Rason Economic and Trade Zone (Rajin-Sonbong)

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The blueprint for the development of the Rajin-Sonbong (Rason) economic and trade zone is released

Tuesday, May 31st, 2011

Institute for Far Eastern Studies (IFES)
2011.05.26

On May 23, the DPRK released the “Outline of DPRK-China Joint Development Plan for Rason and Hwanggumpyong Economic and Trade Zone” consisting of detailed blueprint of two countries’ recent bilateral joint development deal.

According to Yonhap News, China and North Korea are planning to turn the Rason and Hwanggumpyong areas into a comprehensive industrial complex of tourism and manufacturing producing automobiles, mobile phones, agricultural and chemical products.

In addition, the Law on Rason Economic and Trade Zone and the Special Law on Hwanggumpyong Zone will adopt market economy principles which will permit foreign bank investments and independent contracts between corporations and workers. Although the development plans are not definite yet, it is significant since it hints at North Korea’s shifting position on opening up and economic development.

The bilateral development plan between Pyongyang and Beijing will stretch from Rajin, Sonbong, Ungsang, to Gulpo areas.

In the Rajin area, four major industrial complexes will be constructed consisting of storage, logistics and distribution centers, state of the art technology, and equipment, clothing and food manufacturing. In the Ungsang area, comprehensive a wood processing complex will be built while in the Gulpo area, a high-efficiency agriculture zone will be constructed. In the Sonbong area, truck manufacturing factories will be built along with other metal producing factories. In Rajin, docks will be built for ship building and maintenance.

There are also plans of developing the Rason area into an international tourism zone. There are immediate plans to build basic tourism infrastructure such as hotels, resorts, and roads for sightseeing. The long-term goal is to build a grand Northeast Asia tour course, which will include Yanbian of China; Rason, Chongjin, Mount Chilbo and Mount Kumgang of North Korea; Vladivostok and Sakhalin of Russia; Sapporo and Nakata of Japan; and Sokcho and Busan of South Korea.

As for the Hwanggumpyong area, four major industrial complexes will be established: one each for information, tourism and culture, modern protected agriculture, and food processing. More specifically, Hwanggumpyong will connect information between Hwanggumpyong and the border city of Dandong in China. In addition, culture and tourism will be developed through promotion of Arirang and other cultural performances and exhibitions.

As for the high-efficiency agriculture zone, a modern agriculture technology research center will be established and China-DPRK joint markets will be set up to serve as a central commerce center.

To assist with the industrial development in the area, land and sea routes will be developed where roads and railroads will be built and Rajin will be upgraded to a comprehensive and multi-purpose port.

There are additional plans of constructing a coal power station to replace the current thermoelectric power plant in Sonbong. There is also discussion of possibly developing other alternative energy plants, such as wind and solar. There are also plans of building basic facilities of mobile telecommunication to promote international communication.

Hwanggumpyong is an island on the Yalu River and the new developments in building ports and roads along with distribution network, Internet, and mobile telecommunication will become a link connecting North Korea with China.

Pyongyang is pursuing development through multiple cooperation channels. It has plans of establishing three-tiered cooperative system with joint management committee, joint development management committee and investment development corporation with Beijing. These committees will be responsible for amending and negotiating any issues that may arise during the process of development and supervise various areas of investments, enterprises, and environment and as well as inspect land and commerce development and basic facility operations.

Both Pyongyang and Beijing will attract foreign investments through market-based tax and financial policies in the Rason and Hwanggumpyong zones. Specifically, tax refund policy will be implemented and tariffs will be lifted from any imported equipment and materials necessary for production. The foreign investment companies will be allowed to choose their own banks or even establish financial institutions to assist in their business management.

In addition, workers and companies will be permitted to sign their own labor contracts. The companies will be granted autonomy in hiring and firing, pricing, bankruptcy, liquidation and other business practices based on market principles.

As for investment protection policy, foreign investors will be permitted to transfer or inherit profits and assets and foreign investor’s investments and assets will not be collected as national property by North Korea.

