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North Korea

Seoul offers Kim Jong-un grand bargain to link North and South Korean economies with China

Moon Jae-in handed his North Korean counterpart a blueprint for economic integration at last month’s historic Panmunjom summit

PUBLISHED : Monday, 07 May, 2018, 9:23pm
UPDATED : Tuesday, 08 May, 2018, 6:21pm

South Korea set out a detailed blueprint for economic integration at last month’s historic summit with North Korea, sources have revealed. 

President Moon Jae-in gave the North’s leader Kim Jong-un a USB drive containing a “New Economic Map of the Korean Peninsula” at the fortified border village of Panmunjom on April 27.

The initiative included three economic belts – one connecting the west coast of the peninsula to China, making the region a centre of logistics; one connecting the east coast to Russia for energy cooperation and one on the current border to promote tourism.

Whilst sources at the South Korean presidential office did not give further details about the information contained in the drive, they confirmed that the plan was in line with Moon’s “Berlin speech” last year when he outlined his basic approach to the north on a visit to the German capital.

During last year’s presidential election campaign, Moon pledged to merge the two Koreas’ economies in a single market to lay the foundations for unification.

Park Byeong-seug, a South Korean lawmaker from Moon’s ruling Democratic Party of Korea, said the proposal was in line with Moon’s campaign promises.

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“The concept of the three belts was one of President Moon’s pledges during the election last year,” Park said. 

“The new economic map includes railway links between the two Koreas and China’s northeast stretching all the way to Europe.” 

One part of the plan would involve the construction of a rail link starting in Mokpo on the southwest tip of the peninsula, passing through Seoul and Pyongyang and the North’s Special Administrative Region of Sinuiju, before reaching Beijing.

Beijing is likely to welcome Seoul’s proposal as it accords with the core Chinese national interest of enhancing sustainable economic development and boosting the country’s northeastern rust belt.

Cheng Xiaohe, a deputy director at the centre for international strategic studies at Renmin University said Beijing may try to incorporate the plan into its Belt and Road Initiative.

“The northeast has been China’s weakest link and seen poor economic development for years. A rail link could make a real difference to the region,” Cheng said.

Improving the area’s logistics would also benefit China as its access to the open seas in that part of the world is physically blocked by the Korean peninsula and Russia’s far east.

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North Korea’s economy is also closely tied to the northeast of China and opening up the reclusive state’s markets could provide new opportunities for the Chinese provinces on its border.

Lu Chao, a research fellow at Liaoning Academy of Social Sciences, said: “The plan would have a huge impact on China’s northeastern region as it would transform the region as a centre of logistics in East Asia, which could function as a driving force for the rapid economic growth of the region.”

“The northeast is the region with the greatest economic potential in China. A railway connection would bring a myriad of investments from overseas and would help the economy take off.”

Yet observers added that the initiatives were dependent on Kim accepting Seoul’s definition of denuclearisation – namely the complete, verifiable and irreversible dismantling of the North’s nuclear programme.

Cheng said: “[Without Pyongyang’s complete denuclearisation] it won’t be so easy. After all, international society is still bound by the UN’s sanctions.”

Seoul has endorsed UN Security Council Resolution 2375, which limits its scope for a deal on economic cooperation.

The measure, passed in September last year, limits the export of crude oil and refined petroleum products to North Korea and bans joint ventures with the hermit state.

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South Korea would have to allow its allies and the UN to mediate any easing of sanctions before it could establish any economic cooperation with the North.

Moon Chung-in, a special foreign affairs and national security adviser in Seoul, said last month that Seoul’s economic incentives would compensate Pyongyang for freezing its missile programme, disclosing its nuclear capacity and allowing international inspections within its borders.

Additional reporting by Yujing Liu