economy but also helps with peace and stability on the Korean Peninsula," Zhang said.

   "It is China's long-standing stance that dialogue and negotiation are the only and right way to resolve relevant issues on the Korean Peninsula and achieve lasting peace." Zhang made the remarks days after Chinese President Hu Jintao met Jang Song-thaek in Beijing, in a display of support for the North's new leadership.

   North Korea experts also say the massive North Korean delegation's visit to China reaffirms Pyongyang's push for economic growth with the help of its socialist ally. This and most other signs leave little doubt about Kim Jong-un's shift from "songun" (military-first) to "songyong" (economy-first) politics, according to their view.

   Reform and openness were two words characterizing North Korea over the past eight months or so. Kim ousted a former military chief and concentrated economic administration, which had been shared by the military and party, in the Cabinet. The twenty-something leader Kim Jong-un also showed he is an open-minded ruler unlike his father, being seen with his wife and enjoying U.S. popular culture in public.

   Since April, Kim Jong-un has taken a series of measures to get the economy rolling again. Kim has reportedly abolished rationing, allowed state-run manufacturing companies to set product prices on their own, and is experimenting with agricultural reform that allows farmers to keep 30 percent of their output. All these efforts are geared toward improving the livelihood of the North Korean people, a goal Kim declared in April.

   Meanwhile, North Korea ruled out any policy changes following the death of long-time leader Kim Jong-il. A spokesman for the Committee for the Peaceful Reunification of Korea, reacting to the possible policy change as asserted by Seoul, said in a statement on July 29, "As far as 'signs of policy change' are concerned, there can not be any slightest change in all policies of the DPRK."

   The spokesman added, "It is the hostile forces such as the U.S. and the South Korean puppet group that are running wild to isolate and stifle the DPRK with vicious sanctions while preventing it from conducting normal exchange with other countries."

   "It is also aimed at dampening the aspiration for reunification through alliance with the North mounting in South Korea, stoking confrontation and creating foolish impression of 'North's change' in a bid to realize the ambition for unification through absorption. To expect 'policy change' and 'reform and opening' from the DPRK is nothing but a foolish and silly dream just like wanting the sun to rise in the west."

   On Aug. 16, North Korea's official Web site Uriminzokkiri also refuted the claim of Pyongyang's reform and opening, saying, "the South Korean conservative forces are distorting and downgrading the great changes being made in our fatherland."