Kim Jong-un outlines economic strategy of self-reliance in case of continued sanctions : North Korea : News : The Hankyoreh
Kim Jong-un outlines economic strategy of self-reliance in case of continued sanctions
Posted on : Jan.3,2019 16:44 KST Modified on : Jan.3,2019 16:44 KST
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New strategy stands as alternative in absence of overseas cooperation and investment
North Korean leader Kim Jong-un gives his New Year’s address at the Workers’ Party of Korea headquarters in Pyongyang on Jan. 1. (Yonhap News)
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The recent New Year’s address by North Korean leader Kim Jong-un stated a 2019 economic management approach based on a strategy of “self-reliant renewal” using the economy’s internal resources rather than openness and cooperation on overseas investment in anticipation of the international community’s economic containment continuing into the long term, analysts said.
Kim mentioned a “self-reliant economy” multiple times in his Jan. 1 address.
“What we are convinced of once again as we proudly review the past year when we made rapid progress while paving our way by our own efforts with belief in our own strength in the face of harsh economic blockade and sanctions, is the truth that our state is fully capable of dynamically advancing along the road of development of socialism of our own style [. . .] without any external assistance or any other’s help,” he said.
Lee Seok-ki, a senior research fellow and North Korean industry expert at the Korea Institute for Industrial Economics & Trade (KIET), noted, “Apart from the electricity production mentioned in the New Year’s address, nothing noteworthy was presented in terms of other major investment projects or other ambitious economic goals and directions.”
“It looks as though the focus was on mobilizing internal resources to promote the economy under the management and guidance of the North Korean economic ministries, reflecting the possibility or likelihood of sanctions continuing,” Lee said.
Kim also stressed that North Korea “should properly plan and thoroughly implement the national operations aimed at maintaining, reinforcing and reenergizing the national economy as a whole.” In addition to calling for innovations to “satisfactorily realize the unified guidance of the state over the overall economy,” he also said the North Korean Cabinet and other state and economic guidance bodies “should adjust the structures and system of work to raise the efficiency of economic work.”
The message essentially stresses the importance of strategic measures for economic management at the state level.
Lee argued, “The reason for this emphasis on the Cabinet and economic management and guidance, which were mentioned relatively little in past New Year’s addresses, seems to reflect a perception that it is more urgent under conditions of economic sanctions for the state to intervene directly in the economy by managing and controlling internal economic resources, rather than forging onward with the economic reform and openness measures introduced since the Kim Jong-un regime came to power in 2012.”
In effect, Kim was announcing plans for emergency management of the economy in preparation for continued economic sanctions. Indeed, toward the end of his address, he declared, “This year, too, we will face constant obstacles and challenges in our progress, but no one can change our determination and will and stop our vigorous advance.”
A source with the Bank of Korea Economic Research Institute (BOK ERI) said, “The particular emphasis Kim placed on the economy in his New Year’s address could be seen as reflecting a sense of urgency over the failure to produce any major results yet with the economy despite changing their strategy course last April to abandon the two-track approach of economic and military (nuclear) development and focus on building the economy.”
“The increased emphasis on building a self-sufficient economy rather than seeking overseas investment and cooperation through things like special economic zones and economic development district may reflect an underlying aim of pressuring the US into participating in bilateral discussions and loosening its economic sanctions,” the source suggested.
Yoo Seung-min, head of the North Korean investment strategy team at Samsung Securities, said, “A look at the New Year’s address suggests the emphasis on self-reliant renewal is a move in anticipation of the negotiations with the US dragging on for some time.”
“It seems like they’ve reached the conclusion that they can’t do very much to begin rebuilding the North Korean economy in earnest with economic sanctions in place, so they’ve made a strategic decision on matters that are realistic in the short term, such as resumption of the Kaesong Industrial Complex and tourism at Mt. Kumgang without compensation or conditions, rather than investment projects that could end up taking some time,” Yoo said.
Increased production of private capital goods and consumer items in munitions industry
Also notable is North Korea’s announcement of increased production of private capital goods and consumer items in the munitions industries – a seeming reflection of the relaxed military tensions between South and North.
