Kim Jong Un’s Confidence, and How It Factors Into His Economic Plan

Since North Korean leader Kim Jong Un formally took power in 2012, the Korean Peninsula has always been under the threat of war, except for the brief period surrounding the historic inter-Korean summitry in 2018-2019. In his address to the Supreme People’s Assembly on January 15, Kim Jong Un announced what appeared to be warnings of potential conflict with South Korea. However, a closer look at the text of the speech reveals a more nuanced focus on the interplay between the economy and war. Despite veiled threats, the title of his speech, “On the Immediate Tasks for the Prosperity and Development of Our Republic and the Promotion of the Wellbeing of Our People,” underscores Kim Jong Un’s emphasis on the economy and welfare, not war.

Kim Jong Un has consistently emphasized economic and defense construction since his early ascension to power under the so-called parallel path of economic and nuclear development, also known as byungjin. Improving people’s living standards while strengthening the country’s overwhelming nuclear deterrent has been his consistent policy goal. The crux of his recent address is the “20×10 policy” for local development, which aims to establish local industrial plants in 20 counties over 10 years. This initiative seeks to bridge urban-rural disparities by building modern factories in the provinces, with the hopes of fully utilizing resources and raw materials to ensure that citizens always have high-quality basic food, foodstuffs and consumer goods, providing them with basic living conditions and necessities. In fact, the goal of local and rural development had been emphasized as a policy priority during the time of Kim Il Sung and Kim Jong Il as well. Although despite all their talk, the actual living standards of rural residents have not improved dramatically.

While there are still many unknowns and data from North Korea is hard to come by, delving into the intricacies of speeches can enable us to better see the interplay between the country’s economic objectives, geopolitical complexities, and the pivotal role of Kim Jong Un’s leadership and confidence that factor into the nation’s strategic trajectory.

The 20×10 Policy

What makes this rural development policy different from previous ones under Kim Jong Il and Kim Il Sung? First, as Kim Jong Un has stated, local industrial plants will be built all over the country. The plan is to build rural industrial plants in 20 cities and counties each year for the next 10 years, so that roughly 200 counties and cities are covered by the end of the decade. To be clear, there are factories in the provinces already, but they mainly produce military goods. As a result, the provinces have not been able to provide basic food, groceries, or consumer goods for the local population.

To accomplish these goals, the Workers’ Party of Korea (WPK) has already promised to guarantee funds, labor and materials to all counties on an ongoing, annual basis, based on the experience of operating an industrial plant built in June 2022 in Kimhwa County on the border between North and South Korea.[1] The party has also set up a dedicated department to lead the effort, with the party’s organizational leadership, the highest authority, in charge. This is a departure from past practice. For instance, in 2021, when the Municipal and County Development Law, which established the legal system for rural development at the county level, was first enacted, no central government support was provided for local development initiatives.

On January 30, Rodong Sinmun reported that the “20×10 Provincial Development Committee” had officially begun and was moving forward at full speed. Next year marks the 80th anniversary of the founding of the WPK, and the party will likely hold its ninth congress later next year. It is believed that Kim Jong Un is trying to make progress on local development before that time to demonstrate success in an initiative that his grandfather and father were unable to achieve.

The Past is Prologue: Economic Policy Under Kim Jong Un

Kim Jong Un’s focus on both national defense and economic construction is not unreasonable; it is a style of governance that has been consistent since he took power in 2012, when he revised the preamble to the constitution to state that Kim Jong Il had made North Korea a nuclear power.

In his second year in power, in March and April 2013, following the country’s third nuclear test, confrontation between North Korea and the United States led to speculation of a second war on the Korean Peninsula, United Nations Security Council sanctions, an unprecedented increase in the intensity and scale of US-ROK military exercises, and the temporary closure of the Kaesong Industrial Complex, a symbol of inter-Korean reconciliation efforts. Kim Jong Un fueled that speculation by creating the impression that war was imminent.

On March 5, 2013, North Korea declared that the armistice agreement was “invalid.” In response to the UN’s discussion of sanctions against North Korea and the conduct of the US-ROK joint military exercise “Key Resolve,” North Korea announced that it would make the armistice agreement “totally nullified” and halt all activities at the Panmunjom Representative Office of the Korean People’s Army (also referred to as the Panmunjom Mission of the Korean People’s Army). Three days later, on March 8, it announced the abrogation of “all agreements on nonaggression” and the suspension of the “Panmunjom liaison channel” between North and South Korea. On March 26, the Supreme Command of the Korean People’s Army (KPA) announced that it had entered the “combat duty posture,” and on March 30, it declared a state of war. In the early hours of March 29, Kim convened an urgent operational meeting, during which he ordered his troops to be on standby for “ its military bases in the operational theaters in the Pacific, including Hawaii and Guam, and those in south Korea.”

