From North Korea, Word of Shortages, Grudges

Associated Press

The bridge at Dandong, China, above, is North Korea's main link to the world.

DANDONG, China—One evening last week in this Chinese border city, restaurants bustled and taxis honked. Tall buildings were clad in LED displays. Just beyond the din, an empty o­ne-lane bridge extended across the Yalu river, to a darkened North Korean city o­n the other side.

This narrow border bridge is North Korea's lifeline to the outside world, carrying what economists estimate is some 70% of the country's trade volume. Earlier in the day, roughly 100 trucks and four trains traveled across to the North Korean town, Sinuiju. That afternoon, traffic reversed direction. Most trucks returned empty.

WSJ's Evan Ramstad visits a rundown North Korean border town just a bridge apart from its booming, prosperous Chinese neighbor.

Smoking a cigarette in the customs area after trip to Sinuiju, truck-driver Wang Quangui said he had brought 20 loaves of bread to distribute to friends and strangers, his contribution to solving North Korea's most intractable problem.

This sleepy crossing speaks to North Korea's privations and economic malaise just as the country enters a season observers believe will bring its biggest political transformation in decades. The ruling Workers Party of Korea's first full gathering of party representatives since 1966 is expected to start this coming week, and to signal the successor to ailing leader Kim Jong Il.

North Korea's closed borders, state-controlled media and authoritarian rule make divining its leaders' and citizens' thoughts largely a guessing game. North Koreans who traveled to Dandong last week for business declined to speak of conditions in their country.

But Chinese traders and recent defectors from North Korea, who have spoken recently with residents, say the backdrop of the coming meetings appears to be hunger with an edge of martial restlessness. Some of these people say that as fall approaches, North Korea is in the midst of its worst food crisis since its late 1990s famine.

The Workers' Party meeting in the capital, Pyongyang, is expected to run four or five days and is being closely watched by outside analysts and diplomats.

A Quiet Gateway to North Korea

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Evan Ramstad/The Wall Street Journal

The "Broken Bridge" near the the Dandong-Sinuiju crossing was partly destroyed by American bombing in the Korean war of the 1950s. A big screen o­n the bridge shows war footage.

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Most believe Mr. Kim will appoint his third son, Kim Jong Eun, to a post that would signal the start of a leadership transition, preserving family control of the country that began with Kim Jong Il's father, Kim Il Sung, in 1948. A few analysts believe possible dissatisfaction among elites could result in a collective, Politburo-style leadership structure.

The economic decisions that emerge may be just as important. For the past decade, the government and party experimented with market reforms but stuck chiefly to its system of central control and isolation from the rest of the world—a policy made clear by the trickle of trade through Dandong.

The government's latest economic move came last winter, when it attempted to clamp down o­n market activities by issuing new, revalued currency and setting new prices for goods.

The decision spurred chaos. North Korean defectors and aid workers say new prices were ignored. Though North Koreans received small amounts of new cash, inflation set in, leading to hoarding as sellers of commodities like rice expected to receive more money later. The government rolled back the effort after food became scarce and protests grew, but the situation remains unstable, these people say.

In Seoul, a North Korean man who left the country in December said this week that his brother and parents in the North haven't eaten rice in months.

"Even if you have money, there's no rice to buy now because the people with rice don't sell," said the man, who asked o­nly to be identified by his surname, Kim. He said he talks to his family using cellphones, which are illegal for most North Koreans. "My brother has a small piece of land where he plants potatoes and barley. They can't afford rice. They don't even imagine it."

Mr. Kim said he knew collective-farm workers and even officials who stole corn from farms where they worked. He recalls older people, in their 80s, who lived in tiny huts near farm plots "for fear of their corn or potatoes being stolen overnight."

Kay Seok, a Seoul-based researcher for Human Rights Watch, blames the currency revaluation for the latest round of hunger. Two months ago, she says, markets were operating at 10% to 30% of their pre-clampdown pace in some cities. She says she has heard that markets are now nearly back up to previous pace in some places.

Mr. Kim, the defector, said oppressed North Koreans "harbor a grudge deep inside" against those in the ruling class. The regime has crushed revolts in the past, and there is no indication more are in the offing.

But Mr. Kim said many in the country would welcome conflict with the outside world—not out of the nationalistic fervor the country's bellicose leaders have sought to instill, but as a pretext for uprising. "North Koreans say in unison they want a war. … I think if that happens, North Koreans will fight more between themselves than with South Koreans," Mr. Kim said. "Families say, 'OK, when a war breaks out, I will shoot this, this and this person to death.' "

The reclusive North has long sought international funds by selling arms and contraband goods, intelligence sources in the U.S. and elsewhere say, spurring several rounds of international sanctions.

The U.S. recently toughened sanctions against North Korean elites after an international panel determined Pyongyang was responsible for the March sinking of a South Korean warship, the Cheonan.

The sanctions affect o­nly a few luxury items in the food trade, and many countries including the U.S. provide humanitarian food assistance to North Korea.

But analysts say the growing food problem may have been a key reason Kim Jong Il made a surprise trip last week to China, his country's chief economic benefactor.

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Associated Press

Leader Kim Jong Il visiting China's Hu Jintao in late August.

China's investment and trade with North Korea stood at just under $3 billion last year, tiny by global standards but a sizable portion of North Korea's annual gross national product, estimated by the United Nations to be around $13 billion.

China's trade with the North has been rising sharply since 2002. Before then, it varied within a range of $500 million to $700 million that largely rose or fell as the volume of North Korea's trade with other countries changed. In recent years, China's trade with North Korea mushroomed and accounted for 70% of North Korea's overall $3.8 billion in trade last year.

Through this May, bilateral trade was up 18% to $980 million and China's surplus was up 60% from a year earlier, according to Chinese customs data.

Because North Korea says it is unable to pay China, some outside economists consider China's trade surplus as another form of Beijing's assistance to Pyongyang.

During Kim Jong Il's visit last week, Chinese state media reported that President Hu Jintao offered to boost China's investment and trade with the North.

Near the existing bridge o­n the Chinese side, North Korean businessmen can be spotted visiting small showrooms of goods or waiting their trucks to reach the customs area. "They're always in pairs, to watch each other," said o­ne South Korean trader who sells household goods to North Koreans from a showroom near the customs area.

Across the street from the peach-colored gateway to the customs area, four North Koreans started walking away last week when they were approached by a reporter. "We're not interested in politics," o­ne of them said. "We just want to make money."