Posted in China, Coal, Economic reform, Electricity, Energy, Foreign direct investment, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Rason Economic and Trade Zone (Rajin-Sonbong), Sea shipping, Special Economic Zones (Established before 2013), Tourism, Transportation | Comments Closed

China Exim Bank delegation visited DPRK in April

Monday, May 9th, 2011

According to the Donga Ilbo:

Members of the credit rating agency under the Export-Import Bank of China are known to have visited North Korea around the “Day of the Sun” on April 15, otherwise known as the birthday of the Stalinist country`s founder Kim Il Sung.

A source in Beijing said, “Around 10 people from the Export-Import Bank of China made a 10-day trip to North Korea ahead of the Day of the Sun. They not only visited Pyongyang but also other cities.”

The agency provides sovereign credit ratings for countries around the world. Critics say the members visited the North to seek further economic cooperation, adding their trip holds more meaning than attending the holiday event because they also visited other cities.

Another source in Beijing said, “The Chinese government is mulling financial benefits including no-interest loans to Chinese companies investing in the [North’s] city of Rason.”

Beijing seems to be preparing to invest in the Hunchun-Rason area near the Tumen River and Dandong-Sinuiju’s Hwanggeumpyong region near the Yalu River, where Pyongyang-Beijing economic cooperation is vital.

Read the full story here:
China`s Exim Bank delegation visited N. Korea last month
Donga Ilbo
2011-5-9

Posted in Banking, China, Economic reform, Finance, Fiscal & monetary policy, Foreign direct investment, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

Recent articles on Rason’s future

Wednesday, May 4th, 2011

According to the Hankyoreh:

China is stepping out into the Pacific through the gates of North Korea’s Rason Special District. North Korea, which has been declaring its aim of creating a “strong and prosperous nation by 2012,” is actively welcoming the move from China.

A number of sources, including officials with the Jilin Province government in China, reported that a groundbreaking ceremony is to be held on May 30 for a highway linking the North Korea cities of Wonjong and Rason, bordering directly on Quanhe in Hunchun, Jilin Province. A number of leaders from both countries are scheduled to attend the ceremony, which is to take place in Rason (Rajin-Sonbong), North Korea.

A Chinese official working on preparations for the project said in a recent interview with the Hankyoreh that the event would be “an occasion for declaring North Korea-China economic cooperation and North Korean openness to the world.” The official added that dozens of officials from the Chinese central government would be attending, including a number of leaders.

The construction effort is a signal announcing the opening of Rason and large-scale economic cooperation between North Korea and China. In addition to the groundbreaking ceremony for the highway, which is to be a major channel tying North Korea and China together economically, efforts to develop China’s Rajin Harbor and transport large amounts of coal through it are beginning in earnest.

The Rason development effort is taking place according to China’s “blueprints” in everything from the planning to investment and management. Local sources said that China and North Korea have already formed a special joint steering committee for the district, and that it has been decided that the chairman will be from China.

The Rason urban development plan jointly drafted by China and North Korea includes the development of international freight brokerage, export processing, and financial regions. According to a North Korean video, models for the plan include Dalian and Tianjin, which Kim Jong-il inspected in 2010 during a visit to China.

An official with the Yanji city government said, “North Korea is also aware that keeping its doors closed will only lead to death, but it is concerned that the regime will be destabilized if it opens up all at once, so it plans to first open up Rajin and develop it as a ‘test region.’”

“They are adopting the Chinese model, learning from China about legislation, taxes, and benefits to lure businesses,” the official added.

The effort is being pursued promptly, in contrast with previous North Korea-China economic efforts, which tended to amount to little more than words. The reason for this is that the central governments in Beijing and Pyonyang are directly taking care of economic cooperation through the medium of Rason’s development.

A Chinese government official reported that Chinese Minister of Commerce Chen Deming traveled to North Korea to sign a memorandum of understanding, and that China and North agreed on a plan for joint investment in and administration of Rason’s highway, port, and industrial park construction. The official added the Chinese Prime Minister Wen Jiabao personally signed policy documents upgrading Hunchun to a special economic district in line with the Rason development plans.

Meanwhile, North Korea formed an office in its central government to directly administer Rason Special City, replaced old officials who failed to make progress with Rason’s development over the years, and sent in young officials from the central government, including Rason Special City secretary Im Kyong-man, sources reported.

China needs the Rason development to ensure the success of its current national development plan for Changchun, Jilin, and the Tumen River basin, while North Korea decided to cooperate with China to address its economic problems and stabilize its succession framework. Analysts say North Korea hopes to tout successful development of Rason as an achievement of Kim Jong-un.

