The global community has plainly noticed the critical role played by the People’s Republic of China (PRC) in inducing change in North Korea’s diplomatic behavior, particularly with respect to the recent international crisis created by North Korea’s pursuit of a nuclear weapons program. Less attention has been given, however, to China’s powerful influence over North Korean behavior on the economic front. As it turns out, China’s influence on North Korea in the economic sphere, while subtle, has been considerable, extending beyond the simple empirical fact that China is the most important investment and trade partner for North Korea. China has, in fact, had an important impact on North Korean domestic economic policy, as a model and as a catalyst for the modest changes that have taken place despite North Korea’s extreme regime rigidity and limited state capacity.
Hwang Jang-yop, the highest-ranking defector from the Democratic People’s Republic of Korea (DPRK), who left Pyongyang in 1997, stated in his memoir that both Kim Ilsung and Kim Jong-il felt great hostility toward China after Deng Xiaoping launched China on the path of pursuing market-oriented “socialism with Chinese characteristics” in 1978. This antipathy deepened after China participated in the Seoul Olympics in 1988. Despite this anger and hostility, and regardless of repeated denials from Pyongyang, the record shows that North Korea started to attempt to emulate certain aspects of China’s economic reform policies as early as the first half of the 1980s. Sporadic Chinese-style reform attempts followed repeatedly thereafter, exhibiting a characteristically North Korean “go-and-stop” pattern of economic policymaking.
This paper constructs an empirical answer to the questions of why, when, and how North Korea shifted from a stance of hostility to one of acquiescence toward China’s model of economic reform and development, coupled with continued authoritarian rule, and therefore in fact started to follow, even though hesitantly, a transition path..