China Will Invest US$3 Billion in North Korea

David Nealis at Yonsei University in Seoul

China will invest US$3 billion in a special economic zone in northeastern North Korea, a boost for the DPRK’s central planned economy and hopefully to the 200,000 residents of Rason.Pyongyang's dependence on Beijing, its only major ally and largest trading partner, has grown over the years. 

According to sources, China would build an airport, a power plant, a cross-border railway and piers in the North's Rason economic zone bordering China and Russia by 2020, Yonhap reported yesterday. In return for the construction, China had secured the right to use the Rason port for 50 years, the South Korean news agency said. Though there has been no official statement from Beijing. 

The 55-kilometre cross-border railway track will connect Rason with the Chinese city of Tumen. The use of piers at Rason gives China's northeastern provinces direct access to the Sea of Japan, giving a boost to the economy of north eastern China as well. China had lacked this access for 150 years, since it signed a treaty ceding part of its coastline to Russia and leaving its northeastern part landlocked. The new arrangement reduces shipping costs for Chinese firms operating in the area.

While total accumulated foreign investment in North Korea reached US$1.475 billion in 2010, up from US$1.437 billion the previous year, according to the United Nations Conference on Trade and Development, Pyongyang's economy is still struggling. This is not the first time China has set up an SEZ with the North Korea, but let’s hope for the people of North Korea that this time it is successful.