Is the Party Over?
Despite introducing some limited market-friendly reforms, Mr. Kim has not abandoned the centrally planned economic system, which would undermine the legitimacy of the Kim dynasty that has ruled North Korea since its founding, experts say. Instead, he has focused on reviving state-controlled factories and collective farms and increasing domestic production.
His approach has enjoyed some success: Recent visitors to Pyongyang reported seeing more snacks, canned foods and other domestically produced goods on store shelves. Kang Mi-jin, a North Korean defector who monitors the North Korean economy for the Seoul-based website Daily NK, said she had counted more than 10 domestic brands of instant noodles.
But the state and market systems “are incompatible, given the different prices and wages each comes up with, so that strength in one often means weakness in the other,” said William Brown, a former C.I.A. analyst who follows the North Korean economy.
That is apparent in the northeastern town of Musan, once the center of North Korea’s iron-ore production, where many donju investors have gone bankrupt since export routes were closed, said Mr. Ishimaru, the Japanese journalist. The miners, meanwhile, have been foraging for herbs to sell in the markets.
For now, there is no sign that the economy is reaching a breaking point, according to defectors in touch with their relatives in the North. The prices of rice, corn and fuel remain stable, and the won is holding steady against the American dollar and Chinese renminbi. North Korea also continues to conduct trade through illicit ship-to-ship transfers.
But apartment prices in Pyongyang are declining, and the growing trade deficit with China is depleting North Korea’s foreign currency reserves. That lack of cash could put the government in a bind this summer, when the impact of what United Nations officials called the country’s worst harvest in more than a decade is most likely to be felt.
“What he really wants, and needs, is dollars,” Mr. Brown said, referring to Mr. Kim’s attempt to get the sanctions lifted at the Vietnam meeting. “So he tossed the dice for a big win and lost his bet. I’m pretty sure he will be back for more negotiations soon.”
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