North Korea beckons
At the invitation of Jiang Ze-Min, Secretary-general of the CPC Central Committee and President of China, Kim Jong Il, Secretary-general of the Workers Party of Korea, visited China informally during January 15-20, 2001, and stayed in Shanghai four days. Premier Zhu Rong-Ji accompanied Kim Jong Il on visits to the Shanghai Urban Planning Exhibition Hall, Shanghai General Motors and Huahong NEC Electronics. Huang Ju, Secretary of the Shanghai Party Municipal Committee, briefed Kim Jong Il on progress in opening Shanghai to the world. Huang showed Kim Jong Il around the Pudong New Area, Shanghai Bell, the Shanghai Stock Exchange, Shanghai Baosteel, Zhangjiang High-Tech Park and the Sunqiao Modern Agriculture Development Zone.
The visits in Shanghai must have left a deep impression on him. When he met President Jiang Ze-Min in Beijing, Kim Jong Il stressed that, “Since the introduction of reform and the policy of opening to the world, China, especially Shanghai, has made overwhelming progress. This proves that the reform and policy of opening up carried out by the Communist Party in China has been correct.”
When Kim Jong Il visited the Sunqiao Modern Agriculture Development Zone in Shanghai, he was very interested in the greenhouses and the various vegetables and flowers inside them.
Agriculture had long been the bottleneck in North Korea’s economic development. Kim II Sung had dreamt that one day North Korea would realize agricultural modernization, but he failed to witness the realization of this dream in his lifetime. For three consecutive years—1994 to 1997— North Korea suffered natural disasters, paralyzing the already backward agricultural industry.
Kim Jong II also hoped to find a path forward for agriculture in North Korea. Therefore during his visit to the Sunqiao Modern Agriculture Development Zone in Shanghai, he asked detailed questions: Which countries produced such greenhouse equipment? How much did greenhouse equipment cost per hectare of land covered? How many kilos of vegetables could be produced per hectare of greenhouse cultivation? What specific types of vegetables and flowers were being grown?
Most intriguing to him was the fact that seedlings of these tomatoes and big, colorful peppers originated not from seeds in the soil, but from spores via cell division. These seedlings developed roots, stalks, sprouts and small leaves inside culture bottles, and were then transplanted to plastic vases filled with nutrient solution. Tomato vines matured fully over a period of 12 months, but as individual tomatoes ripened from the bottom up, they could be picked throughout the year.
This kind of high-tech industrialized agriculture production model gave Kim Jong Il a whole new perspective and left an indelible impression on his mind.
On his way home, Kim Jong II paid a short visit to Dandong, the Chinese city in Liaoning Province bordering his country. Officials of the Liaoning Communist Party, the Dandong Municipal Party Committee, the Dandong Municipal Government and representatives of the PLA hosted welcome and farewell ceremonies for Kim.
Kim Jong II invited Zhang Cheng-Xiang, Deputy Secretary of the CPC Liaoning Province Committee, Cai Zhe-Fu, Secretary of the Dandong Municipal Party Committee, and Dandong Mayor Jiang Zuoyong on board his train, and chatted amiably for half an hour. In his special train carriage, Kim Jong Il asked his hosts many questions about Dandong’s economy, municipal construction, highways and agriculture. But he was most keen about agricultural issues.
Cai Zhe-Fu, Secretary of the Dandong Municipal Party Committee, recalled their conversation. “Secretary-general Kim asked whether we had greenhouses using plastic sheets or glass, and how much it cost to make one using plastic. I answered that it took 50,000 yuan to construct a more up-market, one-acre greenhouse, but just a few thousand yuan to assemble a “cold greenhouse,” a low-lying, tent-like structure that attached direct to the soil.
“The Secretary-general also asked me how much output could be expected from one acre of land under the transparent plastic sheet, and the kinds of vegetables we planted inside.
“Kim then inquired about the state of Dandong’s economy and urban construction. When he heard that the Dandong-Shenyang highway was underway, he was very pleased, and asked when it would be completed. At the end of September in 2002, I said. How long would the highway be? 130 kilometers, I answered. And the speed limit? Then Zhang Cheng-Xiang, Deputy Secretary of the CPC Liaoning Province Committee who was sitting next to me, replied: ‘Over 100 kilometers an hour.’”
