North Korea’s 2020 parliamentary session and the budget: the main points
By: Benjamin Katzeff Silberstein
This past Sunday, the 12th of April, the North Korean Supreme People’s Assembly met at Mansudae Assembly Hall, the grand, majestic room where the assembly sits. Out of the six items on the SPA’s agenda, at least three – half – dealt in some shape or form with the economy, and arguably, some others could also fit into that category:
The agenda items of the Third Session of the 14th SPA of the DPRK were decided at the session:
1. On adoption of the law of the DPRK on recycling resources
2. On adoption of the law of the DPRK on tele-education
3. On adoption of the law of the DPRK on providing living conditions for discharged officers
4. On the work of the Cabinet of the DPRK for Juche 108 (2019) and its tasks of Juche 109 (2020)
5. On implementation of the state budget for Juche 108 (2019) and the state budget for Juche 109 (2020).
6. Organizational matter.
(Source: “Third Session of 14th SPA of DPRK Held,” Korean Central News Agency, April 13, 2020.)
I include the Cabinet report given the strong emphasis over the past years of the cabinet’s leading role in economic management. A separate KCNA-report from the same day, “Report on Work of DPRK Cabinet for Juche 108 (2019) and Its Tasks for Juche 109 (2020),” summarized this report of the cabinet’s work. I paste it here with some annotating comments. Yes, the whole first paragraph below is one sentence:
According to the report on the work of the Cabinet delivered at the Third Session of the 14th Supreme People’s Assembly(SPA) of the Democratic People’s Republic of Korea (DPRK), last year the Cabinet organized a drive of putting the overall national economy on a new higher stage with a main emphasis put on accomplishing the sustained economic development, ensuring the local production of equipment, raw and other materials and revitalizing production by boosting the capability of independent development of the country, true to the important tasks set forth by Supreme Leader Kim Jong Un in his report at the Fourth Plenary Meeting of the Seventh Central Committee of the Workers’ Party of Korea and in his historic policy speech at the First Session of the 14th SPA.
None of these phrases (“local production of equipment” etc) are new or surprising, and the most notable fact is perhaps the absence of anything unusual in such an unusual time (coronavirus, sanctions).
The report said that last year all sectors and units of the national economy carried out the gross yearly industrial production value at 108 percent, and ministries, national institutions, the city and county people’s committees and industrial establishments over-fulfilled their national economic plan.
The electrical power industrial sector carried out the hydraulic power generation plan at 103 percent and made sure that production was increased by properly carrying on the repair and readjustment of generating equipment.
Now this is interesting – repairing and readjusting could either mean a claim that the industry is doing fine even without imports of Chinese machine parts and the like, because it can simply repair and readjust what’s already there. Or, it’s a claim that in fact, despite sanctions, the country’s industries are able to replenish whatever equipment it needs to stay afloat.
The thermal power plants provided a guarantee for stabilizing the electric power production without relying on heavy oil.
The coal industrial field respectively showed 23 percent and 22 percent increases in the coal production and the supply of coal for thermal power generation over last year, and the large-scale coal mines rich in deposits and with favorable mining conditions provided a foundation to increase coal production.
In the field of the metallurgical industry the Kim Chaek Iron and Steel Complex has shown 22 percent, 2 percent and 37 percent increases in the production of pig iron, steel and rolled steel over last year. The chemical industry achieved large growth in the production of chemical fertilizer, carbide and caustic soda.
Of course, any claims of over-fulfillment of quotas and the like should be taken with a grain of salt, as such claims are classical in North Korean propaganda regardless of their foundation in reality (the genre was born in the Soviet Union). Still, trying out a charitable reading, there are theoretical ways in which claims over over-fulfillment could technically be true, particularly in these sectors. We know nothing about the revenue of these products, for example, and mines and factories could churn out production in great magnitudes but with questionable value when the products can’t be exported or sold at a profit at all. Because coal prices have dropped so much under sanctions, industry could well be powered at a lower cost, but the value of this is, again, questionable.
On the agricultural front the peak-year level was exceeded in the grain production even under unfavorable weather conditions.
A repetition of the claim of a bumper harvest last year, which remains highly unlikely, as I argued here.
