By John Burton
North Korea is confronting the same dilemma that more advanced countries are facing when it comes to COVID-19: whether the cure will prove more damaging than the disease.
When COVID-19 broke out in China in January, North Korea responded rapidly by shutting down its borders with its bigger neighbor. Officials in Pyongyang feared their country was extremely vulnerable since the pandemic could quickly overwhelm their creaky health care system, so they decided to lock down hard and fast to contain the virus from spreading quickly.
Those draconian measures appear to have succeeded. Although most analysts are skeptical of North Korea's claim that it has suffered no COVID-19 cases, it appears that it has kept the outbreak under control. Ports are gradually opening and children are starting to return to school.
The economic costs of closing down the country are considerable. Some economists are predicting the growth rate could contract by 6.5 percent this year, its worst performance since 1997 at the end of the great famine.
Due to strict border controls, trade between China and North Korea fell by 72 percent in January and February from a year earlier, according to Chinese customs data. This comes on top of an already steep decline in bilateral trade in recent years due to tough international sanctions against North Korea.
Despite the sanctions, North Korea had been making progress until recently in stabilizing the economy and making it more resilient to outside pressure. Increased construction projects, including building glitzy holiday resorts, have helped boost economic growth, while domestic prices of staples and fuel remained mostly steady.
But the sudden collapse in trade with China this year means that North Korea is facing a shortage of funds to prop up economic activity. The reduced trade with China and restrictions on internal travel have led to higher prices for rice and fuel in the private markets. There have been reports of panic buying of Chinese-made goods in Pyongyang and factories are said to be trying to source raw materials locally rather than from China.
The North Korean media has been notably frank about the economic problems the country is facing. The Rodong Sinmun, the party newspaper, recently admitted that the people were suffering "hardships" and the country "lagged behind" others in economic development. Even before the COVID-19 outbreak, North Korean leader Kim Jong-un warned in his New Year's speech of tough economic times ahead.
North Korea's external propaganda paints a brighter picture. In a new English-language video blog series, "What's Up Pyongyang?" its millennial hostess, Un-A, visits a crowded modern supermarket filled with domestic goods.
With its China border closed due to COVID-19, "forecasters predicted that the DPRK economy would soon implode in such severe isolation. But the results showed something different; something the exact opposite. The global crisis has provided an opportunity for the Korean people to prove their economic potential and capability," Un-A concludes.
This message reflects a doubling down by officials on the traditional policy of "juche," or self-reliance, in the belief that it will reduce the country's exposure to vulnerabilities.
That implies that the government wants to curb market reforms and reduce the country's dependence on aid from "hostile" powers.
One sign of the government's intention to reassert state control over the economy are reports of a compulsory bond-buying program. The government plans to raise money from the public and private businessmen, the "donju," to finance construction projects, including the building of the showcase Pyongyang General Hospital this year.
With the bonds essentially aimed at confiscating some of the foreign currency reserves held by private businessmen, the move is viewed as curbing the power and influence of the donju, which has grown in the past decade.
A renewed juche policy could also be aimed at reducing private smuggling from China to prevent the spread of COVID-19 as the fairly porous border reopens.
This is not to say that North Korea will completely turn its back on the outside world. It will continue to promote official trade with China. Moreover, it appears eager to acquire foreign technology. The Rodong Sinmun recently noted that a refusal to adopt new technology from abroad to build a "powerful economy" would amount to "exclusivism."
North Korea's turning inward, however, may not be as surprising as it seems. The COVID-19 outbreak has weakened globalization, with some countries adopting a more nationalist economic agenda to promote autonomy. Even the United States appears to be adopting a policy of increased self-reliance by dismantling its manufacturing chains overseas and bringing production home.
John Burton (johnburtonft@yahoo.com), a former Korea correspondent for the Financial Times, is a Washington, D.C.-based journalist and consultant.
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When COVID-19 broke out in China in January, North Korea responded rapidly by shutting down its borders with its bigger neighbor. Officials in Pyongyang feared their country was extremely vulnerable since the pandemic could quickly overwhelm their creaky health care system, so they decided to lock down hard and fast to contain the virus from spreading quickly.
Those draconian measures appear to have succeeded. Although most analysts are skeptical of North Korea's claim that it has suffered no COVID-19 cases, it appears that it has kept the outbreak under control. Ports are gradually opening and children are starting to return to school.
The economic costs of closing down the country are considerable. Some economists are predicting the growth rate could contract by 6.5 percent this year, its worst performance since 1997 at the end of the great famine.
Due to strict border controls, trade between China and North Korea fell by 72 percent in January and February from a year earlier, according to Chinese customs data. This comes on top of an already steep decline in bilateral trade in recent years due to tough international sanctions against North Korea.
Despite the sanctions, North Korea had been making progress until recently in stabilizing the economy and making it more resilient to outside pressure. Increased construction projects, including building glitzy holiday resorts, have helped boost economic growth, while domestic prices of staples and fuel remained mostly steady.
But the sudden collapse in trade with China this year means that North Korea is facing a shortage of funds to prop up economic activity. The reduced trade with China and restrictions on internal travel have led to higher prices for rice and fuel in the private markets. There have been reports of panic buying of Chinese-made goods in Pyongyang and factories are said to be trying to source raw materials locally rather than from China.
The North Korean media has been notably frank about the economic problems the country is facing. The Rodong Sinmun, the party newspaper, recently admitted that the people were suffering "hardships" and the country "lagged behind" others in economic development. Even before the COVID-19 outbreak, North Korean leader Kim Jong-un warned in his New Year's speech of tough economic times ahead.
North Korea's external propaganda paints a brighter picture. In a new English-language video blog series, "What's Up Pyongyang?" its millennial hostess, Un-A, visits a crowded modern supermarket filled with domestic goods.
With its China border closed due to COVID-19, "forecasters predicted that the DPRK economy would soon implode in such severe isolation. But the results showed something different; something the exact opposite. The global crisis has provided an opportunity for the Korean people to prove their economic potential and capability," Un-A concludes.
This message reflects a doubling down by officials on the traditional policy of "juche," or self-reliance, in the belief that it will reduce the country's exposure to vulnerabilities.
That implies that the government wants to curb market reforms and reduce the country's dependence on aid from "hostile" powers.
One sign of the government's intention to reassert state control over the economy are reports of a compulsory bond-buying program. The government plans to raise money from the public and private businessmen, the "donju," to finance construction projects, including the building of the showcase Pyongyang General Hospital this year.
With the bonds essentially aimed at confiscating some of the foreign currency reserves held by private businessmen, the move is viewed as curbing the power and influence of the donju, which has grown in the past decade.
A renewed juche policy could also be aimed at reducing private smuggling from China to prevent the spread of COVID-19 as the fairly porous border reopens.
This is not to say that North Korea will completely turn its back on the outside world. It will continue to promote official trade with China. Moreover, it appears eager to acquire foreign technology. The Rodong Sinmun recently noted that a refusal to adopt new technology from abroad to build a "powerful economy" would amount to "exclusivism."
North Korea's turning inward, however, may not be as surprising as it seems. The COVID-19 outbreak has weakened globalization, with some countries adopting a more nationalist economic agenda to promote autonomy. Even the United States appears to be adopting a policy of increased self-reliance by dismantling its manufacturing chains overseas and bringing production home.
John Burton (johnburtonft@yahoo.com), a former Korea correspondent for the Financial Times, is a Washington, D.C.-based journalist and consultant.
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