“Kim Jong II smiled. ‘Why so slow?’”
“Zhang Cheng-Xiang explained: ‘Because the highway will be built in mountainous terrain. It is designed for 120 kilometers per hour, but actually people may drive as fast as 160 kilometers per hour.’”
“Kim Jong Il nodded and said: ‘Good, good. I would like to visit Dandong City, Liaoning Province, and your Dandong-Shenyang highway in due time. We will also build our own Pyongyang-Sinuiju highway.’”
Cai Zhe-Fu said that he was also deeply impressed by the meeting with Kim Jong Il at Dandong train station that day. “On the train, Kim Jong II asked eagerly about Dandong’s agriculture. He inquired about the output per acre of land, the highest yield of rice, the output of corn per acre, and our access to chemical fertilizer. He covered a wide range of topics, but most of his questions centered on agriculture, in a very detailed and practical way. At last one of his Korean assistants reminded him that time was up.
“The temperature outside was minus 20 Celsius that day, but it was warm in the carriage. Kim Jong II was just wearing a T-shirt, but he insisted on seeing us off at the carriage door, shaking hands with us in the chilly wind, and waving to his Chinese friends who had come to bid him farewell. We officials from Liaoning Province and the Dandong government were deeply impressed by his amiable personality and leadership charisma.”
Back home, Kim Jong II instructed that the China-based North Korea Consulate-general undertake a detailed survey on the status of glass greenhouses in China. Very quickly, the reports found their way to Kim’s desk. It was mentioned in one report that a Dutch Chinese named Yang Bin was the largest supplier of greenhouse equipment and technologies in China, and Yang Bin was busy focusing his energy, resources and money on a project called “Holland Village,” which would be established as a modern agricultural production base.
Kim Jong II instructed the North Korea Consulate-general and the embassy in Shenyang to make contact with Yang Bin.
At first, the general manager of a North Korean trading company came to visit Holland Village. He toured the four hectares of newly built greenhouses, and spoke in detail with Yang Bin. Several days later, in the company of the Chief Consul of the North Korea Embassy in Shenyang, this general manager visited Yang Bin again. On behalf of the Trade Ministry, the Committee of Economic Cooperation and Promotion, the Agriculture Ministry, and the General Horticulture Office of North Korea, they invited Yang Bin to visit Pyongyang. (1)
In April 2001, Yang Bin visited Korea for the first time. When he arrived in Pyongyang, he was received with hospitality and lodged at Moranbong Guest Hotel, normally reserved for guests of state.
After a full schedule of meetings with senior North Korean officials, on behalf of the Holland Euro-Asia Group, Yang Bin signed a cooperation agreement with Pyongyang General Horticulture Company. The two parties agreed to invest in Pyongyang-Euro Asia Joint Venture Company, an entity specially established by the North Korean cabinet to help Yang Bin with his agriculture project; domestically, it would be known as the Pyongyang General Horticulture Bureau, but internationally it would drop the “Bureau” etiquette in favor of “Company.” Kim Dongkyu would be the General Director of the Bureau and President of the company.
During his lifetime, Kim II Sung had greatly admired Dutch modern agriculture and had hoped to set up a model modern agriculture zone in North Korea. In order to fulfill his father’s wish, Kim Jong Il allocated 50 hectares of land to Yang’s project. This area lay between the cemeteries of Comrade King II Sung and revolutionary martyr Kim Jong Sok, and was located in a place called Huacheng Cave in Pyongyang’s Longcheng District.
On June 30, 2001, the parties finalized the company charter and organizational structure of Pyongyang-Euro Asia Joint Venture Company. Total shares were worth US$22 million: Yang Bin took a 70 percent stake thanks to his injection of capital, equipment and technology into the company. His North Korean partner held 30 percent by virtue of its contribution of land and labor.
On July 20, 2001, the parties signed the contract in Pyongyang and the contract came into force. From that moment on, Yang Bin began to make his footprint on North Korea’s agricultural modernization.

