North Korea's Livelihood Economy, Seen from Dandong

Apartment buildings and greenhouse farms newly established in Sangdan-ri, Wihwado.

On the morning of the 2nd, the author surveyed roughly 20 kilometres stretching from the New Amnok River Bridge in Dandong's new district in China to the Amnok River pontoon bridge, from which Sangdan-ri on North Korea's Wihwado can be seen across the water. Viewed from across the Amnok River, Sinuiju City has clearly changed in appearance over the past several years, and construction remains ongoing.

Some have claimed that the high-rise apartment buildings constructed on Wihwado have no electricity supply and that no residents live there — that they are propaganda structures. It does indeed appear that occupancy of the newly built high-rise apartments has not been completed. Yet lights could be seen switched on in some units even during daylight hours, and an elderly woman carrying a child on her back was also confirmed. Voices of concern are, to be sure, also heard among residents of Dandong City.

Even so, the perceived economic conditions of Sinuiju residents are said to have improved. Dandong City is home to many ethnic Korean Chinese (Chosŏnjok) with relatives in Sinuiju. A female service worker at a large restaurant in Dandong, who attended an international school in Sinuiju before taking her current position, said: "My friends living in Sinuiju say they have no great difficulty making ends meet," adding that "with China-DPRK exchanges increasing recently, expectations have risen that living conditions will improve further." Indeed, a marked increase in air conditioning units installed on buildings and apartments in central Sinuiju could be observed.

 North Korean tourists visiting Sinuiju riding pleasure boats and motorboats on the Amnok River.

Dandong traders who recently visited P'yŏngyang likewise reported with one voice that the city has changed a great deal.

"I did not sense any shortage of goods in P'yŏngyang. As for the electricity situation, there were no major problems in the central district of P'yŏngyang or in the newly constructed Hwasŏng District. Traffic congestion has emerged on P'yŏngyang's roads, and an alternate-day driving system has at times been implemented. This is a phenomenon that has appeared as more than 10,000 private automobiles have come into circulation."

In recent years, North Korea's market exchange rate has surged. The rate, which stood at around 8,000 won to the U.S. dollar immediately after the COVID-19 pandemic, has soared to 65,000 won. Some analysts cite this as evidence that the North Korean economy has run into crisis. The view of those encountered in Dandong, however, was different. One ethnic Korean Chinese trader analysed that "just as the dollar is rising sharply in South Korea as well, the global trend of dollar strength is fundamentally being reflected in the North Korean economy too," adding that expectations surrounding the revitalisation of China-DPRK trade are also operating as a contributing factor.

As the exchange rate has risen, the prices of goods dependent on imported raw materials and of imported commodities have also risen considerably. Even so, the impact of the rising exchange rate on the livelihood economy is said not to be manifesting to the degree feared by outside observers.

One trader said: "It is true that prices have risen a great deal, but when converted on a foreign-currency basis there has been no significant fluctuation," explaining that "because people living in P'yŏngyang and other major cities fundamentally held foreign currency, their lives do not become harder even when the exchange rate rises."

The same trader continued: "When you talk with traders on the North Korean side, they say that in the large cities, with about 1,000 dollars a month, one can buy a mobile phone, occasionally eat out, and get by well enough."

Still, with the price of rice and other goods having risen sharply, how are ordinary people holding out? Grain prices are estimated to have risen roughly threefold compared with 2023. Although workers' wages have been raised by a factor of ten to twenty, at market prices this amounts to enough to buy only about two to three days' worth of rice.

One Dandong trader said: "I saw a report that nearly half of North Korea's population suffers from malnutrition. If you simply calculate from grain prices and wages, such an analysis is possible," explaining that "unlike workers under capitalism, however, North Korean residents do not live on wages alone as people in China do."

He said that "for the State Administration Council (civil servants), soldiers, munitions enterprises and the like, the state distributes basic necessities in kind (sells them at low prices), and factories and enterprises also supply their workers through their own means," adding that "fundamentally, one should regard North Korean workplace employees as not buying their rice on the market."

There remained aspects that were still difficult to understand. Reading the author's expression, he added a further explanation: "You have to look at the overall economic trend."

