A CONSEQUENCE OF BEIJING'S "INSIDIOUS PLANS" OR THE RESULT OF THE GROWTH OF THE CHINESE ECONOMY?

O. V. KIRYANOV

Postgraduate student of ISAA MSU

Rossiyskaya Gazeta correspondent

China Keywords:. North Korea, trade and economic relations, investment, dependence

After South Korea took a course to curtail trade and economic ties with the DPRK in 2008, the situation has developed that external circumstances push Pyongyang to strengthen the alliance and trade and economic relations with the PRC, leaving it with no other alternative.

In theory, Japan, the United States and Russia could also act as a relatively serious alternative, or at least achieve more or less significant trade and economic cooperation with the DPRK. However, for one reason or another, none of them can become a counterweight to Pyongyang's Chinese influence.

TOKYO'S STUBBORNNESS AND WASHINGTON'S ZIGZAGS

Trade with Japan after 1992 accounted for a fairly large share of the DPRK's foreign trade balance - about 20%¹. The land of the Rising Sun consistently ranked second to fourth among North Korea's main trading partners. Thus, in 2000, the volume of Japanese-North Korean trade reached $463.7 million, in 2001 - $474.7 million, in 2002 - $369.5 million.²

However, then an event occurred, after which Tokyo actually completely abandoned any kind of ties with the DPRK. During the 2002 North Korean-Japanese summit, North Korean leader Kim Jong Il acknowledged responsibility for the abduction of some Japanese citizens by North Korean special services in the 1970s and 1980s.Some Japanese or their relatives were even released to their homeland.

However, the effect was diametrically opposite to what Pyongyang was probably hoping for. These confessions breathed new life into the painful topic of the abduction of Japanese citizens and the involvement of the DPRK special services in this, which even in Japan itself began to be questioned.

Under pressure from the public and various political forces, the Japanese government began to demand the return of all Japanese citizens or clarify their fate. Pyongyang refused.

And then Tokyo, which often shows remarkable diplomatic inflexibility and shortsightedness, went ahead. Since the second half of 2002, Japan has consistently imposed increasingly stringent restrictions on ties with the DPRK. And after the 2006 survey. Since 2007, Japan has almost completely stopped doing business with the DPRK (in that year, the volume of bilateral trade was only $^9.3 million) ^.4

Tokyo categorically demands a full solution to the issue of the abducted citizens, otherwise refusing to provide North Korea with any assistance and maintain any trade relations. Moreover, Japan not only regularly joins the powers that demand further tightening of international sanctions against the DPRK, but also independently unilaterally imposes additional restrictions on its companies and citizens. This situation persists to this day.

Washington's position on North Korea after the end of the Cold War was not consistent. In 1994, during the Clinton administration, the United States and North Korea agreed to create an international consortium for the construction of a North Korean nuclear power plant with two light-water reactors. However, with the coming to power of President J. R. R. Tolkien,In 2001, neoconservative "hawks"took over the Bush administration. They ranked North Korea among the" rogue countries "of the" axis of evil", curtailed trade and economic relations and plans to build a nuclear power plant in the DPRK.

However, in 2003, the Bush administration still had to moderate its ardor and participate in the six-party talks on the denuclearization of the Korean Peninsula. But they were interrupted in 2009. Washington's position has become tougher due to Pyongyang's nuclear and missile tests in 2006 and 2009, as well as incidents involving the sinking of the South Korean frigate Cheonan and the shelling of the South Korean island of Yeonpyeongdo*.

Ending. For the beginning, see: Asia and Africa Today, 2012, No. 6.

* For more information, see: Rusakov EM. Ne prava (mezhdunarodnogo), ni zdravogo smysla [Neither law (international), nor common Sense] / / Asia and Africa Today, 2010, No. 3; Rusakov E. M. Prizraki vozvrashchayut iz "kholoda" / / Asia and Africa Today, 2010, No. 10 (approx. ed.).

