More on Chinese investments in North Korea

An article by Jane Perlez in Monday’s International Herald Tribune paints roughly the same picture as an earlier article in Dongfang Zaobao. This article focuses on the Xiyang Group, described as “one of the biggest mining conglomerates in China” and apparently one classed as private. Its chairman, Zhou Furen, is on the Forbes list of the 100 richest men in China.

Xiyang invested $40 million in an iron ore mine, but after four months, by which time the North Korean partner has apparently mastered the technology involved, the mine was taken over by the North Koreans and Chinese workers evicted at gunpoint. Xiyang now demands $31.2 million in compensation, but the North Korean government says that it has failed to deliver on its investment promises.

As Perlez notes, it is perhaps not the fact of the dispute that is news but that it is public. This may have something to do with the size of the investment, which is the largest to date to get into such trouble. The article recalls that in 2009, Wen Jiabao persuaded North Korea to back off from nationalizing the Hyesan copper mine, developed with the Wanxiang group.

It appears that no major investment has been done by an officially state-owned enterprise. The article claims that this is despite North Korea’s invitations to China.

Production costs at the Xiyang mine are half that in China. The government is supposed to provide and feed labour, but Xiyang’s deputy GM says they were obliged to feed the 700 North Korean workers because they were too weak.

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