The Road to Rason

A bus bumps and bruises its way along the unpaved road, carrying would-be investors to Rason’s First Rason International Trade Exhibition which ran from August 21-25, 2011, in Sonbong. The windows are open, until a crimson humvee barrels past, its powerful suspension dancing on the road, leaving behind a plume of beige dust. The bus windows snap shut, the still air quickly gets hot and more than one of the passengers wishes we were Chinese high-rollers, being whisked to the Emperor Casino and Hotel, which sits beautifully on Korea’s East Sea, overlooking Bipa Island and flanked by lush green mountains and crystal waters.
Pictured above (Google Earth via NKeconwatch.com): Rason geographic border (in red) and security perimeter fence (in yellow).

The passengers of the humvee—part of the casino’s fleet—will long be checked in and gambling their fortunes away by the time we complete our two and a half hour journey. However, it won’t always be this way. Rason’s 50km road to the border is finally being upgraded. Indeed, the 2.5 hour journey took 3.5 hours in June. Since then, the road has been widened, the first stage of the construction plan, allowing for traffic to flow both directions more easily and smaller passenger vehicles to overtake the more cumbersome truckers who ply the road.

Its construction is an important sign in the development of the Rason Special Economic Zone. Rason, an amalgamation of the names of the area’s two biggest cities, Rajin and Sonbong, could theoretically be a vibrant hub for both logistics and manufacturing. It is located in the far Northeast of the Democratic People’s Republic of Korea, bordering Russia and China. It has abundant, cheap labor and the region’s northernmost ice-free port. It has been a legal entity since the early 1991, but has struggled to reach its potential in the face of ambivalence from Pyongyang and difficult geopolitical circumstances.

Local administrators have bold plans for this experiment in economic opening-up and to develop as the Rason Municipal People’s Committee has imagined, an efficient road link with China’s Northeastern provinces is vital. For about a decade, improvements to the road have been “under discussion” and “coming soon,” but it is now undeniably underway. Work began in May of this year.

Four Chinese companies are providing the capital investment and expertise in building the road. One Rason city official speculated that they would recoup their investment through a long-term contract to operate tolls. However, more than one foreign investor claimed that the financing was coming from the Chinese government, making tolls unnecessary, or at the least complimentary.

It was also claimed that Beijing had been pushing for the road for several years, with the North Korean side blocking the project, until finally the Chinese offered to fund 100% of it and the Koreans relented. Of course, decision making in both governments is highly opaque, but if true, it turns the common media trope of North Koreans constantly going to China to beg for aid and investment on its head. Beijing may not have sent in its massive state-owned enterprises to invest, but it does have an interest in facilitating the development of landlocked Jilin and Heiliongjang provinces through their capacity to trade internationally. It would also be in line with Beijing’s strategic “Fulin,” or “enriching the neighbors” policy, which encourages economic links with—and some might claim hegemony over—contiguous countries.

Chinese companies are also providing much of the labor for the construction, with the imported workforce sleeping in small clusters of tents at various points along the road. However, they appear to be outnumbered by local workers, who are deployed in groups of three to a dozen at various points along the road. Frequent visitors also noted that the Korean People’s Army had been contributing to the project, but did not appear to be working at the end of August.

Officials in Rason claim the deadline for completion is in November, which appeared to be an optimistic assessment given its current stage of development. However, there is widespread talk of shutting the road to traffic completely for the whole month of October and rerouting vehicles for the entire month in order to meet the deadline. This would spare the Chinese tent-dwelling laborers the unpleasant and probably dangerous prospect of working through the winter, while living in temporary accommodation. At the same time, it would ensure that a hard surface be completed before cold, ice, and snow are able to damage the work already completed and cause further delays in the spring.

Meanwhile, alongside much of the road runs a railroad track to Russia, which is now lined with a new-looking electrical power system, but apparently still lacks a modern command system. It is also seeing significant construction. China and North Korea both use an international standard gauge, while Russia uses a wider one. A second, wider track is being laid so that Russian trains can travel all the way into Rajin without having to transfer cargo. There are pockets of small groups of workers at various points along the track and at the focal point of construction, there were roughly 250 people working along a 2 kilometer stretch. There are also apparently 150 or so Russian workers on the project.

The businesspeople who ground their way along the dusty road to Sonbong found a trade fair with 124 exhibitors, both Korean and foreign. At the investors meeting, they were treated to a rather slickly produced video and slideshow presentation, while sitting under the dim, low energy lightbulbs that are the hallmark of North Korean lighting schemes. The video showed imagined towers rising, ships queuing at sea for their berths and a sparkling new train station made of steel and glass.

Much will have to be improved for the video to become a reality. The port is apparently to receive important upgrades, again with Chinese money. Banking is also an issue, though North Korea’s Golden Triangle Bank is putting up a 7-story building in Rajin to facilitate international transactions. Perhaps most frustratingly for investors now, communication with partners in Rason is difficult. A domestic cell phone network exists, but international phone calling and individual emailing are nearly impossible. There is talk that that will change next year. Indeed, most of these issues are “about to be agreed upon” or “coming soon,” as was the road itself for so long.

The actual construction of the road, however, is a good sign for those who want to see a quickening of investment and development. Along the road, mixed in with Korean signs with proclamations such as “achieve outstanding construction and build a civilized spirit of construction,” are several signs in both Korean and Chinese, reading “Support the construction of the road and improve China-Korea Relations.” It may well do that. It may also improve the chances of heavy investment in Rason’s other infrastructure projects.

The author is an executive director for Choson Exchange, a Singaporean non-profit that facilitates educational exchange in the fields of economics, management, and business. He was on an exploratory trip for the organization to Rason in late August.

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