“The munitions industry, in hearty response to our Party’s militant call for concentrating all efforts on economic construction, produced a variety of farm machinery, construction equipment, cooperative products and consumer goods, thereby giving an impetus to economic development and the improvement of the people’s living standards,” Kim said in his New Year’s address.
Lee Seok-gi read this as “showing a shift in the munitions industry with a relative decrease in production of conventional weapons and the channeling of munitions production resources into making items for civilian consumption.”
By Cho Kye-wan, staff reporter
Kim mentioned a “self-reliant economy” multiple times in his Jan. 1 address.
“What we are convinced of once again as we proudly review the past year when we made rapid progress while paving our way by our own efforts with belief in our own strength in the face of harsh economic blockade and sanctions, is the truth that our state is fully capable of dynamically advancing along the road of development of socialism of our own style [. . .] without any external assistance or any other’s help,” he said.
Lee Seok-ki, a senior research fellow and North Korean industry expert at the Korea Institute for Industrial Economics & Trade (KIET), noted, “Apart from the electricity production mentioned in the New Year’s address, nothing noteworthy was presented in terms of other major investment projects or other ambitious economic goals and directions.”
“It looks as though the focus was on mobilizing internal resources to promote the economy under the management and guidance of the North Korean economic ministries, reflecting the possibility or likelihood of sanctions continuing,” Lee said.
Kim also stressed that North Korea “should properly plan and thoroughly implement the national operations aimed at maintaining, reinforcing and reenergizing the national economy as a whole.” In addition to calling for innovations to “satisfactorily realize the unified guidance of the state over the overall economy,” he also said the North Korean Cabinet and other state and economic guidance bodies “should adjust the structures and system of work to raise the efficiency of economic work.”
The message essentially stresses the importance of strategic measures for economic management at the state level.
Lee argued, “The reason for this emphasis on the Cabinet and economic management and guidance, which were mentioned relatively little in past New Year’s addresses, seems to reflect a perception that it is more urgent under conditions of economic sanctions for the state to intervene directly in the economy by managing and controlling internal economic resources, rather than forging onward with the economic reform and openness measures introduced since the Kim Jong-un regime came to power in 2012.”
In effect, Kim was announcing plans for emergency management of the economy in preparation for continued economic sanctions. Indeed, toward the end of his address, he declared, “This year, too, we will face constant obstacles and challenges in our progress, but no one can change our determination and will and stop our vigorous advance.”
A source with the Bank of Korea Economic Research Institute (BOK ERI) said, “The particular emphasis Kim placed on the economy in his New Year’s address could be seen as reflecting a sense of urgency over the failure to produce any major results yet with the economy despite changing their strategy course last April to abandon the two-track approach of economic and military (nuclear) development and focus on building the economy.”
“The increased emphasis on building a self-sufficient economy rather than seeking overseas investment and cooperation through things like special economic zones and economic development district may reflect an underlying aim of pressuring the US into participating in bilateral discussions and loosening its economic sanctions,” the source suggested.
Yoo Seung-min, head of the North Korean investment strategy team at Samsung Securities, said, “A look at the New Year’s address suggests the emphasis on self-reliant renewal is a move in anticipation of the negotiations with the US dragging on for some time.”
“It seems like they’ve reached the conclusion that they can’t do very much to begin rebuilding the North Korean economy in earnest with economic sanctions in place, so they’ve made a strategic decision on matters that are realistic in the short term, such as resumption of the Kaesong Industrial Complex and tourism at Mt. Kumgang without compensation or conditions, rather than investment projects that could end up taking some time,” Yoo said.
Increased production of private capital goods and consumer items in munitions industry
Also notable is North Korea’s announcement of increased production of private capital goods and consumer items in the munitions industries – a seeming reflection of the relaxed military tensions between South and North.
“The munitions industry, in hearty response to our Party’s militant call for concentrating all efforts on economic construction, produced a variety of farm machinery, construction equipment, cooperative products and consumer goods, thereby giving an impetus to economic development and the improvement of the people’s living standards,” Kim said in his New Year’s address.
Lee Seok-gi read this as “showing a shift in the munitions industry with a relative decrease in production of conventional weapons and the channeling of munitions production resources into making items for civilian consumption.”
By Cho Kye-wan, staff reporter
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