High-ranking officials in North Korea’s ruling party are monopolizing local markets that are permitted to operate outside the influence of the state as part of economic reforms and illegally renting out stands to the public for exorbitant rates, according to sources inside the country.
The Central Committee of the Workers’ Party of [North] Korea strictly prohibits the party’s judicial and political executive members or their families from entering into business in local markets, or jangmadang, but regulations protecting the sector are routinely ignored, the sources said.
One source from North Hamgyong province, near the border with China, recently told RFA’s Korean Service that party executive members are “competing with one another” to take possession of local market stands, lured by the prospect of high profits.
“Word is getting around among North Korean residents that being judicial and political party executives means having the power to make money,” the source said, speaking on condition of anonymity.
“Local markets have a big influence on the nation’s economy and executive officials are clashing over the markets in a bid to win market stands.”
The source referred to thriving Sunam Market in North Hamgyong’s capital Chongjin—North Korea’s third-largest city—where profits from running a stand can generate profits “as high as those earned by foreign currency-generating organizations.”
“It costs a lot to have a stand at a largescale market, and not many people go for it unless they are wealthy enough to have hundreds of thousands of Chinese yuan (100,000 yuan = U.S. $14,700),” the source said, adding that “once you own a market stand you eventually will make money.”
“According to the regulations, only owners can run market stands, but powerless people who lack capital have no choice but to rent someone else’s stand to do business.”
The wife of the director of the Sunam District People’s Committee Workers Organization owns five market stands, the source said, drawing criticism from fellow stand owners frustrated by her family’s access to capital and disregard for market regulations.
But despite the scrutiny, “many judicial and political party executive officials’ families are fighting to win additional market stands,” he said.
Abuse of power
A second source from North Hamgyong confirmed that “many judicial and political party executives” flout the rules to earn a profit renting out market stands, adding that they frequently acquire the stands through abuse of power.
“Executive officials use their positions to … make secret agreements with market managers and expel stand owners by making false claims about violations of hygiene or other market regulations,” said the source, who also asked not to be named.
“[After taking possession] the executives offer all sorts of products at the stand and have others sell for them to earn a profit.”
According to the source, the party executives can then generate a healthy profit without ever needing to visit the stands, leaving local residents—who the market system is supposed to benefit—with little recourse.
“Even if someone reports this type of illegal activity to the Central Committee, the executive officials can cover up their wrongdoing, and the whistleblower ends up suffering the consequences,” he said.
Until the late 1980s, North Korea’s government regularly targeted local markets and at times nearly drove them to extinction, while all basic foodstuff and consumer goods were rationed and distributed by the authorities.
In recent years, North Korean leader Kim Jong Un’s regime has implemented badly-needed economic reforms, including an unspoken acceptance of the local market system, even as state media continues to insist that the country remains a “fortress of socialism.”
In a commentary last year, North Korea expert Andrei Lankov of Kookmin University in Seoul said that “for all practical reasons, it is the thriving markets which are driving the North Korean economy.”
“Without markets, even the physical survival of the majority of the North Koreans would be impossible,” he said.