The development project is proceeding in a very specific and far-reaching way. “This is Korean land, but the industrial complex is being operated as Chinese and will hire North Korea workers to earn foreign currency” for North Korea, said an official with a Chinese company in charge of a large-scale construction effort in Rason.

The electricity shortage issue, which had previously been a major stumbling block to investment, has been resolved by China. A source in Hunchun said, “Plans are being examined to either send surplus power from Hunchun’s thermoelectric power plants to Rason, or for a company in Jilin Province to retrofit an old Soviet crude oil plant in the Sonbong region into a coal-burning power plant.”

Even Chinese officials have been astonished at the active measures from Pyongyang. A Rajin representatives’ office opened in downtown Yanji, the seat of the Yanbian Korean Autonomous Prefecture, is hard at work drawing in investment.

“If Chinese investors want to take a look at Rason, they can drive their cars in for themselves with an invitation from the Rajin representatives,” explained a source in Yanbian.

In the border city of Hunchun, money and people have begun shifting toward the North Korean side. Construction of 500 apartments for Chinese people working in Rason began in late March, according to officials at a construction company commissioned to carry out the project. Capital and labor investment for the Hunchun-Rason highway construction is coming entirely from China, and a number of the roughly 500 Chinese workers needed to begin have already arrived in Rason with six-month passes issued by North Korea. Large Chinese corporations such as Changli, Shangdi Guanquan Investment, and FAW are known to be undertaking investment in Rason.

According to the Korea Herald:

Despite its reputation as one of the most closed nations in the world, North Korea is, at least partly, opening up to market economy conventions, evident in its effort to cultivate its specially designated economic zone.

North Korea designated Raseon the country’s first free trade zone, as a “special city” in January 2010. The city, which borders both China and Russia, was dubbed a free trade zone along with nearby Sonbong in 1991, even though foreign investment never materialized.

In recent years, the North has tried to reinvigorate the trade zone, signing an accord with Russia to restore railways that could help rejuvenate the port there. Russia invested 140 million euro ($202 million) in the Rason project in late 2008.

In recent months, North Korea appears to have initiated a media campaign for Rason, beckoning foreign investors as Pyongyang struggles to resuscitate its moribund economy, according to informed sources and media reports.

According to a source familiar with North Korean affairs, the city has seen both new factories built and upgrades of previous ones.

A couple of large Chinese companies have also reportedly signed deals on either providing construction parts or investments in the region’s resources development.

Chinese commerce officials from the central government and the nearby Jilin Province have also reportedly held talks with their Pyongyang, Rason counterparts regarding such business transactions.

The city is also becoming more urbanized, according to sources. Apartments and road construction repairs are sprouting, while the number of daily logistics traffic across the nearby North Korea-Chinese border has nearly doubled to some 200 trucks in late April, compared to some 100 trucks just three months ago.

The North Korean leader Kim Jong-il recently traveled to the city, a move that analysts see as underlining the regime’s desire to promote the trade city to lure foreign investment.

The KCNA reported on April 22 that Kim visited the city’s Rajin Shipyard where he was briefed on different processes of shipbuilding. There he highlighted the importance of the shipbuilding industry and urged for the introduction of new production technology.

It was the first time that the North’s tightly controlled media reported the name of the shipyard and Kim’s visit there. Known as one of three major shipyards in North Korea, the Rajin Shipyard is believed to have built warships and submarines, according to sources in Seoul.

Increasing media reports from North Korea on Rason also seems to back claims that the country is putting its weight behind the city.

On April 19, the KCNA filed a profile report on Rason’s tourism industry, touting its historic relics, cultural facilities and fantastic seascape “and introducing tourist hot spots in and near the city.

In an earlier, March 30 report, the KCNA said that the city has adopted “a preferential tariff system” for foreign investors and traders.

“Choe Kwang-nam, an official in charge of economic cooperation of the Rason City People’s Committee, told the KCNA that the zone provides favorable business conditions to foreign investors through the preferential tariff system,” it said.

“Foreign investors and businesses are allowed to conduct diverse economic and trade activities and have a free choice of investment forms and business,” it quoted Choe as saying.

