VZCZCXRO1557
PP RUEHCN RUEHGH RUEHVC
DE RUEHSH #0141/01 2250402
ZNY SSSSS ZZH
P 130402Z AUG 09
FM AMCONSUL SHENYANG
TO RUEHC/SECSTATE WASHDC PRIORITY 8794
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHVK/AMCONSUL VLADIVOSTOK 0735
RUEAIIA/CIA WASHDC 0198
RHMFISS/COMUSKOREA J2 SEOUL KOR
RUEKJCS/DIA WASHDC 0143
RUCGEVC/JOINT STAFF WASHDC 0103
RHEHAAA/NSC WASHDC
RUEKJCS/SECDEF WASHDC 0158

S E C R E T SECTION 01 OF 03 SHENYANG 000141 
 
SIPDIS 
 
 
DEPARTMENT FOR EAP/K, EAP/CM, INR 
MOSCOW PASS TO VLADIVOSTOK 
 
E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION 
TAGS: CH ECON KN KS PREL RS
SUBJECT: PRC-DPRK BORDER: DPRK ECONOMY ROBUST, UNSC 
SANCTIONS ENFORCED? 
 
REF: A. SHENYANG 137 
     ¶B. SHENYANG 134 
     ¶C. SHENYANG 92 
     ¶D. SHENYANG 76 
 
Classified By: Consul General Stephen B. Wickman.  Reasons 1.4(b)/(d). 
 
¶1. (C) SUMMARY: Sources agree that the North Korean economy 
appears to be the strongest it has been in recent memory. 
Chinese officials may be enforcing UNSC 1874 (Ref A, B) 
and financial sanctions through stepped-up inspections at 
the PRC-DPRK border, but there is local skepticism about the 
ability of such sanctions to stop the DPRK from engaging in 
its activities.  Separate trips by different consulate 
officers at multiple points along the PRC-DPRK border 
suggest a noticeable increase in the amount of North Korean 
economic activity (Ref C, D).  END SUMMARY. 
 
¶2. (U) ConGenOff traveled to the Yanbian Korean Autonomous 
Prefecture August 2-9 to meet with local contacts and 
observe developments along China's Tumen River border with 
North Korea.  Other ConGenOffs stopped by Dandong on August 
¶8. 
 
DPRK ECONOMY ON THE REBOUND?  THANKS TO THE 150-DAY BATTLE! 
--------------------------------------------- -------------- 
¶3. (C) A Sino-Korean trader related to us on August 7 his 
surprise at the improved state of the DPRK economy after his 
June visit to Pyongyang.  He said that electricity and fuel 
is not a problem in Pyongyang and other key cities, citing 
the amount of apparent nighttime consumption and vehicular 
movement he observed during his most recent trip.  As a 
frequent traveler to North Korea, he caveated this 
observation by warning that above-average rainfall in North 
Korea was probably a great boon to the DPRK's hydroelectric 
power plants and that the real test for the North Korean 
economy was what happened come winter. 
 
¶4. (C) The trader believed that the DPRK's 150-Day Battle 
was not a pure propaganda stunt for show, but a determined 
effort on the part of the North Korean leadership to 
redirect military-first ("songun") spending toward the 
civilian economy.  Given the deteriorated state of the North 
Korean economy, he speculated that "instead of wasting money 
on long-range missiles and nuclear tests that disappear 
immediately upon usage," the leadership reasoned that it 
would be able to show the populace tangible improvements 
with even modest or minimal economic growth.  He said the 
new propaganda themes in Pyongyang no longer mentioned 
military-first, missiles, or nuclear issues, but rather 
sounded the need for the DPRK to become a "strong economic 
state."  He did not think that the DPRK state would fall 
apart anytime in the next five years.  Given the current 
trajectory, he predicted that North Korea would ultimately 
be obliged to alter its policies to permit more trade and 
interaction with foreigners (NOTE: This contact is a former 
state-owned enterprise manager who has extensive contacts in 
the provincial and prefectural governments.  Due to DPRK 
intransigence, he says he has refocused his business on PRC- 
Russia trade while continuing to travel regularly to North 
Korea.  He said he also accompanies Jilin Party Secretary 
Wang Min and Governor Han Changfu on trade junkets to Moscow 
and Pyongyang.) 
 
