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Cranes and trucks at the construction site for a special economic zone along the North Korea-China border

“The border region between North Korea and China is developing as we speak.”

That was the conclusion last month from Lee Jong-seok, a senior research fellow at the Sejong Institute, after his recent survey of the area.

“Construction was taking place all around. It was something I hadn’t seen when I visited in 2012, and very different from what I saw last year,” Lee added.

The People’s Republic of China State Council‘s decision under Premier Li Keqiang to approve construction of its first state-level border economic cooperation zone in 23 years at Ji’an and Helong on the North Korean border shows both the direction of current development and its strategic significance.

“What makes this so important is that it‘s a clear indicator that the focus of North Korea-China economic relations is on boosting collaboration and connectivity, rather than the zone’s size or economic role,” Lee said.

For instance, the Ji’an-Helong zone differs from another zone set up at Dandong-Hunchun in 1992 in that the former’s inland location means its focus is exclusively on economic cooperation with North Korea. Located on the sea, the Dandong-Hunchun zone was positioned to allow cooperation with other countries besides North Korea, including South Korea and Russia. The next question is whether the Chinese central government‘s approval of the two zones ties in with President Xi Jinping’s announcement of detailed plans in March for the Belt and Road Initiatives, a new China-centered economic belt creating a new land and sea “Silk Road.”

Also part of this trend is the “hushi” trade district opened up on Oct. 15 at Dandong, a city in China’s Liaoning Province that faces Sinuiju in North Korea. Hushi trade is a limited form of free trade permitted by Beijing to promote quality of life improvement and economic development in its border region and cut down on clandestine trade. The Sinuiju-Dandong line now processes over 70% of trade between North Korea and China. Meanwhile, the Chinese government is also on schedule with building key infrastructure agreed upon with North Korea, including the building of the New Yalu (Amnok) River Bridge linking Dandong and Sinuiju and a joint office for the Hwanggumpyong special economic district.

“What we ought to note about this infrastructure is that it has been built amid UN sanctions against North Korea,” Lee said.

North Korea has also been proactive in developing its border region with China. A total of 21 economic development zones have been set up since leader Kim Jong-un’s first mention of them at a plenary meeting of the Workers’ Party central committee on Mar. 31, 2013; eight of them are up and running on the border region on the Yalu and Tumen (Duman) Rivers. This brings the current total up to four Chinese state-level border economic cooperation zones, three North Korean special economic districts, and eight North Korean economic development districts operating in the border region. Another border economic cooperation zone is currently being pushed for Changbai, a county in China’s Jilin Province that faces the city of Hyesan in North Korea‘s Chagang Province.

North Korean workers are also being brought into major border cities at an accelerating rate.

“There are believed to be around 40,000 to 50,000 North Korean workers living in China, especially in the provinces of Liaoning and Jilin, and that’s a conservative estimate,” said Lee. If true, the number would be well over twice the estimate of 19,000 or so North Korea workers in China given by the South Korean Ministry of Foreign Affairs in 2013.

An official with an economic development district in the city of Tumen in the Yanbian Korean Autonomous Prefecture of China‘s Jilin Province gave an example of the boom.

“In 2014, there were around 1,500 Korean workers at the Tumen Korean Industrial Park. This year, the number is up to around 3,000,” the official was quoted by Lee as saying.

“Companies guarantee lodging and pay 1,500 yuan a month [around US$235],” the official reportedly added.

“If you estimate yearly per capita earnings at about US$3,500, that would mean remittances of between US$140 million and US$170 million a year for 40,000 to 50,000 workers,” Lee explained.

The estimate is roughly double the average total yearly earnings of US$86 million for the North Korean workforce at the Kaesong Industrial Complex. Remittances by North Korean workers in China are also left out of North Korea-China trade totals.

“There is likely to be a significant amount of foreign currency going into North Korea through tourism with China and export of workers that is not captured in the official statistics,” said Lee.

At least three factors are at work in the current North Korea-China economic cooperation: the heavy economic demands of the central Chinese government, the pragmatic policies of economic openness since Kim Jong-un’s arrival as leader, and strategic decisions by authorities in Beijing.

By Lee Je-hun, staff reporter

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