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Further Reading

DPRK Corruption

Though weakened and corrupt, the DPRK security apparatus is still capable of inflicting fearsome punishment on those caught doing something viewed as anti-regime. Moreover, the authorities still punished not only the wrongdoer, but his or her extended family (and sometimes friends) as well. While medieval, this collective punishment kept a tight and effective lid on regime opposition. The average non-elite North Korean does not have the luxury of thinking about politics. Instead, he/she has to worry about putting food on the table for the next meal.

The children of high-ranking North Korean and Chinese officials hijack the most favorable investment and aid deals for their own enrichment. When the child of a high-ranking official hears of a Chinese aid proposal to North Korea, he will travel to North Korea to convince the relevant official to follow his instructions for implementing the aid project. He will then use his connections to request proposals from Chinese companies to develop the project, returning to North Korea to convince the relevant official to select the favored company. At each step, money changes hands, and the well-connected Chinese go-between pockets a tidy sum.

For the offspring of officials in the DPRK, there are also ample opportunities to work in China. In a typical situation, a DPRK official will alert another official to an opportunity for the second official's child to work in China for a DPRK-Chinese joint venture. After signing a contract, it is a cheap, easy process to obtain the necessary permit from the Chinese provincial Bureau of Labor and Social Security. The system is similar to the "ting xin, liu zhi" system in China in the 1980s, in which officials retained their government position with a suspended salary while going to work for a private company.

Over-reporting of actual value is a common phenomenon on the part of North Koreans charged with securing foreign investment. For instance, a commitment of RMB 10 million is reported to Pyongyang as a commitment of USD 10 million or more and the actual sum (the RMB 10 million) is reported as a first tranche. After the initial investment is realized, the central government is told that the foreign investor demands further preferences in order to inject more money. The reporting officials count on the central government either taking additional steps to attract the extra investment or doing something to upset the Chinese investor. In the latter case, the official can blame the lack of realizing the investment on political factors out of his control.

Northeast China is home to 10,000-20,000 North Koreans. PRC policy toward North Korean border-crossers shifted in 2002 in part because of growing evidence of the involvement of some crossers in criminal activity. Until 2002, Beijing and local northeastern Chinese government officials benignly neglected North Koreans "living peacefully" in northeast China. But in 2002, PRC policy toward North Korean border- crossers officially shifted, requiring the arrest and repatriation of "illegal migrants" to the DPRK.

In a number of areas along the southern end of the PRC-DPRK border, illicit cross-border smuggling persists, complicating the extent to which official trade figures fully capture the complex reality of PRC-DPRK exchanges -- official or otherwise. Scrap metal and antiques are among the staples of smaller-scale smuggling around Dandong. Profitability is difficult to discern. One Hekou smuggler reported that copper fetched RMB 49 (USD 6.30) per kilo on the black market in 2007. According to one Kuandian smuggler, the most successful smuggler in Hushan-- a full-time operator, unlike some others who smuggle only to supplement their normal incomes--can afford to pay his "employees" RMB 60,000 (USD 7700) per year, a large sum in an otherwise depressed area.

The complicity of corrupt local officials complicates PRC efforts to crack down on smuggling. Local police were well aware of the smuggling and turned a blind eye. Maintaining a good relationship with security officials is absolutely essential to smuggling operations. The ability of North Koreans to make multiple forays into China after repatriation underscores, in part, the corruption of North Korean soldiers and other security personnel on the DPRK side of the border. It also suggests, in select cases, ties of some border-crossers to resilient criminal networks in North Korea.

By the end of 2009 DPRK's poor harvest and severe food shortages were nothing new. The major difference from the famine of the late 1990s is that non-elite North Koreans had taken charge of getting their own food via unofficial markets; in the 1990s, many ordinary North Koreans sat around waiting for the government to save them and died of starvation. The increase in black market activity throughout the DPRK could be read as a sign of particularly tough, but not unprecedented, times in the North.

Just about everyone in North Korea now buys and/or sells things in black markets, including government officials and urban workers. People go to their work units for the morning roll call and then head off to the nearest market to "earn real income." The system is sustainable because even work unit supervisors and security force officers earn income at the markets -- though often in the form of bribes. At a typical market, approximately 85 percent of the goods come from China; the balance, were generally goods stolen from factories, government offices and/or people's homes.