N. Korea tinkers with market principles
By Kim Young-jin
North Korea is making room for market principles to improve its economy, learning from the failure of squelching such growth, analysts said Friday.
Reports this week, citing sources in the North, said the leadership of the regime has passed down instructions to implement new management policies under Kim Jong-un, leader of the Stalinist state since December last year. The so-called "June 28 new economic management system” loosens tight control of output and allows production units to distribute wealth themselves, the reports said.
Officials have downplayed the possibility that the measures entail an abandonment of the North’s planned distribution system (PDS). Still, experts believe the experiments show that the regime has learned lessons from past failures.
A currency revaluation in 2009, aimed at squelching the North’s informal markets and reviving the PDS, failed spectacularly and reportedly caused rare incidents of unrest.
“It’s too early to say they have given up on the PDS,” Yoo Ho-yeol, a North watcher at Korea University, said. “But the authorities appear to be allowing for more of a market role as well as incentives for the people, instead of trying to stamp out such forces as they did in 2009.”
The new system reportedly involves factory enterprises setting their own prices for goods, rather than the state, and giving them more leeway to decide on matters such as production and distribution of profits. Farmers will take 30 percent of the total harvest and the government 70 percent.
Kim Jong-un apparently ordered officials to come up with the measures on June 28. Reports of the plan were first reported by Daily NK, a website here with sources in the North.
According to Radio Free Asia, the regime continues to tout other socialistic policies such as free education and free health care, and defends the new economic measures as an extension of its own unique system.
Officials have adopted a cautious stance, saying such measures were introduced in 2002 but were ultimately swept under the rug. They also noted that the distribution system was still operating in Pyongyang, where the country’s elite are concentrated.
But one official said that there “seemed to be some movements” toward changes, including the regime all but allowing markets to continue operation and urged the North to concentrate on improving living conditions for ordinary people.
Analysts Yoo said Pyongyang appeared to be signaling a shift in influence from the military to bureaucrats, as well as a willingness to work more with the outside after years of isolation over its nuclear program.
“They are signaling intent to make changes, but that it will be difficult without outside support,” he said. Many expect the upcoming elections in the South and for the next administration to favor engagement.
Bang Tae-seop of the Samsung Economic Research Institute said the economic measures would also help Kim Jong-un consolidate support among the populace and differentiate from his father.
Kim, since taking over after Kim Jong-il’s death in December, has emphasized the need for changes to improve people’s lives and reportedly ordered cadres to explore how to buoy the economy.