In April of that year, North Korea adopted a decree “on further consolidating the status of a self-defense nuclear power” and restarted its 5 MWe plutonium production reactor at Yongbyon. On April 9, North Korea’s Asia-Pacific Peace Commission announced that it did not want foreigners in South Korea to suffer harm if war broke out, and called for evacuation and safety measures in advance. On April 11, the Workers’ Committee for the Peaceful Reunification of the Fatherland released a statement claiming it could hit all US military bases in the Pacific and East Asia with the push of a button and that the latest threat was not simply psychological warfare.

Tensions reached a boiling point when US B-52 strategic bombers appeared over the Korean Peninsula. This crisis was finally defused by the US first sending Secretary of State John Kerry as a special envoy to North Korea on April 15, 2013, and then former President Jimmy Carter on May 1, 2013, and North Korea responded by lifting its first combat alert. According to Kerry, President Barack Obama’s decision for “a number of exercises not to be taken” that month helped lower “our rhetoric significantly,” and North Korea responded by returning to the negotiating table.

However, amid all this turbulence and war rhetoric, Kim Jong Un’s domestic actions did not reflect broader war preparations. On March 31, 2013, he held a plenary meeting of the WPK Central Committee to adopt a new strategic course, byungjin, prioritizing both economic development and the development of a credible nuclear deterrent.[2] Two weeks prior to that announcement, the country held its first national light industry convention in 10 years, where Kim Jong Un delivered a speech emphasizing the need to further develop light industry, which is directly related to people’s lives.[3]

Later in May, he enacted the Economic Development Zone Law and designated 14 economic development zones that year alone.[4] At the time, Kim sought to develop balanced regional development by attracting tourists and foreign investment, and envisioned gradually building tourist special zones and economic development zones across the country. Although large-scale tourism zones were built in places such as Wonsan, this policy of economic development zones was virtually abandoned as the country failed to attract foreign investment, in part due to a lack of economic infrastructure, wavering North Korean power supply, and United Nations Security Council and US financial sanctions over North Korea’s nuclear and missile programs.[5]

Despite these challenges, Kim initiated massive construction projects. He has since greatly expanded recreational facilities such as amusement parks, equestrian centers, ski slopes, and swimming pools and constructed large-scale streets and apartments to make life easier for residents. Every year, the Kim regime presents a vast construction plan, and every year, progress is made against those plans.

In particular, the speed at which North Korea has accomplished some of its large-scale construction goals has been remarkable. From 2012-2023, several representative projects, such as high-rise apartments, were completed across the country in a short period of time, including:

• Pyongyang’s Changjon Street
• Pyongyang’s Mirae and Unha Scientists streets
• Kim Il Sung University housing for educators and scientists
• Kim Chaek University of Technology educators’ housing
• Future Scientists’ Street
• Ryomyong Street
• The Science and Technology Center
• The Sepho Stockbreeding Zone in Kangwon Province
• Samjiyeon City
• Pyongyang Songhwa Street
• Tens of thousands of housing units in Pyongyang.

Such large-scale construction is certainly not the norm in a country that has failed to provide basic food, groceries and consumer goods to its rural and provincial populations.[6]

The North Korean authorities see large-scale construction as an appropriate way to show off their economic revival to the population. Construction is an intuitive measure of national strength and civilization and is seen as a meaningful and important project to implement the WPK’s people’s initiatives despite intense sanctions and pressure from the international community and in an atmosphere of accelerated war preparations. While all this construction is linked to Kim Jong Un’s vision of “all-round development of North Korean-style socialism,” it also shows that Kim wants to demonstrate a leadership that will not give in to sanctions and pressure and will meet them head-on.

Confidence and Complexity in Economic Strategy

In my view, the fact that Kim Jong Un laid out so many challenging goals and tasks in the economic and military sectors in his January 15 address reflects a significant level of confidence. Kim claimed to have achieved breakthroughs in 2023, saying that no other year was as full of phenomenal victories as last year. Even if this assessment is somewhat exaggerated, a look at sectoral trends in the North Korean economy in 2023 shows no signs or circumstances of severe deterioration from the previous year in most areas, including foreign trade, agriculture, manufacturing, construction, services and market prices/exchange rates.[7]

Kim also seems to be encouraged by his country’s ability to survive the COVID-19 pandemic, which terrorized the world for nearly four years, with minimal human and material damage. He appears pleased that he has succeeded in upgrading his nuclear arsenal and has made steady progress toward completing new strategic and tactical weapons systems such as solid-fuel intercontinental ballistic missiles and military reconnaissance satellites. He also seems confident that he has laid the groundwork for broader cooperation with Russia in military, economic and scientific fields.

