The Special Economic Zone of Rason

Construction continues on piers 1 and 2 in Rajin port, North Korea, part of Rason Special Economic Zone. Photo taken on August 20th, 2012. Photo credit Associated Press.

These days, Rason is the place to be. Check out the Associated Press’s video showing the bustling market.The special economic zone of Rason lies at the far northeastern corner of North Korea, just below the confluence of borders between China and Russia. Rason occupies a far-flung stretch of coastline providing an important link between landlocked Jilin province of China and the East Sea. It also borders Russia, a scant 90 miles from Vladivostok and the eastern terminus of the Trans-Siberian Railroad.

Rason was envisioned as a special area within North Korea for industry and foreign investment. But the political vision has been somewhat inconsistent; its status has fluctuated over the years. It originated as two cities, Rajin and Sonbong. From 1993 to 2001 they were integrated politically to form Rason, a “Directly Governed City” separate from the rest of the province. From 2004 to 2010 the city was reintegrated into the surrounding countryside, considered a part of North Hamgyong Province. Since 2010, the city has been a “Special City” and Choson Exchange notes that further legislation in late 2011 took steps to harmonize Rason’s laws with the China’s capitalist economy.

It’s an important area for many reasons. Most significantly, it has the region’s northernmost ice-free port, with links to sea and rail traffic for China and Russia. Russia leases Pier #3 in the port, and is upgrading it along with a nearby bridge to accept Russian-gauge trains; this would allow them to travel directly from Rason’s port all the way to Moscow along the 10,000-kilometer span of the Trans-Siberian Railroad.

Foreign investment in industry is proceeding slowly but steadily. North Korea lacks the resources to rapidly develop the area, so most of the investment is from small and medium-sized business. For instance, North Korea also plans to upgrade rail lines to China’s Jilin province, but these plans have been slow to eventuate.

Right now, though, the tourism sector is showing the biggest growth. Chinese tourists are now allowed to drive their own cars in Rason; sightseers from neighboring Jilin province can be seen driving cars all over the city, according to a report by Choson Exchange in August 2012. What was once a three-hour drive from the border has been cut to 50 minutes by a new road, and new road signs are trilingual in Korean, Chinese, and English. The presence of Chinese cars on the road is anachronous to the rest of the country, but they attest to Rason’s status as a special economic zone: “the allowance of self-driving Chinese was also designed to make it more convenient for interested Chinese investors to inspect the region,” Choson Exchange explains.

For many, though, investment was a minor concern. Rason’s link to the East Sea is equally important for recreation as well as industry, as tourists flocked to the beaches this past summer, booking hotels to capacity. There’s also been a casino there for over a decade.

A mixed-use retail/residential/commercial park is also under construction. It is reported to include a Pottery Barn among other shops selling clothes, hardware, electronics, and other goods. These will probably be principally targeted toward Chinese consumers; the stores will accept Chinese currency.

The region has its own cell phone network operated by the Thai company Loxley-Pacific; this presumably allows local administrators and businessmen to communicate with their foreign counterparts in China.

Rason seems to be an experiment similar to China’s work with Shenzhen in the 1980s, though it remains to be seen whether the experiment will be as dynamic as Shenzhen proved to be. Shenzhen, a small fishing village in 1979, grew at an unprecedented pace of 28% annually after Deng Xiaoping opened it as a Special Economic Zone to foreign investment; it now numbers 12 million inhabitants and has the fourth-highest economic output in China. Many believe, though, that it grew too explosively; the New York Times notes that “Shenzhen has begun to look less like a model than an ominous warning of the limitations of a growth-above-all approach.”

Rason’s steadier pace offers hope for a more reasonable pace of change; in this, North Korea’s limited resources might be something to be grateful for. Still, it’s one of the most rapidly changing and unique areas in North Korea.

Children peek from behind a wall in Rason, North Korea in October 2011. Photo credit Ng Han Guan / Associated Press.

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