Kim Jong Un Makes Economic Gamble

( Kim Jong Un, the communist North Korean dictator, has unveiled more details of his nation’s five-year economic plan…and it looks pretty risky. It’s part of a strategy to make the communist country more self-reliant after cutting off more than 90% of trade with China during the COVID pandemic.

The new strategy is designed to reward private entrepreneurship for the first time and consolidate government control over the economy…while simultaneously promoting self-sufficiency among citizens.

It sounds like North Korea wants to be the next China.

An interesting analysis from Jonathan Corrado at 38 North describes how North Korea has long as much as $8.2 billion as a result of international economic sanctions, with Pyongyang’s ability to deflect that pressure depending on whether its domestic economy can compensate for the lost earnings.

And, because North Korea doesn’t publish its finances, nobody really knows for sure just how badly they’re doing during the pandemic – but the country’s foreign exchange holdings are believed to have shrunk by as much as $1 billion every year since 2017.

The report describes how North Korea’s economy is defined by its cycle of liberalization and retrenchment, but the measures currently being put in place are the most extreme in its history. Kim Jong Un paved the way for further liberalization of the economy back in 2014 when he allowed private entrepreneurs to invest in government-run enterprises, and in 2019, when he enshrined in law a measure designed to give more autonomy to businesses overproduction and pricing.

In February, Kim’s Cabinet said they were considering granting even more power to private enterprises. In an announcement at a plenary meeting of the ruling party’s central committee, Kim stressed the importance of giving party members practical means of innovation, and establishing “substantial progress from the first year of the five-year plan.”

The plan will specifically focus on increasing the production of iron and steel and creating better infrastructure and transportation, and a new focus on construction across the country – much of which is impoverished and rural.

The state-run news agency KCNA said that Kim “evinced the determination and will of the Party Central Committee to take important measures to push forward the economic construction and provide the people with more stable and improved living conditions despite the persistent emergency anti-epidemic situation.”

Corrado explained how it will be a challenge to finance North Korea’s goals given its current financial constraints, referencing the country’s “historically low” budget growth of 0.9% for this year.

If Kim pulls this off, North Korea could become the next China.