North Korea’s cautious experiment with economic zone Hwanggumphyong

Hwanggumphyong was launched with great fanfare in 2011 by Jang Song-thaek, the uncle of North Korea’s new ruler, with a pledge of tax breaks and repatriation of dividends, hoping to emulate a formula that has worked for economic zones the world over.

But for the moment, it remains little more than a small, boggy island.

The 14 km2 Hwanggumphyong island is one of four economic zones that were designed to be a magnet for Chinese capital and manufacturing. It lies on the Yalu river, across from the bustling Chinese border city of Dandong and one of the few areas where North Korea allows its citizens contact with the outside world.

Chinese investors are showing little appetite for North Korea, whose economy is worse off than it was 20 years ago from a combination of sanctions over its nuclear weapons ambitions, famine and mismanagement.

Many analysts say the North Korean leadership is terrified that reforms could weaken its iron grip on the state and it has repeatedly baulked at any sweeping changes, ignoring pressure from China, its only real ally, to emerge from a self-imposed cocoon.

China’s leverage is limited and its fear that North Korea could collapse appears to make it willing, albeit begrudgingly, to support the government of leader Kim Jong-un.

-Reuters