GoodFriends: Research Institute For North Korean Society

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North Korea Today No. 437 January 11, 2012

[“Good Friends” aims to help the North Korean people from a humanistic point of view and publishes “North Korea Today” describing the way the North Korean people live as accurately as possible. We at Good Friends also hope to be a bridge between the North Korean people and the world.]
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The Ban of Yuan in Markets
Banning Chinese Yuan to Cut off Domestic Connections to Defectors Overseas
Chilling Effects of Inspection in Border Areas
Defectors said: “Please put me in Chinese jail”
Will the new government succeed or fail? Year 2012 holds the answer
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The Ban of Yuan in Markets
The Central Party has ordered a policy banning the use of Chinese currency, Renminbi (yuan), which is being circulated in markets in North Korea. Instruction is repeatedly given in workplaces, public enterprises, schools and neighborhood units, "to go to banks and exchange yuan and other foreign currencies for domestic currency." If caught using yuan in markets or circulating it, the money will be confiscated and the person will be severely punished. In particular, it is warned that if caught using yuan in markets, goods and money will be confiscated on sight and the person will never again be able to do business in the market. Such order was made despite the fact that the mourning period for Kim Jong-il’s death is not yet over. A Central Party Official said, "We are just carrying out the policy that had been adopted last October"; he sees the measure as a part of the new leadership's policy.

The measure banning the use of yuan conveys the will of Kim Jong-un, the Vice Chairman of the Central Military Commission of the Workers’ Party. It is an attempt to slow down the trend of increasing economic dependence toward China. The portion of yuan used in North Korea's official and unofficial markets has been on the rise. During the Arduous March, yuan began to replace domestic currency in markets. The failure of currency revaluation on November 31, 2009, paradoxically solidified the status of yuan in North Korea. While yuan is not as important as the dollar or euro, the North Korean government is vigilant about its circulation, because it is widely used even by ordinary residents. Especially since the currency revaluation measure, merchants do not sell goods unless paid with yuan or dollar, aggravating the hardship of ordinary citizens. There is an opinion that "families with no relatives or defectors have no chance to have an access to foreign currencies. Increased filing of complaints that people with no yuan have difficulties buying goods could be another reason for taking the measure restricting the use of yuan."


Banning Chinese Yuan to Cut off Domestic Connections to Defectors Overseas
The effect of banning Chinese yuan on the domestic industrial development in North Korea remains to be seen. Some view that this decision was not made solely with economic considerations. A government official said that defectors seem to be behind the domestic circulation of the yuan, and that the ban aims to cut the defectors off from their domestic connections, attributing the inflow of yuan to families of defectors. “Due to tough living conditions, there are many people who have illusions about China and other foreign countries including South Korea, the United States, and Japan. Those who have an unhealthy ideology smuggle goods and commit crimes to obtain the yuan, and even leave for China and South Korea. These people who make it to South Korea after going to China use Korean-Chinese and North Koreans of Chinese origin as liaisons to send Chinese yuan into North Korea, while stealing domestic information and secret intelligence. They also spread words that are harmful to our country, and fabricate false stories. With an increase in these treasonous acts, a fundamental solution has been required.”

It means that the purpose of the ban on foreign currency is to promote industrial development and, and also cut defectors off from their domestic connections. This can be viewed as the continuation of the ban on foreign exchange transactions, which was an extension of the 2009 currency reform. On December 28, 2009, the North Korean government issued a decree on banning foreign exchange transactions without governmental approvals. People’s Safety Agency even threatened that after January 1 in the following year, using foreign currency in criminal activities such as selling things in truck, smuggling, or illegal border crossing can result in maximum penalty. However, the policy was not put in effect in reality, as social turmoil intensified with the soaring price of food and goods and death by starvation. Even some government officials do not have confidence about resuming the failed policy, and many say that they will have to take some time to see how well and thoroughly the new leadership is prepared.


Chilling Effects of Inspection in Border Areas
During the time of mourning of Kim Jong Il's death , there was tighter security on the borders than usual. It was so intense that some say it was blood-chilling. At Hwaryung in North Hamkyung Province, there have already been ten people captured and sent to jail. It used be the case that if border crossers, when caught, said that they were going to see the relatives in China to ask for help because of the desperate living conditions, they could expect some leniency. However, in this case, it was different: they were all sent straight to jail. A security officer strongly warned that from now on any border-crosser, regardless of the reason or his position, would not be able to politically survive in the country."

Those with cell phones are extremely cautious these days. Those spotted by satellite surveillance are also being punished severely. There have also been inhumane and degrading punishments. In Haesan-Shi, Ryang-gang Province, a resident who was caught using cell phone was made to walk three days with chains around his neck and feet. He was sentenced to life in prison, and his family was banished into the mountains. There is a wide spread rumor that the life sentence was just for show and that he might have already died because of the beatings he received while he walked around with chains on his feet and neck.

