It is widely understood among Korea watchers that towns in the North lucky enough to be situated near the Chinese border tend to be the most prosperous. The richest of these towns, Sinuiju and Rason, are reputed to be more or less equal to Pyongyang in terms of the per capita income enjoyed by their inhabitants.
Less prominent urban areas have also benefited greatly from flourishing trade with China. In this regard, the city of Hoeryong is no exception.
Such prosperity is relatively new. Historically speaking, Hoeryong was a poor area – even by the humble standards of the North Korean countryside. It is not incidental that the city was, among other things, a place of exile for those deemed politically “unreliable,” shipped en masse from the country’s urban centers.
Hoeryong’s fortunes improved in the late 1970s, when it became a center for the emerging cult of Kim Jong Suk. Kim Jong Il’s mother happened to have been born there, even though she left the area as a child.
Nonetheless, the emergence of the new cult, with all the expected “places of worship” – including Kim Jong Suk’s alleged ‘birth house’ (in all probability a fake) – failed to dramatically improve the economic fortunes of the city. What actually made Hoeryong relatively affluent later on were changes on the other side of the border, which began around the same time.
People began migrating to China from the northern half of what is now North Korea in the late 19th century. By the 1970s, a majority of families in the area had some relations on the other side of the border.
Additionally, Hoeryong housed a few dozen ethnic Chinese families – known as hwagyo – who maintained their professional and personal network across the border, as well as their Chinese citizenship.
THE GRASS WAS GREENER
Until the early 1980s, these local peculiarities were of little, if any, economic or political significance. China was poorer (indeed much poorer) than North Korea at the time.
And even though border controls were lax to the point of being nearly non-existent, internal security in both China and North Korea was scrupulous. Illegal arrivals were almost immediately discovered, apprehended, and sent home for punishment.
Initially, profits were astronomically high
Admittedly, there were some illegal exchanges between North Korea and China at that time. Some people living on the Chinese side of the border have told me how, back in the 1960s, a grandfather would disappear for a few days before coming back with an assortment of tasty sweets (in those days they were much easier to get in North Korea than China).
Real change began in 1982, when both governments signed an agreement allowing their citizens to travel across the border and stay for short visits with family members.
This was the first time since the 1950s that a statistically significant group of North Koreans were given the official right to travel overseas on an individual basis or maintain regular contacts abroad. Predictably, they embraced this freedom and began to use it not just for family reunions, but on calculated and pragmatic activities such as trade.
This agreement roughly coincided with the beginnings of “reform and opening up” in China, creating many opportunities for merchants to make good money.
Initially, profits were astronomically high. People from Hoeryong sold seafood, e.g. dried squid and dried pollack fish (which goes extremely well with beer, I can assure you). Chinese merchants sold clothes, kitchen utensils, and the other cheap consumables that rapidly-growing Chinese industry had begun to churn out.
Profits for both sides were massive, and a smart investment in dried fish could easily produce a fiftyfold profit if swapped in China for, say, cheap running shoes to be resold in the DPRK. Both visiting Chinese Koreans and Chinese residents in North Korea began selling Chinese-made goods in front of the Hoeryong railway station. This was predictably christened the “Hong Kong Market.”
THE NEW PRIVATE SECTOR
Business accelerated in the mid-1990s as the North Korean state economy collapsed and the country became engulfed in famine, with the town’s fortuitous geographic position meaning it was largely untouched by this disaster.
People continued their engagement with China, and profits trickled down even to people with no direct relations with the great neighbor. In Hoeryong in the late 1990s, there were many hungry people, but few actually starved to death.
A smart investment in dried fish could easily produce a fiftyfold profit if swapped in China
It was also during this time that trade began to increase, with the border becoming essentially unguarded on both sides (this remained the case until 2010). Hence, smugglers faced few difficulties crossing it at night and could pay a small bribe to local police and border guards for extra assurance or even protection.
