North Korea's Livelihood Economy, Seen from Dandong

**North Korea's Evolving Landscape: Insights from Dandong**

On the morning of the 2nd, I surveyed roughly 20 kilometers from the New Amnok River Bridge in Dandong's new district in China to the Amnok River pontoon bridge. From this vantage point, I could see Sangdan-ri on North Korea's Wihwado across the water. The view of Sinuiju City has changed significantly over the past several years, with ongoing construction evident.

Observations on New Developments

Some claim that the high-rise apartment buildings constructed on Wihwado lack electricity and that no residents live there, labeling them as propaganda structures. It appears that occupancy of these newly built high-rise apartments is not yet complete. However, lights were visible in some units during daylight hours, and I even spotted an elderly woman carrying a child on her back. Concerns about these developments are also voiced among residents of Dandong City.

Despite these concerns, the perceived economic conditions of Sinuiju residents seem 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, remarked, "My friends living in Sinuiju say they have no great difficulty making ends meet." She added that "with China-DPRK exchanges increasing recently, expectations have risen that living conditions will improve further." A noticeable increase in air conditioning units installed in buildings and apartments in central Sinuiju supports this observation.

Changes in Sinuiju

Dandong traders who recently visited P'yŏngyang reported that the city has undergone significant changes.

One trader shared, "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."

Economic Trends

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 of a crisis in the North Korean economy. However, the perspective from Dandong is different. One ethnic Korean Chinese trader explained, "Just as the dollar is rising sharply in South Korea, the global trend of dollar strength is fundamentally being reflected in the North Korean economy too." He added that expectations surrounding the revitalization of China-DPRK trade are also contributing factors.

As the exchange rate rises, prices of goods reliant on imported raw materials have increased significantly. Yet, the impact of this rising exchange rate on the livelihood economy is reportedly not as severe as feared by outside observers.

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

The Cost of Living

Despite rising prices, how are ordinary people managing? Grain prices are estimated to have tripled compared to 2023. Although workers' wages have increased significantly, this amount only covers two to three days' worth of rice at market prices.

A Dandong trader noted, "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." He explained that "unlike workers under capitalism, North Korean residents do not live on wages alone."

For civil servants, soldiers, and employees of munitions enterprises, the state distributes basic necessities at low prices. Factories and enterprises also supply their workers through their own means. "Fundamentally, one should regard North Korean workplace employees as not buying their rice on the market," he added.

Understanding Economic Trends

There are still aspects that remain unclear. The trader elaborated, "You have to look at the overall economic trend." He stated, "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 assessed that "although there are accounts of continued difficulties in factories not operating normally or farms with low productivity, viewed overall, residents' living standards and purchasing power are on an upward trend."

Rural Development Initiatives

North Korea's rural society is backward in many respects. Acknowledging this, North Korea has been pursuing the "Local Development 20×10 Policy" since 2024 as a priority state program. The initial concept aimed to build modern local factories in 20 cities and counties each year over the next ten years. However, the policy objectives have expanded to include constructing regional hub hospitals and general service centers.

Notably, North Korea has established comprehensive stores within general service center buildings. Additionally, it has begun constructing grain management offices and food supply stations by region, thereby starting to control the grain and goods flowing into regional markets. This has led to the closure of some regional markets and a substantial decrease in the volume of grain circulating in markets.

Changes in Agricultural Income

A Dandong trader who visited Manpo City in Jagang Province noted that, with the "Local Development 20×10 Policy" being pursued steadily, 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 programs could be carried out." He added 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.

One trader remarked, "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."

Conclusion: A Different Perspective

Listening to the accounts of North Koreans' everyday economic life as told by people in Dandong reveals a considerable gap with analyses of the North Korean economy produced at home and abroad. Those encountered in Dandong argue that North Korea must be viewed through a different lens. 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, during a meeting with Wang Huning, Chairman of the National Committee of the Chinese People's Political Consultative Conference, General Secretary of the Workers' Party of Korea Kim Jong Un emphasized the importance of "developing our traditional relations of friendship and cooperation, with socialism at their core." This statement warrants attention, particularly the phrase "relations of cooperation with socialism at their core."

While it may seem that North Korea will struggle to achieve sustained economic growth without structural reform, the country is moving towards strengthening its socialist economy. This shift is bolstered by improving external conditions, such as closer ties with Russia and the expansion of China-DPRK trade.

As I walked along the bank of the Amnok River, a Dandong trader's remark resonated with me. He stated, "It is not entirely meaningless for South Korean economic specialists to analyze the North Korean economy based on trade statistics and economic indicators. However, to understand how North Koreans actually live, one must first grasp how a socialist economy operates." He expressed optimism, saying, "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 with countries that have past experience of socialism or 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.