As Omicron Stifle Commerce North Korea Braces Itself

In mid-November, the indications were there. As the train crossed the Yalu River, entering China from the North Korean side, it looked like North Korea and China were set to resume overland trade. 

Workers were observed repairing the Sino-Korean Friendship Bridge, which connects Dandong, China, and Sinuiju, North Korea, and is one of the few means to enter or exit the North. 

These indicators of activity led South Korean intelligence to believe that trade between the communist neighbors will resume soon, which would be a critical development for North Korea’s economy. However, the development of the omicron coronavirus variant forced Pyongyang to re-seal the country’s borders, proving that forecast incorrect. 

North Korean authorities are making every effort to ensure that the state’s emergency epidemic prevention system is flawless. Bilateral trade with China presently appears to be limited to cargo transfers between ships in international seas. Food and other commodities are in short supply in North Korea. 

North Korea’s gross domestic product is expected to shrink by 4.5 % in 2020. It’s the worst drop since a 6.5 % contraction in 1997, at the height of the Arduous March, a multi-year famine that is said to have killed millions of people.  

Despite its precarious situation, North Korea’s leadership believes the country can still resist pressure as long as grain and other essential prices remain consistent. Kim refuses foreign humanitarian relief, instead of preaching “self-reliance” and “frontal breakthrough” rhetoric. 

Another element is popular awareness of how to get by without relying on the government. The North Korean leadership has curtailed rations to senior Workers’ Party officials living in the capital due to the planned economy’s and rationing scheme’s failings. 

By legalizing the black market and allowing talented people to run businesses, Kim Jong Un facilitated the transition to a market economy. In the North, there are approximately 400 “consolidated markets” where regular people can make a living. 

This liberalization has spawned a new class of nouveau riche known as tonju, or “money masters”. 

The country’s economic indicators were increasing until 2016, when it suffered a series of setbacks. The first was in 2017, when the United Nations Security Council imposed sanctions on North Korea as a result of its sixth nuclear test. Petroleum imports were restricted as a result of the restrictions. 

The amount of foreign currency entering the country has decreased dramatically. North Korea’s foreign currency assets increased by $300 million to $400 million each year between 1997 and 2003. Due to the sanctions, those holdings dropped by more than $1 billion in both 2017 and 2018. 

Kim contemplated emulating China and Vietnam as growth models around the time he initiated discussions with former US President Donald Trump in 2018, because both countries achieved economic progress under socialist governments. In order to attract international investment, North Korea began a series of initiatives, including tourism infrastructure to attract inbound tourists. 

Those hopes were crushed when talks between Washington and Pyongyang broke down. The North Korean authorities feared that liberal ideology and other ideas might infiltrate the country, putting the dictatorship in jeopardy. 

Authorities tightened their grip on information. The government has established new rules that make sharing South Korean films illegal and increased youth indoctrination since last year. Kim has yet to find a way to economic prosperity after nearly a decade at the leadership. 

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