In late June, North Korea convened the 10th Plenary Meeting of the 8th Central Committee of the Workers’ Party of Korea (WPK) to review the first half of the year and adjust the achievement of economic planning objectives. During the meeting, Kim Jong Un assessed the progress of the first year of the “Regional Development 20×10 Policy” and the completion of the “12 major goals” for the first half of the year in generally positive terms (KCNA 2024c). Despite this, both the Minister of Finance, who oversees the national budget, and the Director of the Workers’ Organisation Department, responsible for overseeing labour organisations, were replaced. Given Kim Jong Un’s emphasis on strengthening discipline and the business operations of the relevant departments, it is reasonable to infer that these personnel changes were punitive. This suggests the potential occurrence of issues such as lapses in planning and financial discipline, as well as challenges in labour mobilisation, during the period. With such a backdrop, how might North Korea’s economy in the first half of 2024 be evaluated?

In January 2024, at the 10th session of the 14th Supreme People’s Assembly (SPA), North Korea formally introduced the “Regional Development 20×10 Policy” (referred to as “the Policy”), which emphasises the advancement of local industries (KCNA 2024a). This Policy aims to construct modern local industrial factories in 20 counties each year over the next decade, with the goal of improving the material living standards of the populace. It appears that Kim’s objectives with this policy extended beyond merely enhancing basic living standards; they also included the restoration of the organic linkage between agriculture and industry. By July, North Korea had announced that framework construction for factories in 20 cities and counties had been completed, with plans to have them operational by the end of the year.

However, there are several challenges associated with the implementation of the Policy. Foremost is whether North Korea can secure the necessary financial resources for the construction and operation of these facilities, as this will demand substantial development funds over the decade-long timeframe. In addition to industrial factories, essential infrastructure such as hospitals, commercial facilities, and housing will likely need to be constructed, further raising questions about the state’s ability to acquire the necessary resources. Another concern is the apparent lack of a clear plan for ensuring stable power supply throughout the project’s implementation. Should new local factories encounter difficulties in securing sufficient power, causing disruptions to production, it may prove challenging to maintain the momentum necessary for the policy’s success. Thus, while North Korea is enthusiastically pursuing the Policy, it clearly faces significant practical limitations.

At the 10th Plenary Meeting of the 8th Central Committee, North Korea reported that it had met its plans in sectors such as metals, chemicals, and electricity in connection with the “12 major goals” for the first half of 2024 (KCNA 2024b). The 12 goals encompass key sectors including grain (food crops), electricity, coal, rolled steel, non-ferrous metals, nitrogen fertilisers, cement, timber, fabric (textiles), fishery products, housing, and railway freight volume. North Korea disclosed achievement rates for a selected array of objectives, such as rolled steel (101%), nitrogen fertilisers (107%), coal (107%), railway freight volume (108%), and timber (103%). However, it did not reveal achievement rates for grain, electricity, non-ferrous metals, cement, fabric, fishery products, or housing. This contrasts with the announcement made in December 2023, when North Korea claimed it had achieved all 12 objectives and disclosed the respective achievement rates. Meanwhile, the nation has also evaluated the nationwide agricultural situation for the first half of the year as “fairly good,” stating that irrigation projects were proceeding as planned (KCNA 2024c). However, the United Nations Food and Agriculture Organization (FAO) recently warned that floods and pest infestations could potentially reduce crop yields. Taken together, it appears that North Korea’s performance with regard to the 12 goals in 2024 is falling short of its 2023 achievements.

In 2023, trade between North Korea and China grew by 137.3% year-on-year, totaling $2.29 billion, which corresponds to 82% of the pre-pandemic trade levels seen in 2019. China’s share of North Korea’s overall foreign trade reached an unprecedented 98.3%. However, during the first seven months of 2024, North Korea’s total trade with China fell by 8.4% year-on-year, amounting to $1.11 billion, which is 75.5% of the trade volume for the same period in 2019 and 91.6% of the same period in 2023. North Korea’s imports from China during this period dropped by 13.3% year-on-year to about $910 million, with key imports including wig-making materials, soya oil, synthetic filament fabrics, and construction supplies. In contrast, North Korean exports to China increased by 24.0% year-on-year, reaching roughly $200 million, driven largely by processed goods, minerals, and electricity, despite the existence of international sanctions. Concerns are growing that without a rapid improvement in trade with China, North Korea’s economic recovery may face further setbacks. Meanwhile, Russian presidential foreign policy aide. Yuri Ushakov mentioned that as of the end of 2023, the trade volume between North Korea and Russia has reached $34 million, indicating the need for continuous monitoring of official and unofficial trade between the two countries.

While significant improvements in North Korea’s economic conditions are unlikely for the remainder of 2024, the country is expected to continue relying on China and Russia as potential avenues for circumventing international sanctions, all while reinforcing its policy of self-reliance. North Korea is anticipated to maintain its focus on initiatives that emphasise science and technology, domestic production, resource recycling, and the revitalisation of its local economy. Despite the country’s trade structure being heavily dependent on imports, the extent to which trade with China expands will be a critical factor in determining the pace of its economic recovery in the latter half of 2024. Increased trade with China could enhance North Korea’s access to raw materials that are difficult to produce domestically, thereby fostering economic recovery. Notably, 2024 marks the 75th anniversary of diplomatic relations between North Korea and China. If human exchanges between the two countries resume in the second half of the year, potentially leading to the full reopening of tourism, this could improve North Korea’s service sector and its capacity to earn foreign currency. However, given North Korea’s recent focus on deepening ties with Russia, a significant expansion in trade with China seems unlikely in the absence of major events aimed at strengthening bilateral relations.

In 2021, North Korea officially acknowledged the failure of its “Five-Year Strategy for National Economic Development (2016–2020)” during the 8th Congress of the WPK and established a new “Five-Year Plan for National Economic Development (2021–2025)” aimed at economic recovery through “readjustment and reinforcement,” rather than growth (KCNA 2021). However, as long as the current sanctions regime remains in place, the prospects for North Korea’s economic growth will be limited. Even attempts to achieve economic “recovery” by circumventing sanctions are likely to encounter significant obstacles. For meaningful economic growth, North Korea would need to make a decisive shift towards actively pursuing sanctions relief, rather than relying on continued efforts to evade them.

References

Korean Central News Agency (KCNA). 2021. “On Report Made by Supreme Leader Kim Jong Un at 8th Congress of WPK.” KCNA Watch. January 9. https://kcnawatch.xyz/newstream/1610155111-665078257/on-report-made-by-supreme-leader-kim-jong-un-at-8th-congress-of-wpk/

______. 2024a. “10th Session of 14th SPA of DPRK Held.” KCNA Watch. January 16. https://kcnawatch.xyz/newstream/1705388568-295163906/10th-session-of-14th-spa-of-dprk-held

______. 2024b. “Press Review.” KCNA Watch. February 14. http://kcna.kp/en/article/q/64e900f5bd0353837ca02d7babcce3add1e4808471d06966d02bdfa01647de331866e0c7bc6571e831ca2182de7032d0.kcmsf

______. 2024c. “Report on Enlarged Meeting of Tenth Plenary Meeting of Eighth Central Committee of WPK.” KCNA Watch. July 2. http://kcna.kp/en/article/q/9628d096490c3d7b296c70c881732b49.kcmsf

■ Hae Jung LEE is a research fellow at the Hyundai Research Institute (HRI).

■ Translated and edited by: Jisoo Park, Research Associate; Chaerin Kim, Intern
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