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Inspiration or desperation?

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Why you can trust SCMP
Shim Jae Hoon

NORTH KOREA, a country with an unchanging landscape of repression and hunger, has produced what could be a piece of good news - Pyongyang is apparently ready to fix its moribund economy.

The multi-billion-dollar, and potentially life-saving, question is whether it is a short-term fix or a fundamental reform such as that which seems to have freed China from threats of massive political and economic upheaval.

The paradox facing the North's leader, Kim Jong-il, remains that he has done so little for so long that he faces a dire choice. He risks losing his grip on power if he goes too far in reform, and the even greater danger of regime collapse should he delay serious reform any longer.

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Perhaps reflecting this dilemma, Mr Kim in recent weeks has taken a hands-on role in the new economic management campaign.

While touring Vladivostok last week after a meeting with Russian President Vladimir Putin, Mr Kim asked his hosts to show him a department store. He asked the Russian saleswoman about the price of goods, about profits she was making ('that's a business secret', he was told), and examined the quality of merchandise.

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The trip apparently was aimed at giving him some idea of how a centrally planned economy moves to a market-based, price-driven system. It also was supposed to demonstrate his commitment to kick-starting an economy strangled for five decades by the most rigid Stalinist command system ever enforced in the world.

Since the collapse of the Soviet Union, the tiny North Korean economy, worth just US$15.7 billion (HK$122 billion), has shrunk by one-third, according to calculations by central bank authorities in South Korea.

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