China hails N. Korea's move to set up economic zone

Asian Political News, Sept 30, 2002

BEIJING, Sept. 24 Kyodo

(EDS: ADDING DETAILS)

China on Tuesday lauded North Korea's recent setting up of a semi-autonomous special administrative region along its border with China's northern Liaoning Province that has drawn comparisons to Hong Kong and Chinese special economic zones established to draw in foreign capital.

Foreign Ministry spokeswoman Zhang Qiyue told reporters that China ''welcomes and supports this new measure taken by the DPRK (Democratic Republic of Korea) in the development of its economy.''

But Beijing declined to claim credit for influencing Pyongyang's move, with Zhang saying, ''China's model does not necessarily suit other countries.''

The North Korean government has appointed a Chinese-Dutch businessman, Holland Euro-Asia Group CEO Yang Bin, as governor of the ''Sinuiju special administrative region,'' according to the official Korean Central News Agency (KCNA), monitored in Beijing.

KCNA said a decree was issued on Sept. 12 setting up the special administrative region, which will be turned into an ''international financial, trade, commercial, industrial, up-to-date science, amusement and tourist center.''

Taking a leaf from China's ''one country, two systems'' approach on Hong Kong, a North Korean basic law has granted legislative, administrative and judicial rights to the region, which KCNA said ''shall conduct external activities on its own responsibility within the limit approved by the state and can issue its own passports.''

According to media reports, Yang, 39, whose personal wealth is estimated by Forbes magazine at $900 million, making him the second richest man in China, told foreign reporters Monday in Pyongyang that he intends to run the region in a capitalist style comparable to that of Hong Kong, without interference from the North Korean government.

North Korea apparently hopes to turn Sinuiju into a launching pad for economic reforms that could lead the country toward a market economy.

In the early 1980s, China accompanied ground-breaking market reforms by designating Shenzhen, Zhuhai and Shantou in Guangdong Province; Xiamen in Fujian Province and Hainan Island as special economic zones, allowing them to offer tax breaks to foreign firms to encourage overseas investment.

Chinese academic Jin Xide told Kyodo News that North Korea cannot follow too closely in the steps of China's economic reforms because of its small size and lack of options, since the world has now largely abandoned the socialist economic model.

''North Korea has no choice. They have to reform or die,'' said Jin, a scholar with the influential Chinese Academy of Social Sciences.

''They do have some advantage over China and Vietnam in pushing ahead with economic reforms, however, in their high education and technical levels.''

North Korea appears intent on introducing far-reaching economic reforms -- as long as its leaders can promote mutual development with other nations, and if these nations provide assistance, he said.

''North Korea should be able to continue with economic reforms, as long as they are carried out gradually and cautiously. It cannot adopt the Western model straight away and throw open its doors to the world,'' he said.

In early July, Pyongyang scrapped its socialist rationing system while simultaneously raising wages and prices, in an unprecedented sign North Korea's secretive leadership may have decided to push their impoverished nation onto a market economy path.