BEIJING--Senior North Korean official Jang Song Thaek, who heads the country's economic policy, attended meetings with Chinese leaders Aug. 17 in Beijing, marking one step toward economic reforms that would involve the introduction of "market mechanisms."
Observers believe Jang, the director of the Central Committee Administration Department of the ruling Workers' Party of Korea, will begin earnest efforts to revive his country's ailing economy with Beijing's backing.
"The latest talk has confirmed that North Korea's new regime, led by Kim Jong Un, is earnestly considering reform and door-opening policies," said one source at a Chinese Communist Party think tank. "That is very significant."
According to China's state-run media, Chinese Premier Wen Jiabao told Jang that both countries should promote the use of market mechanisms in the two joint development programs under way: one in the Rason economic and trade zone in northeastern North Korea and the other on Hwanggumpyong and Wihwa islands in the Yalu river along the national border. These mechanisms will allow supply and demand to dictate the prices and quantities of the goods and services being offered in the market.
Wen also proposed introducing land and tax incentives and improving customs and quality control services in those zones.
China has realized rapid economic development by introducing market mechanisms and developing legal systems in special economic zones and elsewhere to encourage corporate investment from overseas. Wen, in effect, called on Jang to apply China's methods of reform and door-opening policies.
Jang expressed basic approval.
"Pyongyang wishes to cooperate closely with Beijing and further promote relevant works so that the joint projects can obtain greater achievements," he was quoted as telling Wen.
Beijing has attached importance to Jang's latest visit to China, which it thinks could "determine the future economic policy of the Kim Jong Un regime," the think tank source said. China, as co-developer of the economic zones, cannot expect to make major gains unless North Korea redirects itself toward reform and door-opening. In addition, a destabilized North Korea due to a sputtering economy would present a burden on China's security.
Pyongyang, meanwhile, has no choice but to step away from its previous path if it really wishes to revive its economy.
"Jang has visited China on many occasions and knows everything about China's reform and door-opening experience," one North Korean source said. "Beijing's latest proposals were probably well within what he had anticipated."
But excessively drastic reforms could invite hostility from the military and other parties with vested interests and compromise the stability of the Kim Jong Un regime.
"Jang is therefore planning to promote reforms only in the joint development zones for the time being and demonstrate the results," the source said.
During a separate talk with Jang on Aug. 17, Chinese President Hu Jintao called for "studying a new form of cooperation," indicating Beijing wants to urge Pyongyang to introduce reforms not only in the existing joint development zones but also in other areas in the future.
In the past, North Korea has made promises of various reforms and improvements to China but have failed to make good on them.
"We need more time to see how far things will evolve," said one source knowledgeable about North Korea's economy.
(This article was written by Kenji Minemura in Beijing and Akihiko Kaise in Seoul.)
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