As a result, the United States now has a whole set of different laws and restrictions that actually prohibit trade and any kind of cooperation with the DPRK. Even the removal of North Korea from the US State Department's list of countries that sponsor international terrorism did not change the situation. In addition to the restrictions provided for by inclusion in this list, a large number of other prohibitions still apply.

In early 2012, there were some positive developments in US-North Korean relations. In February, an agreement was reached between the parties, according to which the United States will provide food aid to the DPRK in the amount of 240 thousand tons. Pyongyang announced a moratorium on nuclear tests, long-range missile launches and a uranium enrichment program at the Yongbyon nuclear center. ⁵ According to the US Department of Commerce, in fiscal year 2011, which ended in September, the US delivered $38.3 million worth of goods to the DPRK, compared to $3.1 million in fiscal year 2010. 99.8% of this government aid was food and medicine.⁶

However, due to Pyongyang's attempt, albeit unsuccessful, to launch an artificial space satellite in April 2012, Washington refused to provide the promised food aid.

The Foreign Ministers of Russia, India and China in a joint communique also "expressed deep concern over the launch of a carrier rocket by the DPRK and called for maximum restraint against any actions that may lead to an escalation of tension on the Korean peninsula." At the same time, they "stressed the importance of properly resolving the Korean Peninsula nuclear issue through political and diplomatic means and called on all parties concerned to continue their efforts to resume the Six-Party talks as soon as possible in order to achieve the goals set out in the Joint Statement of the People's Republic of China, the DPRK, Russia, the Republic of Korea, ^the

RUSSIA: MORE POLITICS THAN BUSINESS

Russia does not shy away from developing ties with the DPRK. In political terms, cooperation between Moscow and Pyongyang is very active. Russia is the only country besides China that North Korean leader Kim Jong Il has visited. The last time this happened was in August 2011.

This is due to the mutual interest of the two countries in developing contacts. However, things are worse in the economy than in politics. By the end of 2010, Russia was the third largest partner of the DPRK, but it was behind China by about 30 times and South Korea-by 20 times. So, if the share of China in the DPRK's foreign trade was 56.9%, South Korea-31.4%, then Russia-less than 2%⁸.

According to Russian businessmen who visited the DPRK, the unfavorable investment climate, high risks, the lack of competitive products in the DPRK and problems with the solvency of North Korean partners objectively do not allow the development of trade and economic cooperation between the Russian Federation and North Korea to a sufficient extent. The mineral deposits that Pyongyang's representatives sometimes tried to attract Russians to develop are not of interest to Russia, since the latter itself has significant reserves of natural resources.

Major trans-Korean projects involving the Russian Federation and both Koreas (electricity and gas supplies from Russia to South Korea via the territory of the DPRK and the construction of a Trans-Korean railway connecting it to the Trans-Siberian Railway) so they still remain at the level of projects that have not yet received real content**.

Still, there is some progress.

Thus, in October 2011, a demonstration run of a train on the Khasan (Russia) - Rajin (North Korea) route took place - the first stage of an international project of Russian Railways (RZD) and the Ministry of Railways of the DPRK. In the second half of 2012, it is planned to complete the modernization of the infrastructure of this section, which is considered by the parties as a pilot part of the reconstruction of the entire Trans-Korean Highway. This project also provides for the construction of a container terminal in the port of Rajin and the subsequent use of this infrastructure for organizing transit traffic with access to the Russian railway network. In the long term, if the entire highway is connected from the South Korean port of Busan through the DPRK to Russia, it will be possible to redirect a significant part of the cargo that currently goes by sea from Busan to Europe to the Russian Trans-Siberian Railway.-

ON A NON-ALTERNATIVE BASIS

Since the second half of the 2000s, the external environment for Pyongyang has been such that it has no real alternative to developing economic ties with China. All other countries have withdrawn from cooperation with North Korea for one reason or another. In the field of politics, only Russia has been actively engaged, but in trade and economy, it has been engaged for objective reasons.

