China still betting on North Korea as business gamble

At China’s very farthest limits, a town sandwiched between North Korea and Russia stands at the heart of Beijing’s plan to revitalize its bleak, frigid northeastern rustbelt. Less than 70 kilometres away in North Korea, the port of Rason offers access to the sea and a shorter trade route to Japan, one of China’s biggest trading partners, than almost any of its own harbors. But the ambitious plan relies on Russian and North Korean co-operation and implementation, making it a monumental gamble.

Hunchun has a population of only 225,000 but received investments totaling more than $16 billion last year from government and private sources, according to the commerce ministry. A high-speed railway running 225 miles and connecting it to the Jilin provincial capital Changchun is slated to open by October. City officials have budgeted to build a tri-national tourist zone enabling visitors to play golf in Russia during the day, dine in China and then gamble at a North Korean casino for the evening. But North Korea can be a difficult business partner.

China’s biggest joint economic project with the North so far has been in Rason, a special economic zone where it invested in two ports. But visitors describe little shipping and only a handful of operating businesses, while many Hunchun locals say relations with North Korea have been frigid in recent years.

Two Chinese entrepreneurs who have done business in Rason said their confidence was deeply shaken in 2013 when Pyongyang purged and executed Jang Song-Thaek — previously its point man on relations with China. In the article announcing his death and branding him a “traitor”, the official Korean Central News Agency said Jang sold “off the land of the Rason economic and trade zone to a foreign country for a period of five decades”.

“Doing business in North Korea is completely unpredictable, they’re really irresponsible,” Peter Wu told AFP. He has been negotiating for almost a year to build a factory in North Korea to make a medicinal herbal drink for export to China, but after spending more than 100,000 yuan has nothing to show for his efforts. “There’s silence for months on the North Korean side and then finally, just when you think you’ve reached a deal, all the rules change and you need to start over.”

[AFP]

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