Read the full stories here:

N.Korea’s Rason Special District could open country to China
Hankyoreh
Park Min-hee
2011-5-4

Investment, projects seemingly brim in N. Korea border city
Korea Herald
2011-5-4

Posted in Automobiles, China, Economic reform, Foreign direct investment, Rason Economic and Trade Zone (Rajin-Sonbong), Sea shipping, Special Economic Zones (Established before 2013), Transportation | Comments Closed

Chinese in DPRK, Koreans in PRC

Thursday, April 28th, 2011

According to Yonhap:

The number of North Koreans officially visiting China reached 28,600 in the first three months of the year, up 35 percent from the same period last year, a news report said Wednesday.

More than half of them visited China to work in either factories or restaurants, while 6,000 people visited China for conferences or businesses, the Voice of America reported, citing Chinese government data.

The VOA also said 700 North Koreans toured China for sightseeing, while fewer than 100 North Koreans visited China to meet relatives or friends and 7,300 visitors had other purposes. The report did not elaborate.

The data did not include information on North Koreans staying illegally in China after defecting, the VOA said.

Tens of thousands of North Korean defectors are believed to be hiding in China, a major land route through which many North Korean defectors travel to Thailand and other Southeast Asian countries before resettling in South Korea.

According ot the Choson Ilbo:

Chinese tourists will start visiting Russian and North Korean cities without visas on Wednesday under a formal agreement between Beijing and the two countries. The tour course starts in the Chinese border city of Hunchun in the lower reaches of the Duman (Tumen) River and goes on to eastern Russia and the Rajin-Sonbong special economic zone in North Korea.

A group of 21 tourists left Changchun, the capital of northeast China’s Jilin Province, on Tuesday for the Hunchun. Travelers will then visit Slavyanka, Vladivostok and Khasan, the official Xinhua news agency said. They then go to North Korea by train and tour the cities of the Duman River and the Rajin-Sonbong area.

The four-day tour starts every Wednesday and costs 2,300 yuan (approximately W390,000). Only Chinese travelers are eligible for the visa-free arrangement.

Read the full stories below:
Number of N. Korean visitors to China rises in first quarter
Yonhap
4/27/2011

Chinese Tourists Visit Russia, N.Korea Visa-Free
Choson Ilbo
4/28/2011

Posted in China, Civil society, International trade, Labor conditions/wages, Rason Economic and Trade Zone (Rajin-Sonbong), Russia, Special Economic Zones (Established before 2013), Tourism, Transportation | Comments Closed

Transfer of management rights to Chinese investment companies within North Korea

Tuesday, April 12th, 2011

Institute for Far Eastern Studies (IFES)
NK Brief (11-04-05)

The trade volume and economic cooperation between China and the DPRK are on the rise. The trade environment for Chinese investment in North Korea has also changed.

Currently in the DPRK, there are about 200 Chinese companies in operation and more than 70 percent of these companies are concentrated around the cities of Rajin and Sonbong. China has pursued economic cooperation with the DPRK based on the four principles of state-ownership, corporate-centeredness, market-management, and mutual benefit. In the past, China persuaded North Korea with various joint venture projects arguing that, “You have nothing to lose from these projects. Although it’s based on market principles, ultimately it’s beneficial for both parties.” North Korea on the other hand maintained the stance, “You (China) invest and we will manage,” holding on to management rights of these companies. However, for this very reason Chinese companies were reluctant to directly invest in North Korea. Even after contracts were signed, large -scale investment did not transpire due to poor management.

However, North Korea finally yielded to China’s request, handing over major management rights to Chinese investors. This recent move is analyzed as an attempt to attract more foreign investment to actualize North Korea’s goal of building a “Strong and Prosperous Nation” by 2012. With large-scale management rights transferred to the Chinese companies for joint ventures, the DPRK-China economic cooperation volume is expected to grow.

North Korea also seems to be exploring other ways to improve the investment environment for the Chinese companies. Recently, Chinese trade investors are reported to be receiving special treatment. They are exempt from strict body searches at the airport and mandatory tours required for all visitors, which included visits to Mangyongdae, the birthplace of Kim Il Sung, Panmunjeom, the International Friendship Exhibition in Myohyang Mountain, and Kim Il Sung monuments. Their trips are now considered and treated strictly for the exclusive purpose of business.