Setting up the model agriculture zone up in Pyongyang
On July 21, 2001, Yang Bin and his entourage returned to Shenyang, and he soon organized a project team headed by Li Gang, Vice-president of the Euro-Asia Group. This team was to be dedicated to the Pyongyang agriculture project. Yang Bin then appointed Ge Xian-Min, an MBA holder and experienced manager, as Director and President of Pyongyang-Euro Asia Joint Venture Company. He also appointed Wang Yu-Min as Vice-president of the new company. Ge and Wang were directly in charge of the organization, construction and technology management of the model agriculture zone in Pyongyang. And Professor Gu Jian-Ping and Dutch experts would be the Chief Engineers in charge of agricultural technology for the zone.
When I arrived in Pyongyang in April 2002, I visited the agricultural zone in Huacheng Cave for the first time. The outer framework of the glass greenhouses had been completed, while the piping and the irrigation systems inside were still being put in place. Row upon row of ripening vegetables and fruits—tomatoes, bell peppers, eggplants, cucumbers and muskmelons—were hanging there inside the greenhouse under the sun. It was a beautiful sight. North Korean workers were harvesting the vegetables, packing them in boxes and loading them on trucks for delivery to downtown Pyongyang.
When were these greenhouses built? Was it possible that these greenhouses—covering 750 acres—were constructed during the previous winter? And where had these vegetable seedlings come from in this frozen, snow-covered land? I had so many questions that I couldn't wait to quiz vice-President Wang Yu-Min as soon as I came back to his no-frills office.
“This is the first model modern agriculture zone in North Korea. What you just saw is only the first phase,” explained Wang. “It covers 50 hectares. One glass greenhouse covers six hectares, or 60,000 square meters. There will be 76 ‘sunshine’ greenhouses, each occupying just one acre. These are similar to the greenhouses in Shandong’s Shouguang City, but slightly modified. For example, the back wall of our sunshine greenhouse is much thicker than that in Shouguang greenhouses. We will also build a small, standardized compartment at the entrance to each greenhouse to keep the environment tidy, beautiful and warm.
“Because our Korean friends requested that we complete the greenhouses so that they can enjoy fresh vegetables as soon as possible, and the residents of Pyongyang can eat fresh vegetables in the winter, President Yang promised that if the Koreans were responsible for the construction, we could definitely achieve this goal.
“In December, 2001, the North Korean government mobilized soldiers, workers and local farmers to help us level the ground and lay down the large plastic awning. There were more than 50,000 people working here at one time, red flags fluttering in the wind, and performers from the Korean People’s Army Art Troupe dancing and singing on the stage. We were deeply touched by this grand spectacle and all the excitement that reminded us of China’s Great Leap Forward campaign in 1958. You can’t see such a scene in our country nowadays!”
I couldn’t help asking: “I heard that North Korea is terribly short on supplies. With so many workers here, how did you feed them?”
Wang Yu-Min smiled. “The food supply in the North Korea is tight indeed, and it would be difficult to solve this problem on their own. It was President Yang that ordered rice, pork, vegetables, potatoes, edible oil, and even gas and diesel fuel to be delivered from China.
“The 76 sunshine greenhouses were in place by January 2002. To ensure that the seedlings of various vegetables grew well, Holland Village did solid preparation work. For instance, the tomatoes were grown from Dutch seedlings that we transported from Shenyang to Pyongyang in trucks with constant-temperature containers. Then, under the instruction of agriculture technicians from China, the vegetable seedlings were cultivated in the 76 greenhouses. As of today, we’ve been able to cultivate more than ten kinds of vegetables, including cucumbers, eggplants, hot chili peppers, sweet bell peppers, tomatoes, muskmelons and lettuce.”
Beginning March 2002, vegetables harvested from the greenhouses of Pyongyang-Euro Asia were supplied to residents and major hotels in Pyongyang. Yang Bin also provided lots of welfare support to the Korean People’s Army and the local people. The names “Euro-Asia Agriculture” and “Yang Bin” became very popular in Pyongyang.
Yang Bin established the first model modern agriculture zone in North Korea and this earned him kudos from North Korea’s political leadership. After the disastrous flood in 1994, agricultural production dropped sharply three years running, and water processing facilities were damaged badly too. At the same time, some countries imposed economic sanctions against North Korea, aggravating the population’s suffering. Support from the international community was very weak, and economic support often came tied with conditions that were repugnant to the government.
