After months of silence and inactivity at a new joint China-North Korea trade zone in Dandong, the project has suddenly sparked into life.
A first batch of imported North Korean goods was sent over from Sinuiju to the China-North Korea Border Trade Zone in Dandong’s New District on June 28. The same day the zone began processing ID cards that will allow Dandong’s 1.8 million people to spend up to 8,000 yuan (US$1,200) per day on North Korean products without paying import duty.
The first 12-tonne shipment of 26 different “cheap but good” North Korean products – wild honey, ginseng and dried mushrooms included – will soon swell to more than 300 everyday items, according to the Yalu River Evening News, a state-owned newspaper in Dandong.
“Yesterday, the first batch of imported North Korean goods arrived, after today there will be a continuous stream of products being sent over,” a trade zone staffer was quoted as saying by the newspaper.
These North Korean products were still being processed and are yet to go on sale, the paper reported in a series of articles on the new trade zone at the end of June. Dandong’s local media has though failed to mention the white elephant that looms large – and disused – just a short drive from the trade zone, the reason this hub of border economic activity was built in the first place.
Nearly five years after construction began on the new $338-million suspension bridge linking Dandong to Sinuiju across the Yalu River, and close to two years after it was due to open, China and North Korea remain silent on what – if anything – will happen to the project. Meanwhile, Dandong’s New District – a multi-billion dollar area built from scratch on the back of promised trade with North Korea – faces economic meltdown.
In many ways, the 3-km bridge has become a gigantic, costly symbol for the recent decline in relations between Beijing and Pyongyang.
Chinese will soon be able to buy wild North Korean honey in Dandong. But after the latest round of UN sanctions imposed in March, Chinese traders can no longer purchase key commodities from North Korea including gold and industrial shipments of coal following recent stricter enforcement by China as the government has lost patience with Pyongyang. The series of missile tests that have followed the new sanctions have further angered Beijing.
In many ways, the 3-km bridge has become a gigantic, costly symbol for the recent decline in relations between Beijing and Pyongyang
In Dandong, previously friendly sentiment towards North Korea on the back of their shared war history has recently turned to contempt. In February, a North Korean official celebrating the launch of the Kwangmyongsong-4 satellite dined in Dandong, got behind the wheel of his Mercedes after drinking and ploughed into a local taxi. The Chinese driver and passenger were killed in the crash prompting an outpouring of anger on Chinese social media as many questioned Beijing’s close relationship with Pyongyang.
“Drunk-driving, regardless of nationality, must be punished!” wrote one of many livid Chinese users on the micro-blogging site Sina Weibo.
For many people in Dandong, the bridge, its failure to open and the economic stagnation this has spread across the city’s New District – designed and built with the main purpose of trade with Sinuiju – has perhaps riled the most.
When construction of the bridge began in October 2011, China paid for everything. New development around the bridge had already been planned on a vast scale, according to published details. A high-tech park would cost US$532.28 million, a business district would require an investment three times larger at $1.62 billion. The ‘Yalu Mysterious Kingdom’ theme park had a published price tag of $91.5 million. In all, nearly US$3.8 billion in state and private investment was included in the New District blueprint published by the city-run Dandong Lingang Industrial Park Administrative Committee in late March 2011, ten months before work on the bridge started. This figure appeared to not include a host of projects slated for the area, not least the $338 million China spent on the bridge itself.
Fast-forward five years and Dandong’s New District is suffering economic free-fall
Fast-forward five years and Dandong’s New District is suffering economic free-fall. China’s housing market has been hit from severe oversupply since mid-2014 but in March a monthly survey showed the latest signs of a recovery as 62 of 70 large and medium-sized cities reported a month-on-month rise in property prices. Of the eight cities that continued to see a decline, Dandong was the worst performer recording a 3.8-percent drop in prices.
The driving factor for this slump remains the city’s New District, a giant building site where huge developments lie abandoned while ‘for sale’ and ‘for rent’ signs dominate almost every building, wiping millions of yuan off investments for each day the new bridge fails to open.
The bulky 25-storey Guomen Tower, the first building visiting North Koreans would see if they ever get to drive over the bridge, lies finished but empty. On the opposite side of the street, the enormous New Yalu River Bridge Port Center has held some exhibitions, including an international tourism expo in September last year, but mostly lies disused. The entrance was blocked off and manned by a lone security guard on one recent visit.
