ASI in the News: Noland on North Korea’s Currency Revaluation

A number of recent reports on the effects of North Korea’s recent currency revaluation have featured Asia Security Initiative grantee Marcus Noland.

Noland has been interviewed by Public Radio International’s the World (text and audio available), the BBC and Korean Business Central.

Posted by Matthew Shannon Stumpf on February 9, 2010. Respond »

New EAI Issue Briefing on the Prospects for Change in China’s DPRK Policy

In the Latest EAI Issue Briefing, “Prospects for Change in the Beijing-Pyongyang Nexus,” Sukhee Han of Yonsei University studies the evolution of China’s policy toward North Korea.

He concludes:

In the wake of the second nuclear test, the voices supporting a tougher stance on North Korea dominated the Chinese academia and media. The Chinese scholars arguing for a harder line are called the “strategists.” In general, the Chinese media coverage of North Korea has become more permissive in recent years ...

Another case indicating the shift of Chinese public sentiment regarding North Korea can be found in the Global Times [Huanqiu shibao], a newspaper with nationalist views on international affairs. It conducted a survey of twenty experts on international affairs right after the second nuclear test and found that half of the respondents supported more severe sanctions against North Korea. It also found that 30 percent of the respondents believed that the Six-Party Talks had failed. Reflective of Chinese domestic trends, China watchers in Washington and Seoul cautiously support such potential changes of policy in China toward North Korea. The China watchers base their current conclusions on two factors. The first is China’s domestic change in sentiment against the North. As a Chinese scholar commented, the North Korean nuclear test was a “slap in the face.” Observers in China believe that their country has consistently supported and provided assistance to North Korea, but their benevolence has been returned with an unexpected betrayal. The second factor is that China, as a rising power in pursuit of superpower status, is less able to continue to support North Korea’s misdemeanors at the cost of international responsibility.

However, the prospects for a change in China’s policy change toward North Korea look dim at the moment. First, it is more important for China to maintain peace and stability on the Korean Peninsula than to denuclearize it. Although China has declared that (1) peace and stability and (2) denuclearization are the two most important goals of its policy toward the Korean Peninsula, China places a much higher priority on peace and stability. Second, it is true that there have been a growing number of North Korea experts arguing for China’s policy change toward North Korea, but their voices are still in the minority. In general, they are relatively young in age and low in status, and have limited opportunities to take part in the decision-making process. Third, if we review the strategists’ argument for policy change, we find that they are not actually intending to implement a fundamental policy change. The key to China’s policy change toward the North is whether China accepts the possibility of a North Korean regime collapse. But given the current situation, China would never allow the collapse of the Kim Jong-il regime.”

Read the entire briefing here and here.

Posted by Matthew Shannon Stumpf on January 13, 2010. Respond »

Stephen Haggard and Marcus Noland Analyze North Korea’s Currency Reform

Stephen Haggard and Marcus Noland have published a new Peterson Institute for International Economics Policy Brief on the effects North Korea’s recent currency reform.

In “The Winter of Their Discontent: Pyongyang Attacks the Market,” they write:

North Korea’s confiscatory currency reform and the subsequent ban on the use of foreign currencies are economically misguided policies and will result in the reduction of North Korean residents’ welfare. These developments come at an inopportune time with the country facing economic stagnation, spiraling prices, and a resurgence of food shortages. North Korea has made no attempt to veil its motivations: strengthening the socialist economy by directly attacking the market and the independence from state control that it represents. Stephan Haggard and Marcus Noland posit that these policies will require a ratcheting up of already high levels of repression, and as long as the state lacks the resources and capacity to provide goods to its citizens, the effort is unlikely to significantly contribute to the stated goal of rebuilding socialism or eradicating the market. The open questions are whether the policies will be reversed and whether they have sown such discontent as to threaten political stability. The survival instincts of North Korea’s determined, resilient citizens may very well make the market a locus of precisely the political activity the regime seeks to thwart.”

Read the briefing here.

Posted on January 6, 2010. Respond »

New Policy Briefings from the Ilmin International Relations Institute at Korea University

The Ilmin International Relations Institute at Korea University has released two new papers in its policy briefing series.

In Policy Briefing Number 4, Joel Wit of Columbia University is “Thinking about Contingency Planning.”

In Policy Briefing Number 5, Robert Rotberg of Harvard University writes on “State Failure and State Poised to Fail: Asia and Developing Nations.”

Read them both in our News section.

Posted by Matthew Shannon Stumpf on January 5, 2010. Respond »

In the News: Update on North Korea’s Currency Reform

South Korea’s Chosun Ilbo reports today that North Korea is “backtracking” after currency reform reportedly sparked protests there.

According to the newspaper:

A high-level North Korean source said it seems authorities ‘are backtracking under pressure from market forces. We’re now living in an era where it’s not as easy as it used to be to deal so recklessly with people’s property. That’s why I think authorities will eventually end up allowing people to exchange all the money they have in old bills into new ones.’”

Read previous Asia Security Initiative blog discussions on this topic here and the Chosun Ilbo article here.

Posted by Matthew Shannon Stumpf on December 15, 2009. Respond »