He said: "When grain and supplies were absolutely insufficient and the government or enterprises could not supply them as prescribed, things were extremely difficult — but that stage has clearly been left behind. The economy has been growing for several years now, and grain output has been steadily increasing." He went on to assess that "although there are also accounts that life remains difficult in the case of factories not yet operating normally or farms with low productivity, viewed overall, residents' living standards and purchasing power are on an upward trend."

North Korea's rural society is backward in a number of respects. Seemingly conscious of this, North Korea has since 2024 been pursuing the "Local Development 20×10 Policy" as a priority state programme. The initial concept was to build modern local factories in 20 cities and counties each year over the coming ten years, but the policy objectives were subsequently expanded to include the construction of regional hub hospitals and general service centres. Notably, North Korea has established comprehensive stores within the general service centre buildings and, separately, has begun constructing grain management offices and food supply (sales) stations by region, thereby beginning to control the grain and goods flowing out into regional markets. In the process, some regional markets have reportedly been closed, and the volume of grain circulating in markets has itself decreased substantially.

A resident who has moved into a newly constructed apartment in Hadan-ri, Wihwado.

The trader said: "From what traders who have recently visited North Korean markets say, it is difficult to find stalls selling grain in the markets," explaining that "the authorities are expanding the distribution network through state-run stores and strengthening grain control through food sales via the food supply stations."

A Dandong trader who had visited Manpo City in Jagang Province said that, with the "Local Development 20×10 Policy" having been pursued steadily for several years, North Korea's rural areas are changing considerably. He explained that "most rural housing in North Korea was built more than 30 years ago, but because there was no economic leeway, no improvement programmes could be carried out," adding that "in such circumstances, when the state builds and distributes new housing while collecting only a portion of the usage fee, farmers' satisfaction cannot but rise."

Farmers' cash incomes are also said to have increased. With rice prices soaring, it is only natural that the incomes of farmers holding rice in kind should rise.

"The days when the government procured rice at absurdly cheap state-set prices are a thing of the past. A phenomenon is also emerging in which, at the level of the farm management committee, farmers' surplus grain is collected and sold to enterprises or on the market at market prices, thereby raising cash income."

North Korean residents examining soy sauce produced at a local industrial factory in Kaep'ung District, Kaesŏng City.

Listening to the accounts of North Koreans' everyday economic life as told by people in Dandong, one cannot help but feel a considerable gap with analyses of the North Korean economy produced at home and abroad. Those encountered in Dandong say that North Korea must be viewed through an entirely different lens — that only by examining the North Korean economy from a socialist perspective, rather than a capitalist one, can the actual livelihood economy be understood.

On the 16th, receiving Wang Huning, Chairman of the National Committee of the Chinese People's Political Consultative Conference, who visited North Korea to mark the 65th anniversary of the conclusion of the China-DPRK Treaty of Friendship, Co-operation and Mutual Assistance, General Secretary of the Workers' Party of Korea Kim Jong Un said that "developing our traditional relations of friendship and cooperation, with socialism at their core, more vigorously across various fields in line with the demands of the times and the aspirations of the peoples of the two countries, is an unshakeable policy." The passage warranting attention here is the phrase "relations of cooperation with socialism at their core."

While we tend to think that North Korea will find it difficult to achieve sustained economic growth through fiscal injection alone, without structural reform of the system, North Korea is moving in the direction of strengthening its socialist economy — drawing confidence from improving external conditions such as closer ties with Russia and the expansion of China-DPRK trade.

Walking together along the bank of the Amnok River, a Dandong trader offered a remark that comes back to mind.

He said: "It is not entirely meaningless for South Korean economic specialists to analyse the North Korean economy on the basis of trade statistics and economic indicators, but to know how Nort h Koreans actually live, one must first understand how a socialist economy operates." He forecast: "Personally, I do not take a pessimistic view of the future of the North Korean economy. Judging by the scale and level of its economy, I believe North Korea can sustain a certain degree of economic growth through economic cooperation alone with countries that have past experience of socialism or that still profess socialism today — China, Russia, and Vietnam among them."

About the Author

Jung Chang-hyun  |  Director, Peace Economy Research Institute

Historian and journalist. Graduated from the Department of Korean History, Seoul National University; completed doctoral coursework at the same institution. Currently Director of the Peace Economy Research Institute. Has pursued research, writing, and journalistic activities in the fields of inter-Korean relations and modern North Korean history for nearly 30 years.