¶5. (C) The sentiment that Pyongyang was in relative bloom 
was mirrored by Yanbian University of Science and Technology 
Vice President David Kim, who talked to us on August 3 after 
having visited Pyongyang in July.  Kim had speculated in a 
meeting in Shenyang prior to his departure that recent signs 
of increased economic activity and power consumption in the 
DPRK were simply the dying throes of a soon-to-fail state. 
In early August he commented that he had never seen as much 
electricity and abundance in Pyongyang in his last 10 years 
of visiting North Korea as he had in mid-July, noting that 
"100 percent of all lights" were on at night.  After seeing 
the economic and vehicular activity on the streets of 
Pyongyang during his latest trip, Kim said that he now 
thought the improvements were "for real" and that people 
living in Pyongyang "do not feel the squeeze." 
 
CHINA ENFORCING UNSC 1874, FINANCIAL SANCTIONS? 
 
SHENYANG 00000141  002 OF 003 
 
 
--------------------------------------------- -- 
¶6. (C) An Amcit NGO leader in charge of a food-processing 
plant in Rason, said on August 8 that on his last trip to 
Rason in July, the Chinese customs officials paid more 
attention to his vehicle and shipments than before.  The 
Chinese customs officials at the Quanhe/Wonjongni Land Port 
are now requiring him and his employees to regularly bring 
their Rason-based motor vehicles back to the border to prove 
that they haven't been illegally sold or given to the North 
Koreans. 
 
¶7. (C) A Sino-Korean businessman working in Tumen City and 
frequent traveler to North Korea said on August 5 that since 
the adoption of UNSC 1874, following the May 25 DPRK nuclear 
test, he had heard several accounts of North Korean trading 
companies in Yanbian being subjected to more scrutiny by 
major banks, such as the Bank of Jilin, and occasionally 
even being denied transactions.  He said his North Korean 
contacts in Yanji were frustrated by these refusals (NOTE: 
The contact is a former PLA tank officer from Longjing City, 
who has conducted business in the DPRK.  Because of his 
political connections and because he has relatives in the 
DPRK, he has an unrestricted travel document (which he 
showed us) to visit all regions of North Korea.  Our 
contact's daughter lives in Canada, and his son lives in 
South Korea.) 
 
¶8. (C) We got a contrary view from Wu Jianhua (protect), a 
government specialist on North Korea and PRC-DPRK issues at 
the Liaoning Academy of Social Sciences, who told us on July 
21 that recent UN sanctions and the efforts to sanction 
specific companies by name were meaningless.  He singled out 
Amnokgang Trading as an example of a military company that 
could change its name at any time.  Wu speculated that 
sanctions might work in easy-to-monitor controlled places 
like Hong Kong or, as they did in 2006, in Macao.  Wu 
averred that the North Koreans could change company names at 
will and that even with the best of Chinese governmental 
efforts to enforce UNSC 1874, it would be near impossible to 
track all of the North Koreans' transactions and front 
companies in China. 
 
¶9. (S) Wu cited the example of how the North Koreans had 
smuggled high-quality small arms out of the DPRK and into 
China for eventual export to Southeast Asian and African 
markets.  He said he had recently heard that Jinzhou in 
Liaoning Province was home to a still-functioning small-arms 
exporting operation.  He said that the DPRK used multiple 
land ports along the Yalu and Tumen Rivers to minimize 
suspicion, avoided relying upon a single point, and employed 
couriers expressly for this business.  Wu suspected that the 
husband of one of his neighbors from his days at Kim Il-Sung 
University in the 1980s was engaged in this business. 
 
