By Andrew Salmon

Last month, I spent nine days with a TV crew reporting along the China-North Korea border

After flying in to Shenyang, we stopped over in Dandong where, via Shinuiju across the Yalu River, some 80 percent of North Korea’s trade with China passes. We then travelled east, to the town of Jian on the Yalu River, amid Mount Baekdu’s foothills.

Then, staging from Yanji ? the de facto capital of the Chinese-Korean ethnic minority ? we visited the town of Duman on the Tumen River and Hunchun in the extreme northwest, where the borders of China, Russia and North Korea famously converge.

It was an interesting trip.

In Dandong, an ex-Pyongyang official, now a businessman, told us of the huge potential for labor exports. A South Korean factory owner in the city explained that North Korean workers are more productive and cheaper than Chinese.

A Chinese-Korean couple in Dandong ? who outsource embroidery to Pyongyang, finish off the products, then export them under a “Made in China” label ? insisted that North Korean work trumps anywhere else in the region for quality. (This echoed comments from a Dutch businessman, who said that Pyongyang’s textiles sector is a better bet than China’s or Bangladesh’s. )

In Hunchun, a Chinese-Korean seafood trader confided that cross-border trade was so lucrative she owned four houses. In Duman, a prosperous Chinese-Korean who sells equipment to the fishing fleet in North Korea’s Rajin-Sonbong Special Economic Zone told us how real estate there is set to boom, and how, “There are no poor people in Rajin. ”

Foreign academics in Yanji detailed the changing aspirations of North Koreans at the city’s university ? exemplified by a girl from an elite family who had planned to return home to teach. Her parents disabused her of that notion: now that she has mastered foreign languages as they ordered her to, she was going into trade.

The Chinese are not just trading, they are investing. A spiffy new road bridge and customs house has risen on the Chinese side of the Yalu. A high-speed rail link has been built to penetrate Rajin-Sonbong. China and Russia have both leased jetties in the warm-water port there, granting them access to the northern Pacific.

While the northwestern (DandongSinuiju) and northeastern gateways (HunchunRajin) from China to North Korea are hardly as bustling as Rotterdam, Long Beach or Busan, their infrastructure will very soon require upgrades. Trucks waiting to enter the Kimdom jammed both customs posts.

Visible cargo included construction materials, electric cables, tires and truck parts. Rail and road trade also transports Chinese consumer products ? from foodstuffs and medicines to fashion and electronic goods ? to satisfy the surging appetite in North Korea’s markets. And these markets are increasingly sophisticated, dealing in multiple currencies.

While China runs an annual trade surplus with North Korea of around $2 billion ? indicating that Beijing is extending aid in the form of trade ? North Korea does possess some credible exports.

In addition to labor, the country possesses natural resources: coal, iron ore, rare earths, gold and copper North Korean foodstuffs ? seafood, wild herbs and wild vegetables herbs ? are highly visible in Yanji and Hunchun’s markets, shops and restaurants.

A nascent market is even sprouting in Northern China for certain North Korean manufactured products. Cigarettes are popular, and operate in lieu of currency in some small-scale transactions. In Dandong, Pyongyang’s famed (and excellent) Daedonggang lager is sold at prices exceeding those of European beers and we were informed (though I cannot confirm), that the company has or will open a factory in China Hence, Daedonggang could become North Korea’s first consumer brand.

Clearly, the Chinese are seizing opportunities delivered by North Korea’s ongoing marketization. It is not just bottom-up forces that are driving North Korean capitalism: Top-down, the regime is getting in on the act. Pyongyang is enthusiastically establishing free economic zones ? 24 exist nationwide ? to lure foreign trade and investment.

Where, then, is South Korean business?

Due to the May 24, 2010, sanctions brought in after the deadly sinking of the South Korean warship Cheonan, South Korean trade with North Korea has been halted beyond the gates of the Kaesong joint manufacturing complex. That step wiped out almost 1,000 South Korean trading firms. Meanwhile, China extends its economic bridgehead in North Korea

Should South Koreans trade with, invest in and outsource to its often-deadly arch rival? A rival that, moreover, maintains an extractive, unrepresentative regime savagely abuses human rights and invests in weapons of mass destruction?

In my next column in two weeks, I will argue the case for exactly that. Stay tuned.

Andrew Salmon is a Seoul-based reporter and author Reach him at andrewcsalmon@yahoo.

SOURCE: The Korea Times