China Wants North Korea to Model Its Economy on Singapore or Vietnam

In this May 7, 2018, photo provided by the North Korean government, North Korean leader Kim Jong Un, left, meets Chinese President Xi Jinping in Dalian, China. Independent journalists were not given access to cover the event depicted in this image distributed by the North Korean government. The content of …
Korean Central News Agency/Korea News Service via AP

China’s Global Times picked up on reports that North Korean dictator Kim Jong-un expressed interest in the ultra-modern amenities of Singapore and its economic system, suggesting in a Tuesday op-ed that Kim should use Singapore’s “state-driven development model” for reforms in his own country.

China has long urged North Korea to follow its own model, and by some accounts came pretty close to persuading Kim’s grandfather and predecessor Kim Il-sung to embrace the reform agenda of China’s president in the 1980s, Deng Xiaoping. If those accounts are to be believed, Chinese arrogance, North Korean claims to greater communist purity, and Pyongyang’s gruesome internal politics scuttled the reform effort, leaving the primitive North Korean economy vulnerable to famine in the 1990s.

The often-confusing relationship between the current regimes of China and North Korea seems to preclude Pyongyang from adopting “Xi Jinping Thought” and embracing China’s economic platform. Among other factors, some believe Kim Jong-un and his inner circle remain angry at Xi for plotting to overthrow him a few years ago and replace him with his more pliable half-brother Kim Jong-nam, who was murdered with nerve agents in 2017 to decisively end such plans. There may also be some hard feelings over China’s willingness to sign on to harsh international sanctions against North Korea’s nuclear program.

This week, Reuters floated the idea that Pyongyang will still look to Beijing for a reform template, no matter how much resentment for the Chinese lingers in Kim’s offices or how chummy he gets with President (and aspiring North Korean beachfront property developer) Donald J. Trump.

Reuters cited “experts” who touted the enduring appeal of Deng Xiaoping’s transition from the dark ages of Mao Tse-tung’s hardcore communism to the “economic miracle” of a “state-controlled market economy.” No matter how much Kim might desire the benefits of greater international trade and advanced industrial technology, he is unlikely to lose his appetite for state control, and China is far better positioned geographically and economically to influence North Korea than the United States or South Korea.

It is, therefore, intriguing to see one of China’s state-controlled media organs advising Kim to take a long look at Singapore instead of accepting Chinese stewardship. The Global Times states the “Singapore model played a vital role” in Deng Xiaoping’s reforms, and suggests it can play the same role for North Korea. Vietnam, which currently has strained relations with China, gets a favorable mention as well:

Export-led development strategies have been the dominant paradigm for economic growth throughout East and Southeast Asia. Only North Korea is today running a relatively closed economy.

If Pyongyang can adopt an opening-up policy following the Singapore model, the isolated country can soon integrate into the Asian industrial chain and achieve an economic take-off.

Besides Singapore, some other Asian countries can also provide useful reference points for North Korea to develop its economy.

For example, being an export-oriented economy, Vietnam’s somewhat surprisingly fast growth owes a lot to its investment-friendly environment.

If North Korea wants to follow in the footsteps of other Asian countries to achieve economic success and reduce poverty, we believe Pyongyang will open up its economy to the outside world eventually.

Given that the Vietnamese are currently protesting Chinese economic imperialism with such gusto that the Chinese embassy in Hanoi is concerned for the safety of visiting Chinese citizens, it is interesting to see a Chinese paper recommending Vietnam as an economy worthy of Kim Jong-un’s careful study. The Global Times piece has a whiff of “look anywhere but America for guidance” about it.

Coincidentally, the Diplomat mused on Monday that North Korea is unlikely to follow the “Doi Moi” economic reform path taken by Vietnam, even though North Korea actually has more advantages than Vietnam did when it launched reforms in the 1980s, including a better industrial base and a stupendous amount of untapped mineral wealth.

The problem facing Kim Jong-un is that he will need a great deal of foreign investment, skilled workers, and industrial capital to access the $10 trillion in buried mineral treasure he is sitting on. To approach Vietnam’s level of GDP growth, foreign investment would have to rise to at least 20 or 30 percent of North Korea’s economy. It currently stands at roughly zero percent.

Such a dramatic increase in foreign investment – along with an influx of foreign workers, technicians, and supervisors for massive mining and industrial projects – would make it difficult to maintain the level of tight central control Vietnam’s government managed during its economic transformation.

The paranoid Kim regime could prove very reluctant to accept the level of outside “contamination” required to follow Vietnam’s path, even if most of the money and workers come from Communist China. A case could even be made that China is more interested in undermining the Kim regime’s authority and colonizing North Korea than the U.S. and its allies would be. Kim can see such a case being made in the streets right now if he takes the Global Times’ advice and has a look at Vietnam.

As for Singapore, it is actually having a bit of trouble with trade protectionism and an industrial downturn at the moment, its economy poorly positioned to handle global trade tensions and interest-rate hikes. Some Singaporean analysts saw the Trump-Kim summit as a distraction from the more pressing issue of U.S.-China trade.

There is no question Singapore’s economy is vastly superior to North Korea’s, and it certainly does have a flair for authoritarianism, although its character is much different from the way Kim prefers to rule his long-suffering people.

The South China Morning Post wondered in late 2016 if conditions in Singapore have gotten a bit too loose for Chinese tastes, as the much smaller nation pursues a unique form of authoritarianism without much totalitarianism – a mix possible largely because the small and geographically isolated population values stability and security so highly. It is no fun being a dissident or political opposition leader in Singapore, but it is much less unhealthy than assuming that position in China or (God help you!) North Korea. The government of Singapore is less of a presence in the daily lives of most citizens.

CNBC postulated on Monday that Kim will try to keep systemic change in North Korea minimized by creating “special economic zones,” similar to the joint projects occasionally undertaken with South Korea. Within these little bubbles around vital natural resources and tourist areas, North Korea’s ogrish totalitarian communism will back down a little bit, allowing the kind of commercial activity currently found only in the black market.

CNBC notes that North Koreans have a “growing market mindset” due to widespread under-the-table business activity, and they are distinctly unhappy with Kim’s failure to deliver promised economic growth after he finished defying the world by developing nuclear weapons. North Korea is even slowly developing a weird variety of “rising bourgeois,” an elite group of politically-favored upper-caste citizens who took advantage of their privileges to become wealthy through commerce.

Kim’s short-term objective is to entice foreign investment and tourism by offering safety and stability while minimizing the impact of foreign commerce on his rigid ideology. The urgent task for U.S. policymakers is persuading him that giving up his nuclear program swiftly and completely is the only way to obtain sanctions relief and reboot his economy. Their long-term project should be sabotaging whatever ideological safeguards North Korea puts in place and subverting its hellish system. Keeping China out of the mix as much as possible will be crucial to that endeavor.