- The Washington Times - Friday, April 2, 2010

PYONGYANG, North Korea (AP) | North Korea will phase out private markets and rely on state-controlled outlets, a senior economist said in a rare interview broadcast Thursday, amid speculation the country’s reclusive leader could soon visit China to secure much-needed investment.

Impoverished yet nuclear-armed North Korea has in recent years allowed some free markets for food and consumer items, while others not sanctioned by the state have also sprung up as the public turned to private enterprise to cope with declining living standards and food shortages. The government has had little choice but to tolerate the nascent capitalism, though its patience appears to wearing thin.

Ri Ki Song, a professor at the Institute of Economy at North Korea’s Academy of Social Sciences, told Associated Press Television News (APTN) in an interview in the North Korean capital that markets are helping improve the lives of the country’s citizenry, but their days are numbered.

“Markets will be removed in the future, by reducing their numbers step-by-step, while continuously expanding the planned supply through state-run commercial networks,” Mr. Ri said. “This is our official position on markets. Now, markets are used as a subsidiary means to offer convenience in peoples’ daily lives.”

Mr. Ri’s comments came as analysts debated the severity of the North’s economic problems, and whether they could threaten the regime of leader Kim Jong-il. The country is engaged in a standoff over its nuclear weapons with the United States, South Korea and other countries, and a second underground atomic test blast in May of last year drew an international rebuke in the form of tighter sanctions by the United Nations.

Mr. Kim may visit China soon, the South Korean government, news reports and analysts said this week, in a trip seen as possibly leading to the country’s return to six-nation nuclear disarmament talks and investment from close ally China.

Zhu Feng, a professor at the School of International Studies at China’s Peking University, said a flourishing “black economy” of underground market transactions in North Korea has arisen to meet the needs of about three-fifth’s of the country’s population of about 24 million people.

“The Stalinist-style planned economy has proven itself incapable of meeting the basic living needs of the population,” Mr. Zhu said at a forum on the North Korean economy held Wednesday in Seoul.

North Korea carried out a redenomination of its currency, the won, in December, a move many analysts have cited as a botched attempt to cool inflation and reassert the communist government’s control over a growing market economy. The measure reportedly sparked anger among citizens stuck with piles of worthless bills.

Mr. Ri acknowledged the country’s private markets closed temporarily because of a delay in setting prices after the reform but emphasized the economy had stabilized and markets reopened. “In the early days, immediately after the currency change, market prices were not fixed, so markets were closed for some days,” Mr. Ri said. “But now all markets are open, and people are buying daily necessities in the markets.”

He also denied reports of social upheaval caused by the abrupt currency change, which reportedly involved setting the rate of exchange at 100 old won to 1 new won and limiting the amount of currency that could be turned in.

Mr. Ri was put forward by the North’s government in response to a request to talk to an official who could explain its economic situation. It is rare for North Korean officials to discuss such issues with foreign media.

North Korea has set an objective of achieving the status of a “powerful and prosperous nation” in 2012, the 100th anniversary of the birth of the country’s founder, Kim Il-sung, father of leader Kim Jong-il.

As part of attempts to revitalize the economy, North Korea announced last month the establishment of a new State Development Bank.

The institution will work in partnership with another North Korean financial body - the Taepung International Investment Group - to try to overhaul the economy, according to Pak Chol Su, an ethnic Korean from China who serves as deputy director-general at the bank and president of the investment group.

“We have to find a solution for the infrastructure, railways, roads, ports and airports and electric power, and the issue of energy, which are most important for Korea,” he said in a separate interview with APTN.

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