When concerns are raised about the volatile North Korean policies involving foreign investment, North Korean officials offer elaborate explanations: “Even if policy changes or the regime, management rights are like private property protected by the Investor Protection Act. One’s investment will be protected even after a policy change, just as your real estate properties would. There is nothing to be worried about.” Many Chinese businessmen are reported to be expressing some concerns over these unexpected changes in policy related to attracting foreign capital and the attitudes of North Korean officials.

Posted in Foreign direct investment, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

Security of investment in DPRK guaranteed by law

Thursday, March 3rd, 2011

UPDATE: KCNA Video here (Youtube)

ORIGINAL POST: According to KCNA:

The DPRK encourages foreigners to make investments in the country on the principle of equality and reciprocity and neither nationalizes nor seize their invested properties, said an official of the DPRK Committee of Investment and Joint Ventures.

In an interview with KCNA, Ri Song Hyok said the DPRK law on foreign investment stipulates the principles and order for protecting the investment of foreigners and ensuring legitimate rights and interests of foreign-invested businesses.

“The law gives a full detail of the requirements of the DPRK’s investment policy, foreign investment forms and methods, investors’ business conditions, investment sectors, incentive measures and preferential treatment in the Rason economic and trade zone,” he said.

According to the principles and order stipulated by the law, regulations have been provided on investment, joint venture, foreign business, foreign-invested business, taxation for foreigners, foreign-invested bank, land lease and Rason economic and trade zone, he added.

The law on foreign investment was adopted in the country on October 5, Juche 81 (1992) and revised in 1999 and 2004.

Well if they say they won’t nationalize or seize invested properties….

The DPRK’s law on foreign investment can be found here.

It is also interesting that KCNA uses the American spelling of “nationalize” rather than the British spelling of “nationalise” since there have been far more British English teachers in the DPRK than American.

Posted in Economic reform, Foreign direct investment, Law on Foreign Investment, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | 3 Comments »

Rason and the Chinese economy

Monday, February 28th, 2011

According to the Choson Ilbo:

But now sources say Beijing seems to think it is high time to persuade the North to reform and open up as the economy is on the verge of collapse. It is pressuring the regime to develop Rajin-Sonbong into a model of Chinese-style reform, and it needs to use Rason Port for its own Tumen River project. This is swiftly attracting Chinese investment to the area.

Beijing reportedly even plans to supply electricity to the Rajin-Songbong area. “The replacement of transformers aimed at getting electricity from China is underway, and Chinese electricity is expected to be supplied from April,” said a North Korean defector.

Beijing has already established an economic mission there that is to handle any conflict with the North Korean authorities. China pressured Pyongyang to sort out traffic, communication and customs issues, and the North apparently agreed to all demands. “Customs clearance took less than 5 minutes,” said a Chinese businessman who visited Rajin-Songbon recently. Previously it took more than three hours and customs officials would extort bribes with false charges. No mobile phone calls to China can be made yet, but landlines are working and mobile phone calls are to be possible soon.

Until last year, not even Chinese people were permitted to watch TV channels from abroad and there were tight limits on what they could say or do. But now Chinese are all but free to do as they please in Rajin-Songbon, and the security officials stationed there have been brought to heel and told not to interfere with Chinese business activities.

Rajin-Songbong used to have so many security officials that it was said the population was half traders and half police, and they frequently hauled people off for questioning on groundless charges.

The North is said to have started selling land in the city to Chinese business at US$50 per 3.3 sq. m downtown and $30 in the suburbs. The Chinese still don’t trust the North Korean regime and are reluctant to purchase, but the fact that the land is for sale at all is a momentous change.

Pyongyang is in negotiations with Beijing to build a massive industrial park in the area like the joint Korean Kaesong Industrial Complex.

Read the full sotry here:
Chinese Businesses Pour into N.Korea’s Rajin-Songbong
Choson Ilbo
2/26/2011

Posted in China, Economic reform, Foreign direct investment, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

KJU supporter takes over Rajin-Sonbong (Rason)

Monday, February 14th, 2011

According to the Donga Ilbo:

North Korea has reportedly appointed Vice Trade Minister Jo Jong Ho as chairman of a civic committee for Rajin-Sonbong Special City, a major post in the North, to succeed Kim Su Yol, who was dismissed late last year.