Legally speaking, there was a joint venture between Yang Bin’s Euro-Asia Group and Pyongyang General Horticulture Company, 70 percent owned by Yang Bin. But in reality, Yang Bin received no revenues from the fresh vegetables supplied by the joint venture.
Those familiar with the status of North Korea know that it is a low-income, low-consumption economy founded on state-managed, quota-based supplies. North Korean citizens enjoy free education from primary through senior high school, free medical treatment, and free housing. Except for farmers working in agriculture cooperatives that directly provide a portion of their daily necessities, all others such as workers, soldiers and officials, and intellectuals such as teachers, receive modest fixed salaries which somewhat reflect one’s seniority in the work unit. They all also enjoy set quotas of food, vegetables, cooking oil and daily necessities, so situations requiring cash payments are rare.
An ordinary worker earns a monthly salary of dozens of North Korean won, while officials make a little more than 100 won. Even highly placed officials in foreign affairs and trade whom I knew brought in only about 200 won monthly.
I asked many ministry-level officials about their salary. Some just smiled; others retorted “definitely less than yours.” But I didn’t give up. Once after a banquet, I pointed at one official working at the deputy ministerial level, and asked another bureau-level official: “So how much more does he earn than you?”
We were good friends and I always brought him Zhonghua cigarettes when I came to Pyongyang. “Several dozen more won,” he said straight out.
So what is the exchange rate for North Korea won against Chinese renminbi or US dollars? I asked Pak Chong Ho, a young man who had studied in China and spoke fluent Chinese. He told me that the North Korean won couldn’t be exchanged directly against foreign currencies. There were Foreign Exchange Certificates (FECs) in North Korea, just like the ones China used to have. The North Korean won could be exchanged for FECs at a rate of US$1:215 won.
At that exchange rate, the monthly income of an ordinary cadre in North Korea was worth around 50 US cents, and that of a bureau-level official just over one US dollar. Monthly salaries of the North Korean workers, cadres, officials and intellectuals went to purchase supplementary goods or food, and the prices of these products were also very low. One strategy: Use your savings to purchase FECs, and then buy imported goods with them at stores accepting foreign exchange.
Since the vegetables were supplied by the government to citizens free of charge, Pyongyang-Euro Asia couldn’t earn a profit unless the government subsidized it. But the fact was that the Pyongyang administration didn’t have enough foreign exchange to do so, so there was nothing to do at first except record the losses under “accounts owed.”
To show their appreciation for Yang Bin and compensate him for expenditures on the model agriculture zone, North Korea government decided to compensate for Yang Bin in other ways.

How was the Sinuiju Special Administrative Region proposed?
During November 2001 to January 2002 when the Pyongyang model modern agricultural zone was under busy construction, Yang Bin traveled frequently between Shenyang and Pyongyang. Each time he arrived in Pyongyang, he was received as a state guest in Moranbong Guest Hotel.
The Koreans tried to serve their best food to Yang Bin, even preparing fish and beef for him. But in the winter, they could only offer cabbage, potatoes, radishes and the like. One evening as Yang Bin walked out of his VIP dining room, he came across a North Korean official exiting an adjacent dining room. Yang Bin helped him open the door, waved to the other officials inside and went his way, but couldn’t help catching a glance of their meager fare: a bit of rice, a basic soup and a few vegetables, mainly kimchee.
These people were all senior cadres in the Foreign Affairs Ministry, Agriculture Ministry and Pyongyang General Horticulture Company. Among them, the most junior official was Deputy Director of the Bureau of Economics under the Foreign Affairs Ministry.
After returning to the second floor where he stayed, Yang Bin sat alone on the sofa in his living room for a long spell. He was so lost in concentration that he didn’t notice the cigarette as it burned right down to his fingers. He snubbed it out and made two snap decisions.
First, he called Ge Xian-Min and Wang Yu-Min at Pyongyang-Euro Asia and instructed them to deliver some of the meat, eggs and vegetables being transported from Shenyang and Dandong to Moranbong Guest Hotel, so as to improve the food quality for everyone dining there.
Then he invited Kim Dongkyu, President of Pyongyang General Horticulture, and his staff to his living room. At first, they discussed the construction of the model agriculture zone. Then he told his Korean friends that he was very upset to see that their lives were so tough, and that he had decided to donate a batch of rice to them.