* For more information, see: Vorontsov A.V., Agaltsov P. The nuclear intrigue of the Korean Peninsula / / Asia and Africa today, 2010, N 10; Rusakov E. M. The ghosts return from the "cold" / / Asia and Africa today, 2010, N 10; Zhebin A. Z. Who is to blame?, Denisov V. I. Is there a way out out of a dead end? // Asia and Africa Today, 2011, No. 11 (ed. ed.).

** For more information, see: Vorontsov A3. When will gas from Russia go to South Korea? // Asia and Africa Today, 2012, No. 5 (Editor's note).

Russia could not compete with China. Therefore, the DPRK simply had no choice but to develop ties with Beijing.

At the same time, North Korea was supposed to ensure the promised improvement of living conditions for the people, try to bring the economy out of the crisis and maintain the stability of the government system.

The situation was further worsened by the failed financial reform at the end of 2009, which severely affected the national economy of the DPRK. This setback has been compounded by a decline in international aid and chronic food supply problems.⁹ Assistance in the required amounts could only come from China, which Pyongyang has begun to give priority to developing economic cooperation with. A course was set for the creation of new free economic zones (Siniju, Hwang Geumphen, Wihwado) and the active development of existing free economic zones, in particular Rason, which were focused on attracting Chinese capital and were located either near the border with the PRC or directly along the border.¹⁰ A number of laws and other regulations have been passed to reduce investment risks and make it easier for Chinese businessmen to work in North Korea.

Pyongyang seems to understand the dangers of unilaterally increasing the influence of a single country, and has tried to counterbalance it in ^the past11. However, faced with a worsening economic situation and growing international isolation, it simply has no alternative but China. In turn, this desire for rapprochement was understood and interested by the Chinese side, which needs the active assistance of the DPRK for the development of the north-eastern regions of the PRC, and for a number of other reasons considers it profitable to invest in North Korea and develop trade relations with it.

IN SEOUL, SOMETIMES NOT AVERSE TO THICKEN THE PAINT

When it comes to analyzing Sino-North Korean relations, South Korean experts are not without their own or unwitting exaggeration of colors. This is facilitated by one feature accepted in South Korean statistics. As a rule, turnover and other indicators of relations between South and North Korea are reflected not in the section "international trade relations", but in a separate column"inter-Korean trade". Therefore, the DPRK's trade turnover with South Korea is often not taken into account, the volume of which, as noted above, is very significant and second only to China. As a result, the data voiced by South Korean experts on the share of other states is artificially inflated.

Hence the statements that are often found in the South Korean media, as well as in reports and documents of South Korean scientific institutes, that the share of China in the DPRK's trade turnover is 70-80%. Thus, in 2010, excluding the North's trade with South Korea, China's share is 83%, while if this indicator is taken into account, it is 56.9% ¹². For the sake of justice, it should be noted that most often such statistics are provided with a short explanation that these figures do not take into account inter-Korean trade.

Nevertheless, the overestimated share of China in North Korea's trade is widely replicated. For example, South Korean expert Choi Soo-yong wrote that "China's share in North Korea's foreign trade in 2008 was 82.2%, and in 2009 - 84.9%." ¹³ While The Korea Times quoted another expert as saying that " China accounts for more than 80% of North Korea's total trade, and this indicator will continue to grow. " ¹⁴

Many South Korean sources also draw attention to the fact that in recent years, China's investment in the North Korean economy has increased tenfold. This is true, but it should be taken into account that in absolute terms, the increase occurred from $1.12 million in 2003 to $41.23 ^million in 2008,15 That is, the figure of" almost forty times " became possible only because before that investment was scanty on the scale of the entire economy, even such a small one. like North Korea.

Moreover, Chinese investment in North Korea fell to $5.86 million in 2009 from $12.14 million in 201016. In addition, investments are usually made in low-tech industries in the DPRK 17.

