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RUEKJCS/DIA WASHDC 0118
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RHMFISS/SECNAV WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 03 SHENYANG 000185 
 
SIPDIS 
 
DEPARTMENT FOR EAP/K, INR, EAP/CM 
 
E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION 
TAGS: PREL PGOV PINR EWWT KN KS CH
SUBJECT: NORTH KOREA: RAJIN PORT FRICTIONS; CHINESE AND 
NGOS IN RASON; FOOD AID AND PRC GRAIN-EXPORT RESTRICTIONS 
 
REF: SHENYANG 76 
 
Classified By: ACTING CONSUL GENERAL BRIAN M. GIBEL. 
REASONS: 1.4(b)/(d). 
 
¶1. (C) SUMMARY: Chinese commercial concerns have been 
focusing on the North Korean port of Chongjin since 
Pyongyang recently terminated a Chinese company's lease 
rights at the DPRK port of Rajin and awarded those 
privileges to a state-owned Russian firm.  One Chinese 
scholar claims the move is further evidence that Moscow and 
Pyongyang are "strategically restricting" the PRC. 
Although Chinese private firms are now negotiating for use 
of Chongjin Port, the extent of PRC Government involvement 
there--if any--remains unclear.  Recent returnees from 
Rajin-Sonbong (Rason) report new restrictions on Chinese 
nationals starting several months ago.  NGO contacts 
involved in Rason offered differing accounts of North 
Korean oversight of the aid community there.  During 
travels late last month to North Hamgyong, Yanggang and 
Chagang provinces, one NGO worker found dwindling food 
supplies, including among some local officials.  Rason, in 
contrast, remains better off.  PRC grain-export 
restrictions continue to complicate and increase the costs 
of food-aid efforts targeting northeastern North Korea. 
END SUMMARY. 
 
¶2. (SBU) Poloff and Pol/Econ Chief traveled December 15-18 
to Changchun, capital of Jilin Province; Yanji, seat of the 
Yanbian Korean Autonomous Prefecture; Tumen, across from 
Namyang, North Korea; and Helong, near the DPRK's Musan 
Iron Mine. 
 
PRC DIFFICULTIES IN RAJIN, INTEREST IN CHONGJIN 
--------------------------------------------- -- 
 
¶3. (C) PRC focus on the North Korean port of Chongjin has 
grown as a result of what contacts describe as Pyongyang's 
abrupt handover of a Chinese lease in Rajin Port to a 
Russian state-owned company.  An April 2008 Russo-North 
Korean accord granted Russian concerns the right to 
build/use a container terminal at Rajin Port and, by late 
2009, reconstruct the 54-kilometer railroad linking Rajin 
and Khasan, a border settlement directly across the Russian 
border (see reftel).  In the process, North Korean 
authorities abrogated at least one Chinese firm's 
contractual rights to use Rajin Port, said Jilin Academy of 
Social Sciences (JASS) North Korea specialist ZHOU Weiping 
(PROTECT) in Changchun on December 14.  Offering similar 
claims were LU Chao (PROTECT), a Shenyang-based North Korea 
expert at the Liaoning Academy of Social Sciences, on 
December 9; LIU Chensheng (PROTECT), a Shenyang-based PRC- 
DPRK trade facilitator, on December 11; and ZHU Yilong 
(PROTECT), the Tumen-based General Manager of the Yanbian 
Haihua Import and Export Company, on December 16. 
 
¶4. (C) Zhu identified the usurped Chinese firm as the 
Yanji-based Yanbian Xiantong Shipping Group, what appears 
to be, or have once been, a PRC-ROK joint venture.  (NOTE: 
Zhu's firm, Yanbian Haihua, is a well-connected player in 
PRC-DPRK trade and reportedly one of Jilin Province's 
largest DPRK-related trading companies.  It is also a 
licensed exporter of PRC foreign aid to the DPRK and in 
2002 established a joint venture in Chongjin, according to 
local media.)  Chinese-language news accounts from the time 
vary, but contacts have told us Xiantong formally acquired 
the rights to terminal three in Rajin Port for its 
container and bulk cargo operations around 2004/2005. 
Xiantong declined our meeting requests. 
 
¶5. (C) Recent events in Rajin have led PRC entities to 
enter negotiations with the North Korean Government for 
berthing and possible development rights in Chongjin Port, 
according to Zhou Weiping and Zhu Yilong.  Details on the 
timing, scope and extent of PRC Government involvement--if 
any--in the talks remain unclear, however. 
 
¶6. (C) Queried on the context of the apparent North Korean 
volte face in Rajin, Zhou Weiping assessed that Russia and 
the DPRK are "strategically restricting" the PRC.  As a 
private firm, Xiantong had insufficient leverage with 
Pyongyang, making it easier for North Korean authorities to 
 
SHENYANG 00000185  002 OF 003 
 
 
revoke the contract, said Zhou.  She added that the 
Xiantong case comes amid similar PRC difficulties with 
other ventures, including enforcing Chinese rights to 
develop the Musan Iron Mine and pave the strategic road 
from Yanbian's Quanhe Land Port to Rajin Port, she added. 
Against this backdrop, Jilin scholars advocated national, 
or at least provincial, government involvement in the 
Chongjin Port negotiations to prevent a similar experience, 
claimed Zhou. 
 