A fishing campaign for supplying more fish to the people was launched in the fishery sector, and the fishing was put on a higher scientific level with the help of the updated aid system for detecting fishing ground.
Again, the sector may certainly produce and supply more, but its incomes will still be lower than they would be without sanctions.
The field of the land and environment protection turned the important projects including the Wonsan Kalma coastal tourist area and the Yangdok Hot Spring Resort into thick woodland and greenery and face-lifted all roads including Pyongyang-Hyangsan and Pyongyang-Wonsan Motorways.
A hint that investment continued in the tourism industry, and that the state expects this industry to blossom in the future, despite the currently dire situation. By extension, perhaps also a suggestion of expected solid economic ties and exchange with China.
The report contains a great deal of interesting detail, but in the interest of time, I’ll skip ahead to the most central parts (my own emphasis):
The report emphasized that all the achievements made last year clearly proved once again that as long as there is the wise guidance provided by the Party, we can live on our own and open up the road of our own development and prosperity no matter how desperately the enemies may try.
The report also said that serious mistakes were found in the work of the Cabinet last year.
They taught a serious lesson that if the officials in charge of providing economic guidance fail to fulfill their duty, it would be impossible to successfully attain the goals of economic construction set forth by the Party, the report said.
It clarified that we face heavy yet responsible tasks to unconditionally and thoroughly carry out the economic construction tasks set forth at the 5th Plenary Meeting of the 7th Central Committee of the WPK under the uplifted slogan “Let’s Break through Head-on All Barriers to Our Advance!”
It went on:
The Cabinet will put a main emphasis on organizing the economic work on the principle of subordinating everything to the health and safety of the people, conducting courageous head-on breakthrough in the spirit of achieving prosperity by dint of self-reliance, and fully meeting the needs for the national economy and for the people’s living by readjusting the economic foundation of the country and by fully tapping the production potential, in order to thoroughly carry out the tasks set forth in the joint resolution of the WPK Central Committee, State Affairs Commission and the Cabinet.
The Cabinet will rationally readjust the economic work system and order and boost its role as the organizer of the state economy.
It will put efforts into holding full control of the resources and fund sources of the state, and securing financial ability and execution power capable of managing and operating the country’s economy in a unified manner.
There are some key phrases below as well, but these two paragraphs are especially noteworthy. The message seems fairly clear that the state’s role in the economy needs to get stronger, and that while independent management methods may certainly be encouraged, the state is in charge. This message is familiar from Kim Jong-un’s December CC Plenum speech.
It will establish a strict discipline for the state development and use of the underground natural resources that are of strategic significance in the state economic development, and also take strong measures to protect and multiply aquatic resources.
It will bring about innovation in the work system, order and method on the principle of ensuring smooth transaction in the overall trade, and thoroughly guarantee the economic benefits of the country through the application of strict discipline and order in the import and export.
Perhaps both a reference to easing some rules and regulations for trade, while also combatting the rampant trade deficit?
The coal industrial sector will fully meet the demand for coal from several fields of the national economy including electricity, metal and chemical industries.
Note the absence here of any reference to coal exports.
The light industrial field will expand the variety of daily necessities and boost their quality. It, regarding the local production of raw and other materials as the lifeline, will rely on the locally available raw and other materials as much as possible for the production of consumer goods, put efforts into the development of local industry and contribute to the improvement of people’s standard of living.
Making consumer goods production and supply more local, and less reliant on imports, has been one of the chief goals through Kim Jong-un’s tenure. Judging by, for example, this recent report about consumer choice in kitchen items, it seems to be going quite well.
The Cabinet, corresponding to its position and duty as the economic command, will ensure the definite provision of unified operation and command for implementing the economic policies of the Party, and guarantee the meticulous economic organization and persevering practices and thus fulfill its responsibility and duty in glorifying this year marking the 75th founding anniversary of the Party as a year of victory to be specially recorded in the history of the country, the report stressed.
The above is just a brief overview and quick read of the budget report. For more on the proportions and overall economic conditions that the report speaks of, check out Ruediger Frank’s recent 38 North article on the SPA session as a whole.