The thesis put forward in South Korea that China intends to "buy up" all of North Korea is also very controversial. ¹⁸ Thus, despite the overall growth of China's absolute investment in the DPRK, Chinese investment in other Asian countries is growing much faster. While in 2004 North Korea accounted for 0.4% of all Chinese direct investment in the Asian region, by 2008 this figure had fallen to 0.1% ¹⁹, and in 2010 it was less than 0.03%²⁰.

At the same time, it should be borne in mind that despite the special treatment of Chinese businessmen, the risks of investing in and trading with the DPRK remain quite high. They are very different-from the poor condition of infrastructure facilities to the low solvency of North Korean partners and banal cases when, having received a deposit, North Korean businessmen simply disappeared. There were also cases when, without explanation, representatives of various levels of the North Korean authorities began to demand additional investments from Chinese investors, the creation of facilities not provided for by contracts, etc. ²¹ All this often led to the fact that either the Chinese suffered losses, or the figures of impressive investments declared on paper and widely advertised in the media remained only a " declaration about intentions" and have never been implemented in practice ²².

YET ECONOMIC DEPENDENCE IS FRAUGHT...

Thus, the current dominant position of the PRC in the DPRK's foreign economic relations is due not so much to any far-reaching intentions of Beijing, but to a combination of various objective factors (political, strategic, economic, social, etc.) that reflect the national interests of China and North Korea, as well as the current difficult situation on the Korean peninsula. Beijing can hardly be suspected of trying to deprive North Korea of its sovereignty by increasing its economic dependence.

Nevertheless, there is still no guarantee that having obtained such levers of pressure on Pyongyang in a "natural" objective way, Beijing will not try to use them. Another question is how successful this will be, because, as practice has shown, China does not always have a real opportunity to influence North Korea's behavior.

There is also a high probability that, having obtained dominant and monopoly positions in any areas of cooperation with the DPRK or in any industries (for example, in mining, leasing ports on the east coast), representatives of China will try to make efforts to maintain their privileges and advantages over other foreign investors who may not be able to do so. they will appear later. South Korea fears that the North Korean economy will eventually become an appendage of Chinese industry.²³

All this can create problems for South Korea in the future in the process of developing cooperation with the North.

We should also add that China often talks about the existence of its "special interests" on the Korean Peninsula or implies its presence. In particular, this concerns the hypothetical possibility of chaos or a full-scale crisis in the DPRK. Some representatives of the People's Republic of China, in informal conversations, reserved Beijing's right to intervene in the situation in the DPRK in order to restore order and stability in the event that the situation in North Korea deteriorates rapidly and the international community does not act promptly and effectively enough.²⁵

* * *

It seems that even under the new leader of the DPRK, Kim Jong Un, at least in the coming years, the DPRK and the PRC will only strengthen and intensify cooperation with each other, which will primarily lead to the expansion of bilateral trade and other types of interaction. Here again, the interests of Beijing and Pyongyang coincide on the most important issue: both countries are interested in ensuring that the situation in the DPRK remains stable and predictable.

^{Song Chae Gi.} 1 Puk-chun gyeongjeokwangye milchagyeong: yesokhwainga? (The significance of closer economic relations between China and the DPRK: Is subordination taking place?) Seoul, KIDA, 2010, p. 2.

^{Mimura Mitsuhiro.} 2 Recent Economic Relations between Japan and North Korea // Kim Kyuryoon. North Korea's External Economic Relations. Seoul: KINU, 2008, p. 134.

³ Ibid., p. 126 - 138.

⁴ Ibid., p. 134.

⁵ ITAR-TASS, Pyongyang, 29.01.12.

⁶ ITAR-TASS, Seoul, 24.02.12.

⁷ Website of the Ministry of Foreign Affairs of the Russian Federation. Joint communique of the 11th Meeting of the Foreign Ministers of the Russian Federation, the Republic of India and the People's Republic of China. Москва, 16.04.2012 http://www.mid.ru/brp_4.nsf/newsline/09FE3BDCBCAB308D442579E2003144FE

⁸ KOTRA statistics for 2010

⁹ Sinnyannan chinmyeon puk, chihachawon cabal "ankanhim" (Faced with the food problem of North Korea, deterring the development of minerals) / / Yonhap News, 9.02.2011.