Kim appears to see all of these developments as the result of internal unity, although in reality, the achievements are based on a system of total mobilization of state resources. From a more critical point of view, it is the so-called soldier or people’s squeeze. North Korea has recently been emphasizing the “new era” of the “swift horse” (Chollima) as a new mass movement slogan. This is an attempt to revive and reinvigorate the signature mass movement of the late 1950s under Kim Il Sung, the Chollima Movement. Just as Kim Il Sung mobilized the population to overcome the devastating economic situation after the Korean War, Kim Jong Un wants to implement the numerous tasks he envisioned and decided upon by the party, including defense, economy, and rural and local construction, through a total mobilization system.

Conclusion

There are many aspects of North Korea’s policies and developments that are difficult to comprehend from a Western perspective. Even after studying North Korea for more than 30 years, I still have questions that remain unanswered.

In order to understand North Korea, it is important to closely observe and analyze the leadership of the supreme leader, the dictator Kim Jong Un. Especially in a country where power is highly concentrated, the ability of the leader at the center is often akin to the ability of the state. The ability to mobilize financial resources from society in pursuit of what the leader perceives as the “national interest” (extraction), the ability to guide the country’s socioeconomic development (coordination), the ability to rule through symbols and consensus (legitimization), and the ability to rule through the use or threat of force (coercion) are important factors in assessing leadership.

It is also important to note that if the improvement of people’s lives is achieved through the method of expropriation of residents, and if people are forced to sacrifice themselves for various political events and achievements such as party conventions, it may ultimately lead to fierce resistance that has not yet surfaced.

1. [1]

   “지방공업의 새로운 도약, 본보기적 실체,” [“A new leap forward for local industry, an exemplary entity,”] Korea Today, July 11, 2022.

2. [2]

   The economic and nuclear development parallel line (byungjin) was adopted at the 23rd Plenary Session of the 6th Labor party Central Committee (March 31, 2013).

3. [3]

   “김정은 동지께서 전국경공업대회에서 하신 연설,” [“Kim Jong Un’s speech at the National Light Industry Congress”], KCNA, March 18, 2013.

4. [4]

   “DPRK Law on Economic Development Zones Enacted,” KCNA reported on June 5, 2013, noting that “a decree on the law was promulgated by the Presidium of the Supreme People’s Assembly of the DPRK was issued on May 29.”

5. [5]

   The Wonsan-Kalma Coastal Tourism Area is a project to develop the Wonsan-Kalma Peninsula in Kangwon Province into a large-scale coastal tourist destination. It includes an airfield, resorts and amenities, and a university to train tourism service personnel, including hotel staff. Initially targeted for completion in April 2019, it was postponed twice and changed to April 2020, but completion is expected to continue to be delayed due to the economic sanctions on North Korea, which have hindered the procurement of construction and equipment materials, and the virtual inability of international tourists to visit due to COVID-19.

6. [6]

   Unofficial reports have also suggested that the housing projects are unsafe and not good quality. Lee Jong-Suk, “North Korea still has much to do to improve the quality of housing for its people,” Daily NK, February 24, 2022, https://www.dailynk.com/english/north-korea-still-has-much-to-do-improve-quality-housing-for-people/.

7. [7]

   In 2023, North Korea’s trade with China was estimated at $2.32 billion. This is 83 percent of the pre-COVID-19 trade volume in 2019. North Korea’s exports to China totaled $290 million, a 218 percent increase from the previous year. This is also higher than in 2019 ($220 million). Imports from China totaled $2.03 billion. While this is a 242 percent increase from the previous year, it still falls short of 2019’s imports ($2.57 billion).

   North Korea’s food production in 2023 totaled 4.82 million tons, up 310,000 tons (6.9 percent) from 4.51 million tons in the previous year, according to estimates by the Korea Rural Development Administration. This is the same level as 2016 (4.82 million tons), which was the highest since Kim Jong Un took power.

   In 2023, imports of intermediates for light industry, such as plastic products, textiles, materials for wigs, stone baths, and edible oils (soybean and palm oil), increased significantly from last year, which may have led to limited capacity utilization in the apparel, food processing, and household goods industries that use these intermediates. The construction industry is believed to have grown significantly, driven by large-scale household construction in Pyongyang and throughout the provinces.

   In 2000-2002, North Korean market prices were very volatile, rising sharply due to extreme supply shortages caused by the suspension of imports of intermediate and final consumer goods, and the market’s dollar exchange rate experienced a sudden appreciation of the North Korean won. However, in 2023, North Korean market prices/exchange rates were relatively more stable than during the COVID-19 crisis (2000-2022).