China inks second port deal with North Korea

By Xu Tianran Source:Global Times Published: 2012-9-12 0:10:05

A deal giving China the right to use Chongjin port in North Korea will both help reduce logistical costs for China's commodity circulation and improve the North Korea's economy, analysts said Tuesday. It is the second port leasing agreement signed between the two countries, the first being inked in 2010.

The official news website of the Yanbian Korean Autonomous Prefecture in Jilin Province reported on Thursday that the Yanbian Haihua Group inked a deal in Pyongyang on September 1 and established with its counterpart a $7.83 million joint venture company. 

Under the deal, Haihua Group holds a 60.46 percent stake while the North Korean side owns the rest, to operate the Chongjin port's No.3 and 4 wharves for 30 years.

The ports will be capable of processing 7 million tons of cargo a year and be put into use this year.

The South Korean Chosun Ilbo newspaper reported that China will try to lease three more North Korean ports because access to the Sea of Japan to the east will save it huge transportation costs. Currently, China's Liaoning Province and its landlocked provinces Heilongjiang and Jilin mostly use railways to transport various goods to the east and south of the country.

According to Yang Mian, a professor of international relations at the Communication University of China, the Chongjin port is in proximity to the Rajin-Sonbong special economic zone, which is the most important China-North Korea economic cooperation project.

The approval to use the Chongjin port is a sign that the North is willing to deepen its business ties with China to improve its economy, he said.

"But it does not mean North Korea will carry out major economic reforms, because it is very cautious against any policy shifts that would undermine its domestic stability," he told the Global Times.

The prefecture's public relations department and the Yanbian Haihua Group did not comment on the joint venture when contacted by the Global Times yesterday.

According to Yang, after the new leadership was established, North Korea clearly signaled its intention to improve its economy and its people's living standards. But as the development of its economic experimental zones is at a very early stage, North Korea lacks laws dealing with foreign investors and gives the impression of being capricious.

"But in general, the North is changing gradually, willing to deal with foreign countries to make money while not loosening domestic controls," Yang said.

In March 2010, a Chinese company in Yanbian obtained the right to use piers at Rajin port for 10 years, the first time China had found a direct trade outlet to the Sea of Japan.

Posted in: Politics, Business, Diplomacy

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