Security officers are raising their voices saying, that anyone using a cell phone should not expect to live another day. At present, if you get caught using a cell phone, it does not matter if you are a political elite; they will fully investigate the situation, and punish you severely. They are trying to stop national information leaking to outside. Even those inside the Security Office are not allowed to use a cell phone unless it is an emergency. The Security Office is issuing daily directives ordering to keep a close eye on civilians and government officials, and to deal with any minor incidents severely so that there should be no disturbances or agitation. As the people have become frightened, the number of people trying to get rid of their cell phones has increased. One phone can be traded for around 500 yuan, and phone cards valued at 100 are traded for around 200 yuan.


Defectors said: “Please put me in Chinese jail”
Only a handful of days have passed since the year 2012 began. Yet the border patrols around the Domun area in China have already caught about 10 defectors and sent them back to North Korea. The interrogation report shows that all of the defectors crossed the border due to hunger.
When the interrogator asked why they dared to cross the border while knowing that their lives were at stake, they responded with the same answer: "I had nothing to lose. I would have died anyway if I had stayed home. I was convinced and told myself: if I am doomed to death either way, I would rather choose to die trying to get out of the misery in North Korea. I was overjoyed when I survived crossing the border and got into China. But I got caught here in China."

They all begged the Chinese officials not to send them back to North Korea.
Some of them asked to be put in Chinese prisons. "I can do the chores or any work in the jail. If you cannot keep me here, then kill me. I would rather die here than go back to North Korea," said some desperate defectors. The Chinese officials who are weary of international pressure on human rights issues have ordered border patrols to send the border crossers back home on the spot when they get caught along the river instead of taking them into interrogation in China.

"It is not that simple to keep them in Chinese prisons. Our current policy on North Korean defectors is to send them back to their country immediately when they get caught along the border. Due to the severe food shortage in North Korea, the number of border crossers remains high. Even though the border surveillance on the other side has been tightened, the inflow of North Korean defectors to China does not seem to slow down. I can clearly see how desperate they are," one of the border patrol officers said.


Will the new government succeed or fail? Year 2012 holds the answer
The central government officials affirm that now the nation is more stable and sanguine than ever. They assess that the newly-formed Organization and Guidance Department is in control of all the areas in the country and it is fully prepared for any unexpected incidents. They also reckon that whether the new government succeeds or fails will depend on how it leads the country in 2012; will the new government continue the same strategy to which the Kim Jong-il regime adhered, closing the door to the outside world tightly and putting intense surveillance on people, or will it embrace foreign investment which will stimulate domestic economic growth? In short, the new government's success will depend on its foreign policy, and they foresee that China's influence on all domestic and foreign policies will increase. While his predecessor treated China as an equal partner, the new Kim will face a new dynamic in relationship with China; its influence will permeate North Korea's economy, politics, military, and other areas, resulting in imbalance of power.

"As far as the opportunity to expand its influence in the Korean Peninsula is concerned, the USA may have lost its chance," one of the government officials commented. "But there is still a chance and the chance should be now when the new government just has begun its era. The USA must change its attitude toward North Korea. It should stop threatening North Korea and try to reconcile its relationship with its counterpart by demonstrating its willingness to have a fair and equal relationship with it.

The government officials in Pyongyang are weary of expanding China's influence but recognize that they lack the ability to prevent it. They believe that the North Korea-China trade will take up to 80% of the overseas trade, and that China's influence in non-governmental and civilian interchanges will expand .”

In the new year, the trade companies in rural areas are allowed to expand into China. Of course, they have to successfully pass the security clearance. It is likely to become fashionable for big companies having their headquarters in Pyongyang to open local branches in rural areas and dispatch resident employees to China. Last year, the North Hamgyong Provincial Party acted to enhance their local finances by opening restaurants in Liaoningsheng, China, for the first time. This year this type of development is expected to appear in other regions as well.

One official said, "The Chinese government is vigorously promoting an early visit to China by our new leader. They even propose that if the visit is going to take too long, the Chinese delegation will visit Pyongyang in order to enhance amity with North Korea. Their intention must be to increase our nation's dependence on China before the new party leadership settles down. What does it mean that the Chinese government now offers to give 500,000 t of food and 200,000 t of oil while they hesitated when our leader (Kim, Jong-Il) visited China for the same help in person many times? It is their intention to prevent the emergence of any political forces whose base is either the United States or South Korea before the new leadership is firmly established. The reason our new leadership tries to limit trade with Yuan is due to concerns about this Chinese scheme."

However, the leadership's dilemma is that the power of China is practically and absolutely necessary. The officials have no doubt that they will enhance negotiations and cooperation with China. In practice they allow local business to enter China, encourage joint ventures and cooperation with China, and plan to greatly increase the number of resident trade officers in China. It is also planned to encourage Chinese companies' investment in North Korea, to enlarge the ranges of Chinese tourism, and to expand social, cultural, and arts interchanges such as sports, medical service, education, and arts in addition to economic realm.
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