NIGHTWATCH Extract: China Moves In on North Korea

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North Korea-China: North Korea will develop the islet of Hwanggumpyong on the Yalu River Delta linking Sinuiju with the Chinese city of Dandong as a special economic zone in cooperation with Chinese businessmen, Chosun Ilbo reported 18 January. North Korean Cabinet already approved a law on the development that will be announced in March or April.

Comment: This is another example of Chinese business tutelage for North Korea. All other special economic zones have either failed for lack of investors or been troubled by North Korean government meddling. In the last category are the Mount Kumgang resort on the east coast and the Kaesong joint industrial park, north of Panmunjom.

One would surmise that a joint venture with the Chinese would be relieved of the unpredictability of North Korean leadership whims, which have undermined the profitability of the joint ventures with the South Koreans. More importantly, every Chinese economic lifeline tossed into the North Korean economic morass is a burden on China and a restraint on North Korea.

The Chinese are moving slowly, but steadily based on their understanding of the magnitude of North Korean economic mismanagement. Thus far, they appear to be helping North Korean enterprises that have prospects of profitability, such as textiles, and Chinese enterprises that benefit from North Korean geography, such as ports and infrastructure on the Sea of Japan.

North Korea never has been self-reliant and its condition of dependency on the global economy has steadily deepened under Kim Chong-il. The Chinese appear determined to salvage what they can and rebuild the rest of North Korea in a different, more sustainable direction, slowly, by converting some North Korean activities into extensions of China’s economy.

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Phi Beta Iota: The Chinese are out-thinking and out-maneuvering the USA on all fronts, and in a fascinating twist, may be egging the USA on to the same military-industrial death march that led to the end of the Soviet Union.  The above development should be studied in relation to WASHINGTON RULES: US-Korea-China-NK NAFTA.  In both instances, leaders are making strategic moves for reasons they consider valid, but that have nothing to do with the well-being of their respective publics.