Chinese company’s withdrawal from N. Korea could be related to recent ouster

Posted on : 2013-12-11 15:06 KST Modified on : 2019-10-19 20:29 KST
Ousted Jang Song-thaek had been responsible for attracting business from China
 meeting with then-Chinese President Hu Jintao.
meeting with then-Chinese President Hu Jintao.

By Kang Tae-ho, senior staff writer

Japanese newspaper the Nihon Keizai Shimbun reported on Nov. 22 that a Chinese state-run corporation that had been participating in the development of a special economic zone in North Korea scrapped its investment plans and pulled out of the project.

At the time, the report didn’t attract much attention. But now that Jang’s ouster has been confirmed, the company’s departure could be connected with the fall of Jang, former Workers’ Party of Korea (WPK) administrative department head.

According to the paper, China Merchants Group was participating in the development of the Hwanggumpyong and Rason special economic zones through the “full investment” method. The article quoted Yang Tianping, executive of China Merchants Shekou Industrial Zone, a subsidiary of the group, who said that they had pulled out of both Hwanggumpyong and Rason.

“We will not be developing these areas after all,” Yang said. “The conditions were not mature.”

When asked why the group was pulling out, Yang explained that they had proposed that the regions be operated according to market principles but that the conditions proposed by the North were poor.

China Merchants Group, which was established in 1873 as a company for investing in development projects, is China’s largest state-run harbor operating company, with 1.5 trillion RMB in assets (around US$247.08 billion). The group is said to have played a leading role in the development of the Shenzhen Special Economic Zone, one of the first such zones to be developed in China.

There is some reason to believe that the China Merchants Group’s withdrawal from the development projects is connected with the purging of Jang Song-thaek. In Aug. 2012, Jang visited China and met with then-Chinese President Hu Jintao. Jang was the first senior North Korean figure to visit China after the death of former leader Kim Jong-il.

Along with this, the third North Korea-China joint conference was held about investing in the development of special economic zones. This is when China Merchants Group made its plan to make a major investment in North Korea.

During the joint conference, which was organized by Jang and Zhen Deming, then Chinese minister of commerce, it was decided to launch joint management committees for both Hwanggumpyong and Rason. This was what prompted the China Merchants Group and other large state-run corporations to invest in Rason.

As a result, it appears very likely that the group’s decision to shut down its operations there is connected with Jang’s ouster. From the perspective of foreign investors, the ouster of Jang, who was leading economic development in North Korea, could have been seen as a signal to stop investing in the North.

At the time, Chinese media reported that the investment team from the China Merchants Group visited Rason in the middle of July, before Jang’s visit to China, and reached a basic agreement with North Korean government officials about future development of the special economic zone.

In addition, the day that Jang met Hu Jintao, the Yatai Group signed an agreement to build a construction materials industrial complex in Rason. Yatai Group is a large cement producing corporation in Changchun, Jilin Province, China. Observers wonder what is going to happen to Chinese plans to invest in such development projects.

Please direct questions or comments to [english@hani.co.kr]

 

button that move to original korean article (클릭시 원문으로 이동하는 버튼)

Related stories

Most viewed articles