Jo is a member of a group that supports Kim Jong Un, the youngest son of North Korean leader Kim Jong Il and heir apparent, and reportedly has helped set the North’s new economic policy.

A source on North Korean affairs said Sunday, “Jo Jong Ho has been named the new chairman of the people’s committee, a post which has remained vacant after the dismissal of former chairman Kim due to sluggish foreign investment.”

“Since Jo used to work with former Trade Minister Im Kyong Man, chief secretary of the ruling Workers’ Party for Rason City, he will likely enjoy a harmonious working relationship with Im.”

Pyongyang has apparently deployed a key member of the power elite among supporters’ groups of Kim Jong Un to an important economic region to lay the foundation for a successful power succession based on economic achievements.

The source said, “The North deployed a Kim Jong Un supporter at a time when Pyongyang is striving to establish the structure for power succession,” adding, “Since Jo is fluent in English, activities to attract foreign investment from overseas enterprises will likely gather momentum.”

Read the full story here:
NK appoints heir apparent`s supporter to key post
Donga Ilbo
2/14/2011

Posted in Ministry of Foreign Trade, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013), Worker's Party | Comments Closed

North Koreans traveling to Rason to gamble

Thursday, January 27th, 2011

According to the Daily NK:

High level North Korean cadres are visiting a casino in the far northeast of the country, disguising their identities so as to avoid government regulations which forbid them from entering, a defector-led NGO has revealed.

Reporting the news, an NK Intellectuals Solidarity inside source explained yesterday, “Recently, cases of high level North Korean cadres disguising their identities to enter Orakjang Casino, which is in the Emperor Hotel in Rasun City, have been occurring frequently.”

The Emperor Hotel was established in 2000 by Emperor Group, a Hong Kong-based property developer. With around 100 rooms, bars, cafes, an indoor swimming pool, sauna, night club, sports center and a fine sea view, the hotel, which cost $64 million to build, employs around 500 people, including a number of North Korean women.

According to the source, while the hotel was regularly frequented by Chinese tourists and officials when it opened, it closed down at the end of 2004 after one official, acting independently, squandered a fortune in public funds there.

However, seizing the opportunity presented by Kim Jong Il’s visits to China last year, the hotel reopened and, according to the source, has recently been doing well off Russian traders, among others.

On this, the source explained, “One of the conditions placed on the opening of the hotel was that North Koreans would not be allowed to enter, and at the beginning their entry seemed to have been thoroughly prohibited,” adding that therefore, “However, as the number of Chinese traders going to the casino increased, so high North Korean cadres doing business with the Chinese and wealthy North Koreans disguising their identities also entered.

The North Koreans apparently pretend to be Korean-Chinese when they enter the casino, where some reportedly gamble away as much as $10,000 per day.

Because North Korean enterprises and factories are unable to operate properly due to a lack of raw materials and capital, average cadres and staff go to gamble mostly to relieve their boredom, the source explained.

Read the full story here:
Casino Luring in Bored North Koreans
Daily NK
Cho Jong-ik
1/27/2011

Posted in Civil society, Gambling, Rason Economic and Trade Zone (Rajin-Sonbong), Sports | Comments Closed

China seeks to station troops in DPRK?

Sunday, January 16th, 2011

UPDATE: China denies sending troops to the DPRK. According to the Global Times:

A Chinese government official Sunday dismissed a report by a South Korean newspaper that China was sending troops to North Korea.

“China will not send a single soldier to other countries without the approval of the UN,” an official at the Chinese Ministry of Defense told the Global Times on condition of anonymity, citing China’s basic policy on troop deployment.

ORIGINAL POST BELOW: According to the AFP:

China is in discussions with North Korea about stationing its troops in the isolated state for the first time since 1994, a South Korean newspaper reported Saturday.

The Chosun Ilbo newspaper quoted an anonymous official at the presidential Blue House as saying that Beijing and Pyongyang recently discussed details of stationing Chinese soldiers in the North’s northeastern city of Rason.

The official said the soldiers would protect Chinese port facilities, but the location also gives access to the Sea of Japan (East Sea), while a senior security official was quoted as saying it would allow China to intervene in case of North Korean instability.

A spokeswoman for the Blue House said she had no information, while China’s defence ministry declined comment to AFP on the matter this week.

