N. Korea's Rajin-Sonbong Vibrant with Capitalist Activity

The Rajin-Sonbong special investment zone in far northeastern North Korea has become a capitalist boomtown that seems out of place in an impoverished communist nation, according to a report in the mass-circulation daily Chosun Ilbo.

The zone’s prosperity is a product of the 150 lucrative joint ventures with which N. Korea has lured companies from China, Japan, Canada and Russia. The lifestyle and prices prevailing inside the zone make it the envy of all other regions of N. Korea.

“Taxis race across newly-built roads, while apartments are being constructed everywhere,” said a defector who had lived in the special economic zone until earlier this year.

The zone’s neon lights are as lively as those in capitalist cities, he recalls. A typical restaurant meal there costs $16 — about two days’ wages for the average N. Korean worker. Four out of five people have mobile phones. Most goods and services are bought with foreign currencies, including the prostitutes who operate with near impunity in the zone despite stringent laws making it punishable by death.

As in capitalist societies, money talks louder than authority, with many government officials easily bribed to overlook such illegal activities and some even eager to participate by pimping for Chinese businessmen.

Rajin-Sonbong is where most N. Koreans would live if given the chance, according to a survey of 200 N. Koreans who had defected in 2012 and 2013 conducted by the Institute for Peace and Unification Studies at Seoul National University.

Being in the zone opens up the possibility of being hired directly by foreign businesses and earning wages that afford a standard of living that most N. Koreans can only dream about. Foreign businesses have taken to recruiting workers directly to avoid the meddling of party officials looking for bribes.

Rajin-Sonbong’s freewheeling capitalism has made the regime fearful that its attitudes may catch on in the rest of the country. In what may be the highest praise that can be bestowed on the zone, it has been called a “rotten hotbed of capitalism” by Kim Jong-un’s uncle-in-law and mentor Jang Song-taek who has recently ordered access to the zone be restricted.

Rajin-Sonbong is the most successful of the four special economic zones and 14 smaller development zones promoted by Kim Jong-un soon after he became leader in late 2011.

The special economic zone of Hwanggumpyong located on an island in the Amrok (Yalu) River in North Pyongan Province was the focus of intense efforts to woo Chinese investment last year. However, the effort stalled due to Beijing’s ire at Pyongyang for increasing tensions on the Korean peninsula with its recent long-range missile launches and nuclear test.

Anther zone that has foundered is Kangryong in South Hwanghae Province. In hopes of luring Chinese investments, in 2011 the area’s 500 local businesses were shut down by Pyongyang. But last July Beijing declared that it would not participate in its development, citing the area’s poor infrastructure and port facilities.

None of the 14 development zones in nine cities and provinces has so far been unsuccessful at luring significant foreign investment.