BORDER SNAPSHOTS: STEADY TRADE, CONSIDERABLE ACTIVITY 
--------------------------------------------- -------- 
¶10. (C) CHONGSHAN/SAMJANGNI: ConGenOff traveled to a less 
traveled section of the PRC-DPRK border on August 6 and 
visited the border port furthest upstream on the Tumen 
River.  At 1300, ConGenOff observed two large Chinese dump 
trucks going into North Korea with loads of what appeared to 
be large gravel chips and other construction materials. 
Behind the dump trucks was a half-loaded Chinese flatbed 
truck carrying a load of plain wheat noodles waiting to 
cross into North Korea.  The Chinese customs officials 
inspecting these loads did not seem to physically inspect 
the cargo and appeared not even to exit the customs house. 
On the DPRK side, we saw three bicyclists and two trucks 
carrying over 10 workers each heading upriver.  En route to 
Nanping/Musan, we saw on the North Korean side a stationary, 
large late-model tour bus with three people standing outside 
and a military truck carrying over ten people which passed 
by the bus. 
 
¶11. (C) NANPING/MUSAN: Around 1500 on August 6, ConGenOff 
saw two large Chinese dump trucks re-enter China carrying 
full loads of what appeared to be iron ore from the Musan 
iron mine.  Between Nanping Land Port and Musan City, 
ConGenOff saw the first of what turned out to be several 
orange South Korean Doosan-brand excavators working in the 
DPRK.  The excavator worked together with three dump trucks 
 
SHENYANG 00000141  003 OF 003 
 
 
to move gravel next to what appeared to be a newly-made 
gravel spit that extended halfway across the river.  In the 
southwest part of Musan, there were at least ten groups of 
ten or more people each in the fields along the river and a 
dozen or more goats grazing along the riverbank.  In 
contrast to previous visits where many people were seen 
doing laundry on the riverbank, there were fewer than five 
people washing clothes.  Nearby, over 20 people were playing 
soccer at what appeared to be a school.  On the main east- 
west street, some 80 people and six vehicles were in motion. 
 
¶12. (C) MYONGSIN-RI: This small village also boasted an 
orange Doosan excavator, though it was not in operation when 
we stopped by on August 6.  A cow pulled a cart and there 
were three children playing in the river. 
 
¶13. (C) YUSON: There were at least 60 people in the main 
north-south street of this branch of Hoeryong City on August 
¶6.  There were six groups of at least ten people each 
working the fields.  There were four stationary dump trucks 
by a pile of gravel and a stationary excavator that also 
appeared to be a good-condition Doosan model. 
 
¶14. (C) TUMEN/NAMYANG: At 1500 on August 5 during a brief 
visit, ConGenOff saw two large North Korean vehicles 
carrying covered loads into the DPRK. 
 
¶15. (C) DANDONG/SINUIJU: During their separate visit on 
August 8, ConGenOffs observed higher than normal levels of 
activity on the North Korean side, noting signs of 
industrial and agricultural activity new to our recent 
memory.  The bulk cargo section of the Sinuiju Land Port was 
in operation with a large crane loading 2.5-ton dump trucks 
with coal.  While one truck was being loaded, the waiting 
truck was freely idling.  There were two late-model touring 
buses and minibuses in the riverfront park, along with many 
North Korean children playing in the Yalu River and waving 
to Chinese tourists.  More than the usual number of 
factories in Sinuiju were emitting smoke, and there were 
workers and vehicles visibly moving about in larger than 
usual numbers.  Along the riverfront, there were new 
construction projects, river barges under repair, and a 
crane moving large piles of coal into dump trucks. 
Traveling upstream of Dandong en route to Hushan, ConGenOffs 
saw backhoes, front-end loaders, and mobile cranes operating 
in the fields. 
WICKMAN