- The Washington Times - Saturday, September 21, 2002

SEOUL North Korea has designated a city on its border with China as a special administrative region, where some experts think the communist country will try to attract foreign investors.
The Presidium of the Legislative Supreme People's Assembly issued a decree Sept. 12 to set up the "Sinuiju special administrative region," North Korea's official news agency, KCNA, reported Thursday.
Sinuiju, located at the northwestern tip of North Korea, is the nation's main gateway to China, its last remaining major ideological ally and trade partner.
The city of 400,000 has chemical, metal and food factories. It has often been cited as a potential candidate for a free-trade zone as North Korea cautiously experiments with elements of a market economy.
In 1999, North Korean officials asked South Korea's Hyundai conglomerate to build an industrial complex there. Hyundai did not accept the proposal, citing poor infrastructure.
Thursday's announcement came as soldiers of the two Koreas opened parts of their heavily fortified border and began removing mines to reconnect cross-border railways that have been severed since the 1950-53 Korean War. If reconnected, the rail line will link Seoul and Pyongyang and continue to Sinuiju and China.
"A free economic zone is the most likely scenario for Sinuiju," said Park June-young, a North Korea expert in Seoul's Ewha Women's University.
South Korean government officials were studying the North's motive. "We are looking into what this statement means. Based on information we have, it's still too early to say for sure that North Korea is setting up a new special economic zone there," said Cho Won-kyu, a North Korea analyst at Seoul's Ministry of National Unification.
North Korea's economy, based on the philosophy of self-reliance, is in deep trouble after losing its Soviet trading partner and aid sources in the early 1990s.
A series of floods and other natural disasters later pushed the country toward famine that killed hundreds of thousands and forced its government to rely on outside aid to help feed its 22 million people.
North Korea began experimenting with capitalism in the mid-1980s, but foreign investors shunned the country's first free economic zone at its northeastern tip, close to its border with Russia. The Rajin-Sunbong zone lacked infrastructure, and only a few empty hotels now stand there.
In January 2001, North Korean leader Kim Jong-il visited Shanghai and toured auto and computer chip plants and the stock exchange, raising speculation that he was considering market reforms.
Since July, North Korea has raised wages and loosened price controls in moves that observers viewed as significant because they include elements of a market-based economy in one of the world's most tightly controlled countries.


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