VZCZCXRO1479
RR RUEHCN RUEHGH RUEHVC
DE RUEHSH #0039/01 0642308
ZNY CCCCC ZZH
R 052308Z MAR 09
FM AMCONSUL SHENYANG
TO RUEHC/SECSTATE WASHDC 8643
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEAIIA/CIA WASHDC 0172
RHMFISS/COMUSKOREA J2 SEOUL KOR
RUEKJCS/DIA WASHDC 0128
RUEKJCS/SECDEF WASHDC 0143

C O N F I D E N T I A L SECTION 01 OF 02 SHENYANG 000039 
 
SIPDIS 
 
MOSCOW PASS VLADIVOSTOK 
 
E.O. 12958: DECL: 03/05/2019 
TAGS: ECON ETRD KN KS PREL RS
SUBJECT: STRAINED YANJI ECONOMY, YUST/PUST OPERATIONS; DPRK 
TRADE STEADY 
 
REF: A. 06 SEOUL 1519 
     ¶B. 07 SHENYANG 79 
     ¶C. 07 SHENYANG 115 
     ¶D. 08 SHENYANG 71 
 
Classified By: Consul General Stephen B. Wickman.  Reasons 1.4 (b) and 
(d). 
 
¶1. (C) SUMMARY: While 2008 was a banner year for trade in 
Jilin Province as a whole, a recent visit to the China-DPRK- 
Russia border region showed that the global slowdown has 
sharply reduced South Korean and Russian trade.  This is in 
stark contrast to the past, when generous capital inflows 
from Seoul and long-term trading relationships with North 
Korea and Russia allowed the Yanbian Korean Autonomous 
Prefecture to enjoy a standard of living much higher than 
neighboring localities.  Meanwhile, the Yanbian University 
of Science and Technology (YUST) is feeling the pinch, while 
its North Korean spinoff, Pyongyang University of Science 
and Technology (PUST) is still awaiting a decision from what 
appears to be a hesitant DPRK government.  END SUMMARY. 
 
¶2. (U) Congenoff and assistant visited the Yanbian Korean 
Autonomous Prefecture in Jilin February 17-19, to gauge the 
ripple effects of the global economic downturn.  Over the 
past two decades, Yanbian's capital of Yanji had benefited 
greatly from its unique relationships with both Koreas and 
Russia. 
 
JILIN 2008 GROWTH HIGH, DPRK CROSS-BORDER TRADE STEADY... 
--------------------------------------------- ------------ 
¶3. (U) As the poorest province in northeast China, Jilin in 
2008 continued to enjoy high growth from a low base. 
Official figures indicate the province's GDP reached RMB 
642.4 billion, up 16 percent from 2007.  Annual disposable 
income of urban residents was up 13.8 percent at RMB 12,829 
and was RMB 4,933 for rural residents, up 17.7 percent.  The 
total foreign trade value reached USD 13.3 billion, up 29.5 
percent from 2007. 
 
¶4. (U) Jilin's total trade value with the DPRK was USD 769 
million, of which USD 535 million were exports, up 124 
percent from 2007.  DPRK trade with Yanji in 2008 reflected 
similar increases, up 200 percent at USD 301 million, with 
imports up 69 percent at USD 79 million and exports up over 
300 percent at USD 212 million.  Imports mainly consisted of 
iron ore while exports were consumer goods, foodstuffs, and 
light machinery (NOTE: The increase in trade value is 
largely driven by increasingly expensive Chinese goods 
rather than real fluctuations in actual trade; border trade 
volume at Yanji land ports show imports to China were up 44 
percent to one million metric tons, but exports were down 1 
percent, to 110,000 metric tons.) 
 
...YANJI DOWN AND PROSPECTS LOOK MUCH WORSE FOR 2009 
--------------------------------------------- ------- 
¶5. (U) Our meetings in Yanji suggested that 2009 has gotten 
off to a bumpy start.  Yanbian Taida International Commerce 
Trade Logistics corporation (Taida) officials revealed a 
sharp downturn in trade volume this year.  Founded in 2001 
to aid traders navigating Chinese customs, Taida provides 
customs clearance services for ROK, DPRK, and Russian 
imports.  In 2008, Taida recorded USD 25 million in volume 
for the whole year but booked well under USD one million in 
January 2009.  Taida officials remarked that South Korean 
goods were down sharply, DPRK goods remained steady, and 
Russian trade was down with the exception of local 
construction materials. 
 
¶6. (U) Yanbian Chenguang International Trade (Chenguang) 
told a similar story.  Russian trade was down from highs in 
2007, and our contacts said they believed that the Russian 
economy was in far worse shape than it appeared to be.  They 
noted that the DPRK had shifted its trading focus to the 
export of minerals as a means of enticing Chinese traders to 
invest via joint ventures and direct investment.  However, 
Chenguang officials said they had been burned before by such 
tactics and they were pessimistic that the DPRK was really 
interested in a reasonable give-and-take.  They noted that 
if Chenguang were allowed to ship DPRK-sourced minerals and 
coal to South Korea, there would be a substantial profit, 
but Pyongyang restricted the sales to domestic Chinese 
consumption for political reasons.  This, they said, did not 
justify any investment by Chenguang in North Korea. 
 
YUST STRUGGLING, PUST READY FOR SOFT OPENING 
 
SHENYANG 00000039  002 OF 002 
 
 
-------------------------------------------- 
¶7. (C) YUST Vice President David KIM (strictly protect), 
normally upbeat and eternally optimistic in the face of 
challenges, was as down as we have ever seen him this visit. 
South Korean private donations, which fund 60 percent of 
YUST's operations, were far lower in 2008 than in 2007, Kim 
said, and 2009 has ushered in even more dire conditions. 
The weakened South Korean won (at a ten-year low) and rising 
ROK unemployment were mostly to blame. 
 
¶8. (C) Kim said PUST still has no firm date for opening in 
Pyongyang.  As he did throughout 2008, he assured us that 
all of the facilities were in place for a "soft opening," 
pending final DPRK governmental approval (Ref D).  However, 
he expressed disappointment that, despite previous DPRK 
assurances that PUST could begin operations as soon as the 
facilities were built, the authorities now appeared to be 
hesitant to face the real prospect of regular and direct 
interactions between North Korean students and foreign 
faculty.  Kim again relayed his disappointment that the USG 
had yet to approve a planned shipment of computer equipment 
to PUST (Ref B & D.) 
WICKMAN