“North Korea and China have discussed the issue of stationing a small number of Chinese troops to protect China-invested port facilities” in the Rason special economic zone, the unnamed official was quoted as saying.

“The presence of Chinese troops is apparently to guard facilities and protect Chinese nationals.”

China reportedly gained rights in 2008 to use a pier at Rason, securing access to the Sea of Japan (East Sea), as North Korea’s dependence on Beijing continues to grow amid a nuclear stand-off with the United States and its allies.

The last Chinese troops left the North in 1994, when Beijing withdrew from the Military Armistice Commission that supervises the truce that ended the 1950-53 Korean war.

Seoul’s International Security Ambassador Nam Joo-Hong told the Chosun Ilbo that China could now send a large number of troops into the North in case of instability in the impoverished communist state.

“The worst scenario China wants to avoid is a possibly chaotic situation in its northeastern provinces which might be created by massive inflows of North Korean refugees,” Nam was quoted as saying.

“Its troops stationed in Rason would facilitate China’s intervention in case of contingencies in the North,” he said.

Here is the original report in the Choson Ilbo (in Korean).

UPDATE: The Choson Ilbo posted a story in English which claims the Chinese soldiers are already in North Korea:

Chinese troops have been stationed in the special economic zone of Rajin-Sonbong in North Korea, sources said Friday.

This would be the first time since Chinese troops withdrew from the Military Armistice Commission in the truce village of Panmunjom in December 1994 that they have been stationed in the North.

“Pyongyang and Beijing have reportedly discussed the matter of stationing a small number of Chinese troops in the Rajin-Sonbong region to guard port facilities China has invested in,” a Cheong Wa Dae official said. “If it’s true, they’re apparently there to protect either facilities or Chinese residents rather than for political or military reasons.”

How many of them are there is not known. The move is unusual since North Korea is constantly calling for U.S. forces to pull out of South Korea and stressing its “juche” or self-reliance doctrine.

A China-based source familiar with North Korean affairs said, “In the middle of the night around Dec. 15 last year, about 50 Chinese armored vehicles and tanks crossed the Duman (Tumen) River from Sanhe into the North Korean city of Hoeryong in North Hamgyong Province.”

Residents were woken up by the roar of armored vehicles. Hoeryong is only about 50 km from Rajin-Sonbong. Other witnesses said they saw military jeeps running from the Chinese city of Dandong in the direction of Sinuiju in the North at around the same time.

“The Chinese armored vehicles could be used to suppress public disturbances and the jeeps to round up on defectors from the North,” the source speculated.

Nam Joo-hong, the ambassador for international security, said, “What China is most worried about in case of a sudden change in the North is mass influx of defectors, which would throw the three northeastern Chinese provinces into confusion. With its military presence in Rajin-Sonbong, there is a likelihood that China could intervene in Korean affairs by sending a large number of troops into the North under the pretext of protecting its residents there in an emergency.”

The North and China have engaged in lively military exchanges since two visits to China by North Korean leader Kim Jong-il last year. Guo Boxiong, the top Chinese military officer and vice chairman of the Chinese Central Military Commission, visited the North in late October last year and met with leader Kim Jong-il and his son and heir Jong-un. In the meeting, Kim senior emphasized “blood ties” between the two countries.

A Chinese mission has been stationed in Rajin-Sonbong since last December. China is transporting natural resources from its northeastern region to the south via Rajin-Sonbong Port, which has recently been renovated.

According to China’s official Xinhua news agency on Jan. 3, China first used the port on Dec. 7, when it transported 20,000 tons of coal from a mine in Hunchun, Jilin Province to southern parts including Shanghai. There is speculation that China will supply its own electricity to Rajin-Sonbong from April.

Quoting an internal North Korean source, the online newspaper Daily NK said the North and China in December signed an investment pact on building three more piers at the port and building a highway and laying a railroad between Quanhe in Jilin and Rajin-Sonbong.

The number of Chinese people arriving in the special zone has grown as a result of the North’s quest for investment, observers said.

“The North Korean State Security has more or less stopped checking Chinese people,” another source said. “The North has apparently concluded that it is unavoidable to accept the Chinese military presence on its land to woo Chinese investment, even if it’s not happy about it.”

Read the full story here:
China to station troops in N. Korea: report
AFP
1/16/2011

Posted in China, Military, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

North Korean Economy Watch