North Korea’s ruling party instructed the cabinet’s Ministry of External Economic Relations in early February to pursue a new strategy aimed at securing a foothold in industrial sectors of the Russian market currently dominated by Chinese companies, a source in Pyongyang told Daily NK recently.
The instructions came from the Economic Department of the Workers’ Party of Korea and are designed to ensure that North Korea gains meaningful advantages from its relationships with China and Russia.
“This is regarded as a turning point in our external economic front,” the source said, requesting anonymity for security reasons.
The source quoted the economic department as follows: “Superficially, we need to maintain the basic framework of economic cooperation with China and Russia. But we need to inconspicuously set the stage for meaningfully engaging in industrial sectors in the Russia market that are basically being monopolized by Chinese companies at the moment.”
The economic department is describing a structural move from trade in goods to industrial participation. The department specifically noted how industrial bases in automobiles, mobile phones and electronic devices — sectors once controlled by South Korean companies — have been largely absorbed by Chinese companies since Russia launched its war against Ukraine.
A key point made by the economic department is that amid these changes, North Korea needs to become not a mere spectator but a real actor in the Russian market. One potential option is for North Korean companies and technical staff to use Russia as a launchpad for joining business initiatives by Chinese companies.
North Korea bids to maximize wage competitiveness
One strategy proposed by the economic department is maximizing wage competitiveness and avoiding needless complexity in contract terms to make North Korean workers the most pragmatic choice. A second is leveraging skilled labor and worksite adaptability amid low-wage conditions to increase North Koreans’ presence in workplaces assembling automobiles, communications devices and electronic devices.
These strategies need to be prioritized, the economic department said, so as to acquire long-term influence rather than short-term gain.
As part of those efforts, the economic department also passed along a list of objectives in negotiations with Russian and Chinese companies. North Korean negotiators are specifically supposed to push for production jobs at joint ventures and subcontractors where workers can accumulate technological knowhow.
In this process, the economic department emphasized, the Ministry of External Economic Relations is supposed to not only provide administrative support but also serve as a proactive negotiating partner. The ministry is supposed to rise above its former passivity by engaging with the business sector and arranging working-level negotiations, exemplifying the slogan of “New Year of initiative, New Year of advancement.”
“This is directly linked to the economic line that will govern the next five years after the Ninth Party Congress. These outreach efforts and negotiations will kick off at the end of February, which happens to be when Russian and Chinese companies are both solidifying their business plans for the beginning of the year. North Korea regards that as a favorable window both for offering concrete terms and expressing its commitment,” the source said.
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