Does North Korea's Workers' Party Congress Signal Economic Reforms?

June 23, 2016North Koreaby East Asia Forum

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Using 'North Korea' and 'reforms' in the same sentence seems odd.

In early May this year, North Korea hosted its seventh Workers’ Party Congress, the first such meeting in 36 years. The nation’s capital was decked in colourful decoration and celebratory events were held to mark the occasion.

The congress continued to communicate many of the well-worn messages of nuclear resoluteness and displays of strength in the face of the international community, but also showed indications of a changing state of affairs in North Korea.

On one level, the congress was a show of strength for North Korean leader Kim Jong-un. Kim is still relatively new to the job, took it on at a young age compared to his father Kim Jong-il and was deprived of the long period of tutelage that Kim Jong-il enjoyed under Kim Il-sung.

The fact that this was the first congress since 1980 also deserves examination. Since then, North Korea endured through economic difficulties, the collapse of the Soviet Union and transitions of Eastern Bloc. After the death of Kim Il-sung, Kim Jong-il enacted his ‘Songun’, or ‘Military-First Policy’, which prioritised the military over the party.

By calling the recent congress, Kim Jong-un is indicating his intent to re-allocate power back to the party to promote economic development, while he continues to appease the military with nuclear weapons development. At the same time, more bureaucratic elites have been promoted to the Party Central Committee, while Pak Bong-ju, a reform-minded economic official, has been appointed to the elite ranks of both the party and the military.

Kim Jong-un also wore a western-style business suit in public for the first time at the congress. These sartorial semiotics further reinforced a message of change, modernisation and development. The congress was designed to emphasise to the world and the North Korean people that the country has returned to a state of normalcy, that the days of austerity are over and will be replaced by growth and prosperity, all achieved by its own means.

On the nuclear front, the North Korean message is as assertive and unrelenting as ever. North Korea sees its nuclear weapons as an existential necessity. It wants to be accepted by the world as a nuclear power. Reflecting this position, the congress re-emphasised North Korea’s commitment to the so-called ‘Byungjin Line’. This Sino-Korean phrase refers to the North Korean government’s commitment to the simultaneous development of the economy and North Korea’s nuclear weapons program.

On economic development, small but perceptible changes have emerged from Pyongyang since Kim Jong-un has took power. In contrast to his father, Kim has taken a more hands-off approach to markets, which developed after the centrally planned economy virtually collapsed during the famine in the 1990s. Enterprise managers now give 20–25 percent of their output to the government and sell the rest on the market.

Agricultural policy has also seen change. Cooperative farms are still the ostensible norm, but in practice have been modified through a reduction of the size of agricultural work units down to individual families.

Farmers now also take a greater share of their harvest; according to some reports, up from zero to 30 percent, and more recently even up to 60 percent. While Kim criticised the notion of reform in his speech at the congress, indicating the need for North Korea to remain nominally socialist, he emphasised the need to be ‘practical’, deliver better living standards to the people and develop the consumer economy.

These incremental reforms in effect spell a degree of modest privatisation. The North Korean economy has grown steadily over the past few years. Members of North Korea’s growing middle class are increasingly visible on the streets of Pyongyang and other regional centres, sporting fashionable Chinese clothing and mobile phones.

Some even have smartphones, which can access North Korea’s internal intranet and stream music and videos from domestic and some foreign sources. There’s also been a boom in construction across the country.

Overall, the congress communicated several, interconnected messages. North Korea wants to be recognised both domestically and internationally as a strong and normalised state, with a functioning economy and potential for development. In addition, it will not surrender its nuclear weapons program.

However, there are indications that North Korea has entered a path of reform. Policy changes will almost certainly be incremental due to the inherent difficulties of reforming such an autocratic system, but changes in the core party leadership do indicate steps towards limited reform.

Critical questions remain, including whether such reform efforts are an attempt to lead real change in North Korea or a response to changes initiated by grassroots marketisation. Either way, the challenge the North Korean government faces is how, under crippling nuclear-related sanctions, it can best harness and channel the direction of marketisation to improve living standards, while avoiding politically destabilising effects.

Reform signals from North Korea’s seventh Party Congress? is republished with permission from East Asia Forum