The up-ramp at the start of the bridge itself has become a focal point for Dandong driving instructors where they drop-off and collect students who practice driving around the area’s near-empty roads.
Foreign investors here have seen initial optimism they would be on the front-line of North Korean economic development slowly turn to despair. The South Korean chaebol SK Group has invested in three operations in Dandong’s New District: a logistics unit, another for manufacturing and sales, and a real-estate development. “There is the potential that this area could grow as rapidly as Macau,” an SK source had told South Korea’s Dong-a-Ilbo newspaper back in mid-2012.
Today the firm’s 19-storey prime office space SK International Tower remains unoccupied, with the lower floors used to store building equipment and supplies. Eight adjacent apartment buildings are all but empty.
Other South Korean investors in Dandong’s New District are understood to have packed up and left months ago.
Newtonian Capital Land, a company registered in the Cayman Islands in 2007, launched an international investment fund to develop two buildings in Dandong’s New District. One was to be a 30-floor apartment tower with four levels of retail space at its base, the other a four-floor shopping mall due for completion in December last year, according to the company’s cached website.
The company’s domain name no longer operates and a different property firm is now listed at Newtonian’s former office in Central, Hong Kong. Its listed phone number also no longer works.
John Kim, a South Korean graduate of the United States Air Force Academy and former financier at Citi Group, was listed as Newtonian’s CEO. He could not be contacted for comment.
As investors have fled and left abandoned buildings, Dandong’s city government has frantically tried to create signs of life. Government offices themselves have relocated to the area. East Liaoning University was also supposed to move here but the plan has been opposed by teachers and senior staff who don’t want to commute 20 kilometers from the center of Dandong, or worse, fully relocate to the New District.
Later this month, the New District will host an annual beer festival, one of a host of new events the city government has set up to try to stimulate the moribund economy.
Officially, the city government has said nothing about why the new bridge remains closed, and when it may open…
The vocal optimism of Dandong’s party secretary Dai Yulin, the driving force behind the New District five years ago, appears to have evaporated. Officially, the city government has said nothing about why the new bridge remains closed, and when it may open, while state-run local media has failed to acknowledge the bridge in months.
“We have been given no information,” said a real-estate agent in Dandong, speaking on condition of anonymity due to the sensitivities in speaking with foreign media.
SHADOW OF JANG
Ask people in the city why the bridge remains closed and almost everyone offers the same, hushed reply: “Jang Song Thaek”.
Jang was seen as a friend of Dandong during numerous visits here as he negotiated the bridge and other economic projects before he was purged and executed by North Korean leader Kim Jong Un in late 2013.
In Sinuiju, the explanation for the bridge’s failure to open is not dissimilar to the reasons cited in China but with one key difference, according to a North Korean source: while Chinese blame North Korea, the North Koreans blame Jang, and Jang only.
Jang signed the deal agreeing the bridge with the Chinese “on his own behalf,” said a North Korean source. As such, Jang was not representing the North Korean government or the people, the source added, and by extension the deal with China was made void following his purge and execution.
It remains unclear how this official take on the bridge’s problems was communicated to ordinary citizens in Sinuiju, but this is the version discussed among people in the city, the source said.
The bridge standoff might be resolved if China agrees to pay for the road linking it up on the Sinuiju side and North Korea provides the labor, the source added, although it was not clear whether this was the North Korean government’s official position. Whether negotiations are even taking place was not known. Either way, North Koreans continue to blame Jang for the bridge fiasco, while Chinese point the finger squarely across the Yalu River.
In the wake of Jang’s purge, most Chinese commentators remained positive that trade projects and related economic development in Dandong would be unaffected. Lu Chao, director of the North and South Korea Research Center at the Liaoning Academy of Social Sciences in Shenyang and a respected authority on bilateral ties, predicted “strong continuity” in policy agreed between Beijing and Pyongyang in an interview with China’s nationalistic tabloid the Global Times after Jang’s execution.
This optimism has since disappeared. The bridge had been due to open in October, 2014, 10 months after Jang’s demise. Afterwards, silence ensued on both sides of the Yalu River. Then in March this year, in another interview with the Global Times, Lu acknowledged relations had turned sour, providing rare public commentary on the plight of the bridge and Dandong’s New District.
“After Jang Song Thaek was purged by North Korea in December 2013, most of these projects were delayed indefinitely – there hasn’t been an official cancellation, but no progress has been made in the past three years,” Lu said.
Main picture: NK News
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