¶7. (C) Landlocked Jilin Province has long sought an outlet 
to the Sea of Japan (East Sea)--access that Rajin would 
have offered.  Zhou claimed Jilin Party Secretary WANG Min 
made the strategic decision--she did not say when--to no 
longer pin the province's hopes for maritime access so 
heavily on Rajin.  One "direct result," said Zhou, is the 
new "inland port" Jilin opened--the first of its kind and 
part of a larger infrastructure project in the province--in 
early December 2008.  This facility will permit Jilin firms 
to clear customs in Changchun and transport their goods 
directly to Dalian Port for immediate shipping to the 
Koreas or beyond. 
 
NEW RESTRICTIONS ON PRC NATIONALS IN RAJIN-SONBONG? 
--------------------------------------------- ------ 
 
¶8. (C) Recent returnees from Rajin-Sonbong echoed media 
accounts reporting new North Korean restrictions affecting 
some Chinese nationals in the area.  JIN Shuguang 
(PROTECT), an ethnic Korean Chinese who travels monthly to 
Rason and northeastern North Korea to distribute 
humanitarian aid on behalf of the Yanbian University of 
Science and Technology (YUST), suggested the new 
regulations began in November.  He claimed December 16 that 
the restrictions appear to confine Chinese businessmen 
residing/operating in northeastern North Korea exclusively 
to Rason.  The restrictions, he said, also impair the 
ability of Chinese businessmen to enter the country.  Kim 
was unclear on the impetus for the shift, but speculated 
North Korea "feared" excessive Chinese influence, a common 
theme we have heard and continue to hear from other 
contacts. 
 
¶9. (C) Separately, a Yanbian-based Western aid worker also 
newly returned from Rason reported December 16 that she 
heard North Korean authorities recently had started 
revoking the residency permits of certain Chinese 
businessmen in Rason while also clamping down on visas for 
incoming Chinese business travelers.  Speculation in the 
Rason aid-community has it that Pyongyang leaned on Rason 
authorities to tamp down on Chinese influence in the area, 
she said.  On December 17, a Yanji-based Westerner plugged 
into Yanbian-based Western and Korean NGO personnel 
operating in Rason noted that he had also heard rumors of 
such restrictions in Rajin starting one or two months ago. 
 
¶10. (C) The impact and extent of this apparent new policy 
remains unclear.  The Yanbian-based Western aid worker, for 
instance, related that her group's two Chinese employees 
based in Rajin have fared differently; one faced no 
difficulties on the ground, while the other experienced 
visa-renewal problems (though the group is unsure whether 
this stems from her nationality or other issues). 
 
DPRK OVERSIGHT OF NGOs in RASON 
------------------------------- 
 
¶11. (C) NGO contacts offered differing accounts of recent 
official North Korean oversight of the foreign aid 
community in Rason.  The Korean-Chinese Jin Shuguang 
reported tightening restrictions on his humanitarian-aid 
operation, based out Yanji.  North Korean authorities late 
this year informed him without explanation that his group 
would be denied entry to the DPRK starting in December, for 
the remainder of 2008, though activities would be permitted 
to resume in January 2009.  Jin observed that compared to 
last year, North Korean security services have been 
noticeably more scrupulous--especially since April--in 
inspecting his operations.  The Yanbian-based Western aid 
worker frequently in Rason described ongoing efforts this 
year by North Korean authorities to ferret out foreigners 
involved in non-substantive projects.  But she noted that 
 
SHENYANG 00000185  003 OF 003 
 
 
the growing strictures on the Rason aid community earlier 
this year, stemming from the fallout over the arrest of 
Canadian aid worker Kim Je Yell (see reftel), had eased 
since August/September. 
 
NGO WORKER ON NORTHEASTERN DPRK FOOD SITUATION, AID 
--------------------------------------------- ------ 
 
¶12. (C) Jin Shuguang claimed that during his travels in 
North Korea late last month he noted insufficient food 
supplies in parts of northeastern North Korea.  The YUST 
operation Jin runs aims to support approximately 30,000 
North Korean children through distributions of 
food/clothing to orphanages and social-welfare institutions 
in Rajin-Sonbong and North Hamgyong, Yanggang and Chagang 
provinces.  Despite this year's comparatively better 
harvest, food supplies remain insufficient and were 
depleting at a more rapid pace than usual, said Jin.  He 
claimed local cadres in North Hamgyong Province confided in 
November that their government rations had been cut and 
requested that Jin bring "extra" aid for them on his next 
visit.  Rajin, where YUST operates an orphanage, has fared 
a bit better.  Jin's comments track with the observations 
of the Yanbian-based Western aid worker, who has a 
background in agriculture.  She described a successful 
potato crop this year in Rason and lively agricultural 
markets filled with more food and activity than in 2007. 
 
¶13. (C) Strong PRC enforcement of grain-export restrictions 
this year has complicated YUST's food-aid operations 
considerably, explained Jin.  YUST remains unable to export 
many grains or grain products (e.g., flour) from northeast 
China to North Korea; Jin has received no indication from 
PRC officialdom that any imminent change is in the offing. 
YUST has consequently been procuring grain in South Korea 
and shipping it by sea from Pusan to Rajin, leading to a 
two- or three-fold increase in costs.  The group has also 
turned toward shipping processed grain products (e.g., 
instant noodles, cookies) and processing equipment from 
China to North Korea--categories of goods not prohibited by 
the PRC export regulations. 
GIBEL