Analysts: North Korea seeking economic reforms

By Agence France-Presse
Friday, August 10, 2012 11:37 EDT
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North Korean leader Kim Jong-Un watches a military parade in Pyongyang in April 2012. Kim faces no threat to his rule despite the sacking of his military chief, but also shows no sign of seeking reforms or easing confrontation, a leading think-tank says
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North Korea’s new leadership is apparently pushing for reforms in a bid to revive its crumbling state-directed economy, analysts and a South Korean official said Friday.

“Our government is aware of North Korea’s discussion and consideration of various changes in the economic sector since the launch of its new leadership,” Kim Hyung-Suk, spokesman for the South’s unification ministry, told reporters.

These were probably aimed at improving the people’s livelihood, he said, adding specific details have not been confirmed.

The extent of the latest changes was unclear. The North in 2002 introduced limited reforms but rolled them back three years later, apparently fearful of loosening the regime’s grip.

Washington-based Radio Free Asia (RFA) said Thursday the regime has held public lectures about the new system, which centred on easing tight controls over output and letting each production unit become self-supporting.

Factories or companies would be given greater autonomy in management and set prices of products by themselves, RFA said.

The state would distribute food rations and other materials only to government, military, education or health workers.

In agriculture, the regime would take 70 percent of the harvest from collective farms and farmers would keep the remaining 30 percent, it said.

The official food distribution system largely collapsed during the famine years of the 1990s, and analysts say it currently only covers part of the population in any case.

Private markets sprang up as people struggled to survive in the famine years and have become increasingly important.

In late 2009 a shock currency revaluation wrought havoc with distribution networks, aggravating food shortages and sparking inflation.

The move was widely seen as a bid by the regime to clamp down on growing market activities.

One analyst said the latest changes indicated that the North may follow in China’s footsteps to some degree.

“Factories and collective farms appear to have been given greater autonomy, as China did in the early stage of economic reforms,” said Cheong Seong-Chang, a researcher with South Korea’s Sejong Institute think-tank.

The North’s main ally China has urged it to adopt reforms to revive the economy, beset by mismanagement and chronic shortages of food and energy.

Some analysts said the regime is unwilling to relax its grip too much.

“It looks like North Korea is attempting to resolve its economic problems within its own framework by tightening the regime’s control of economic issues and improving productivity,” Lim Kang-Taeg, at the South’s state-run Korea Institute for National Unification, told Yonhap news agency.

Agence France-Presse
Agence France-Presse
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