Taking advantage of the situation on the ground, new commodities appeared on the market. Hoeryong merchants began to sell medicinal herbs and other local products, including such exotic items as “frog oil” (a substance extracted from certain species of frog and valued in China for its alleged medicinal qualities).
There was also a short-lived boom in smuggling antiques, usually originating in the far south of the country, where the major cities of the Koryo Dynasty (10th-14th century AD) were once located.
Entrepreneurial and adventurous smugglers were happy to deal with such items, despite the fact that, if caught, they faced the very real chance of execution. Profits were astronomical: a Koryo-era jar, sold by a local farmer at $30 or so, could fetch a few thousand at the border.
Later, around 2000, some local coal mines also found ways to export to China. Such export operations did not constitute smuggling, but rather inhabited a legal grey area. Indeed, one could move truckloads of coal across the river legally: the necessary paperwork was dubious and easily facilitated with bribes. In a few short years, mineral trade surpassed herbal drugs and other exotic substances.
Chinese exports also increased dramatically in volume, but the composition has remained essentially unchanged over the last 25 years. China sells consumer goods, electronics (including, for example, solar panels, very popular in Hoeryong nowadays), textiles, and footwear.
Hoeryong customs, at the bridge separating the two countries just a few kilometers from the town, serves as a major entry point for these goods, which were initially purchased wholesale and then flipped “down south.” Today, an estimated 90-95% of all consumer goods in North Korea are produced in China.
Predictably, it was the local hwagyo – ethnic Chinese citizens with North Korean residency – who benefitted most from this boom. They could move between the two countries more at less as they pleased, facilitated by dual legal status and language abilities. Some even had the money to build mansions rivaling those of top local government officials.
China’s economic boom dragged the once sleepy and deprived township of Hoeryong into roaring prosperity
An additional important element of border city life was (and is) cross-border migration, beginning in earnest around 1995, when famine and economic collapse swept the nation.
Central control, which just a decade ago so tightly limited border traffic, largely disintegrated. It also helped that China’s absurd growth rate necessitated plenty of difficult and dangerous jobs, too poorly paid for local Chinese to consider. Small-scale entrepreneurs did not dig deep into their employees’ backgrounds, as long as these employees were ready to work hard, accept low pay, and stay out of trouble.
Indeed, very few North Koreans in and around Hoeryong left because they wanted to go South Korea. In most cases, migrants went to China to find work at much higher and consistent wages than their country could offer.
In the late 1990s, an illegal North Korean migrant worker in the area could reasonably expect about $40-50 a month, which jumped to around $130 in the early 2010s. Some do relocate permanently in China, and fewer still make the long dangerous journey to South Korea, but the vast majority return to North Korea, and use their hard-earned cash to start some kind of small business: a food stall or a fishing operation.
A number of Hoeryong women also migrate (both coerced and of their own devices) to China to marry much older, usually ethnic Korean, farmers for whom China’s “one-child policy” has left them without companionship.
This is commonly deemed an acceptable arrangement, since such unofficial marriage (it cannot be registered as the women are illegal migrants) allows these women to live in China with a measure of security and, with some luck, eventually even obtain real (or fake) Chinese residency documents.
Though very real and disturbing cases of women forced into sexual servitude do occur, and many more experience abuse or mistreatment, the majority know well what to expect and live relatively comfortable lives. Remittances from these women have contributed to the fast growth of North Korea’s border region economies over the last two decades.
China’s economic boom dragged the once sleepy and deprived township of Hoeryong into roaring prosperity by North Korea’s standards. There are many new houses in the town today, and the average household is likely to own at least a couple of bicycles or even a motorbike.
If things keep going this way, and there’s no reason to expect they won’t, perhaps expensive cars will even start appearing on the driveways of Hoeryong’s new rich.
Edited by Oliver Hotham
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Featured Image: Hoeryong North Korea by Ray Cunningham on 2013-06-18 09:15:12