¹⁰ Tonnasongsi - Sohwangymphen ' yandae chopken kabal channenmalputho kymmulsal (Since the end of last year, the development of two adjacent districts has been actively discussed: Rason in the east, Hwangymphen in the west) / / Ton ilbo, 21.05.2011; Puk chungukkwa hanman-kondan; MOU chegel... Gyeongchap kymmulsal (North Korea and China signed a memorandum of understanding on the construction of a port and an industrial zone... Hangere sinmun. 30.04.2011; Pukrason, hwangymphyong, sichangwolli sanopbeltyro yukson (North Korean Rason and Wihwado will turn into an industrial belt) / / Yonhap News. 23.05.2011.

^{Yoon Tok Min.} 11 Pukhanyn chungugy wysongkukkaga twego mal gosinga? (Will North Korea become a satellite state of China?) // Seoul: Miraechollyakenghuvon, p. 3; Choo Jaewoo. Mirroring North Korea's Growing Economic Dependence on China // Asian Survey, March/April 2008, p. 371.

¹² Pukhan gyeongjae, chungguk yichjong to simhaejil tyt (The North Korean economy's dependence on China is likely to grow) / / Chunan Ilbo. 21.12.2011.

^{Choi Soo Young.} 13 Pukchun Gyeongjekwangewa nampukkyonghepy taebuk phagyphyekkwa pygepunsok (Comparison and analysis of the effect of North Korean-Chinese economic cooperation and inter-Korean ties on the North Korean economy). Seoul, Thon Ilyonguwon, 2010, p. 25.

¹⁴ NK Reliance on China will Accelerate // The Korea Times. 20.12.2011.

¹⁵ Official Statistics of the Ministry of Commerce of the People's Republic of China. 2008 Statistical Bulletin of China's Outward Foreign Direct Investment.

¹⁶ 2010 Statistical Bulletin of China's Outward Foreign Direct Investment, p. 82 - http://hzs.mofcom.gov.cn/accessory/201109/1316069658609.pdf.

^{Cai Kevin G.} 17 Outward Foreign Direct Investment: A Novel Dimension of China's Ilntegration into the Regional and Global Economy // China Quarterly, December 1999, p. 863.

¹⁸ Puk, chunguge phallil whigs? (Is the North on the verge of a crisis selling to China?) // And-Daily. 14.02.2011.

¹⁹ Song Chae Gi. Puk-chun gyeongjeokwangye milchagyun: yesokhwainga? (The significance of closer economic relations between China and the DPRK: is there subordination?). Seoul, KIDA, 2010, p. 3.

²⁰ 2010 Statistical Bulletin of China's Outward Foreign Direct Investment...

^{Jin Zhe.} 21 Economic Relations between China and North Korea: Current Status and Future Prospects // in Kim, Kyuryoon, North Korea's External Economic Relations. Seoul: KINU, 2008, p. 114 - 115.

^{Kim Sang Hoon.} 22 Chhvegyn pukchunkyunzhehemneuk hanhwan (The general situation in the sphere of North Korean-Chinese economic cooperation in recent times) / / KDI Pukchunkyunjeribyu, 2010 nen 8 ho.

^{Song Chae Gi.} 23 Decree. soch., p. 4-5.

^{Gong Keyu.} 24 Tension on the Korean Peninsula and Chinese Policy // International Journal of Korean Unification. N 18, No. 1 (2009).

^{Glaser Bonnie, Snyder Scott} 25 and Park John S. Keeping an Eye on an Unruly Neighbor: Chinese Views of Economic Reform and Stability in North Korea. Washington, D.C., Center for Strategic and International Studies & U.S. Institute of Peace, 3.01.2008, p. 676.