China-North Korea: China announced it will invest US$3 billion in the Rason special economic zone in northeastern North Korea. Under the deal, by 2020 China would build an airport, a power plant, a cross-border railway and improve the port facilities in the North’s Rason economic zone bordering China and Russia. The 55-kilometre cross-border railway track will connect Rason with the Chinese city of Tumen. In return, China secured the right to use the Rason port for 50 years.
Comment: The development of the Rajin-Sonbong (aka, Rason) special economic zone was a Kim Chong-il experiment 20 years ago The location is ideal for trade because proximity to Russian and Chinese railroads would significantly reduce the costs and time of Japanese shipping to Europe. It never attracted investors because the area has almost no infrastructure. Plus, the North wanted investors to build the infrastructure as well as invest in the project. Thus it languished.
Chinese companies are prepared to make the extra investment as part of the national plan to develop northeastern China. They are undertaking projects of this nature in Afghanistan and Indonesia, among other countries. The aim in the Rason project is to pass on the costs ultimately to the Japanese shippers and consumers.
The timing of the latest update to the project obviously was calculated to coincide with the birthday of Kim Chong-il. China now has large economic projects on both ends of the North Korean border. The other is near Sinuiju in northwestern North Korea. North Korea’s border areas are being developed as extensions of the Chinese economic system. North Korea has no other benefactor since relations with the South remain strained. That is tonight’s good news on many levels.