Chinese businessmen seek profitable opportunities in North Korea

On his ninth business trip to North Korea this year, Hao Ze has been meeting government officials to finalise his latest investment deal, providing equipment to mine rutile, an ingredient in paints, plastics and sunscreen.

The work at the mineral ore deposit will add to Hao's growing business empire, which includes a plant manufacturing car parts, a restaurant and a spa - all investments in a country run by a reclusive dictatorship.

Hao is among a growing league of private Chinese investors lured by North Korea's powerful business potential and undeterred by its unpredictable politics. The investments are fuelling growth in North Korea's economy, as well as concerns among Western analysts that the boom could encourage more erratic behaviour by the hermit kingdom.

There, Chinese investors dominate certain business sectors - in particular, mining - and its one reason many analysts say that North Korea's fee- ble economy appears to be improving.

Before 2011, North Korea had been running a deficit. Two prominent economists have estimated that the country enjoyed a small surplus over the last two years. Last year, the country's gross domestic product grew by 1.3 per cent, according to Bank of South Korea. The bank did not provide any dollar figures.

Most of these business deals are private and sealed outside of the Chinese government's control. The exact size of the investments could not be gleaned. But many of the arrangements are profitable and have inadvertently increased Pyongyang's dependence on its closest ally, Beijing, even as China has shown apparent frustration with the nuclear ambitions of supreme leader Kim Jong-un.

The increase in North Korea's wealth from the investments could also shift the country's engagement, or lack of it, with the outside world. Some researchers fear that with more capital, North Korea's nuclear ambitions might grow bolder. The country will also have less incentive to introduce economic changes. Other researchers express hope that foreign investment creates an opportunity for more fruitful engagement with the outside world and the international community.