In fact, during his stay in Pyongyang, the most uncomfortable occasion for Yang Bin was watching a performance of Korean children at the Pyongyang Children's Palace. Their wonderful performance won his admiration. Kim Dongkyu remarked to Yang Bin: “Marshal Kim says that children are the future of our country.” Yang nodded in agreement. “We Chinese have a saying: ‘Children are the nation’s flowers!’”
But after the performance, Yang Bin felt distressed as he shook their hands and examined their gaunt faces. Perhaps they reminded him of his own childhood and China’s lean days. With his father having passed away so early in his life, Yang Bin had to rely on his grandmother who barely eked out an existence by peddling tea on the street. Yang Bin shed tears in front of the Korean officials. He decided on the spot to donate a shipload of hamburgers to the children of Pyongyang.
During January 14-22, 2002, Yang Bin led Li Gang, Bian Shou-Jie, Zhou Xiang and other staff from Euro-Asia Group together with Jack, his Dutch agriculture expert, on a visit to the model zone in Pyongyang. They saw for themselves the status of the vegetable seedlings in the sunshine greenhouses, discussed details of the framework construction for the glass greenhouses, and negotiated with the North Korea officials on related issues.
Inside the greenhouses, it was as warm as a spring day. Thanks to the diligent management of the technicians from Euro-Asia Group, the vegetable seedlings were growing well, and the vines of tomatoes, cucumbers and kidney beans had begun to climb and blossom for the first time. Yang Bin and his entourage, as well as the North Korean officials, expressed their satisfaction.
On the night of January 21, Pyongyang General Horticulture hosted a welcome banquet for Yang Bin and his staff at Moranbong Guest Hotel. After the banquet, Pyongyang General Horticulture’s President Kim Dongkyu came to chat in Yang’s suite on the second floor of the hotel.
“President Yang, you are a friend to the people of North Korea,” said Kim as soon as he sat down. “You have contributed so much to North Korea selflessly. On behalf of Marshal Kim Jong II and the North Korean government, I express our deepest gratitude to you.”
Yang Bin gave Kim a friendly pat on the shoulder. “I grew up in China, receiving an education that stressed patriotism and internationalism. Compared to the hundreds of thousands of Chinese volunteers who shed their blood and even sacrificed their lives for North Korea, a bit of money and effort on my part is nothing big!”
Kim Dongkyu laughed heartily. “President Yang, you are truly great. The friendship between China and North Korea has withstood the test of blood and fire. Your concern for the Korean people is sincere and has passed the test as well. You are a businessman and therefore must earn a profit. But as you know, here in North Korea we are too poor to pay you back for your kindness. Marshal urges that, if you have any request, please do not hesitate to raise it.”
“No, no! I just hope that the people of North Korea can live better in the future. But I would like you to consider a suggestion of mine,” said Yang Bin. “What are the factors behind the poverty of farmers in North Korea? One of the reasons is that they work for only half the year but remain idle during the winter. Now how can that be acceptable?
“Our agriculture project is simply a model zone. It cannot be applied on a nationwide basis, because a glass greenhouse costs too much. We can export the vegetables and flowers produced in the greenhouses to Japan. More focus must be placed on the popularization of glass-free ‘sunshine’ greenhouses and cheaper, more basic greenhouses. You can establish dozens or even hundreds of demonstration sites—using these low-cost greenhouses—across the country so that people in all parts of North Korea have vegetables to eat in winter. As to how to invigorate the agricultural industry here, I have some further recommendations…”.
His eyes hardly visible so big was his smile, Kim Dongkyu broke in. “Fine, fine. I agree with you. And I thank you very much, too. But as I said just now, you are a businessman so revenue is a must. And what I am going to propose now is not just my own idea.”
On behalf of North Korea government, Kim Dongkyu made a proposal and a promise that greatly surprised his guest. “Would you consider choosing land in an area downstream of the Yalu River—27 square meters in the Sinuiju Region, specifically—rent it from our government, and develop it into an export zone? You would be in charge of the entire zone. If it is successful, you could request to increase the size of the area under your management in the future.”
Yang Bin was dumbstruck. Nothing of the sort had occurred to him before.
Kim Dongkyu told Yang Bin that they had tried to create a Special Economic Zone in Rajin-Sonbong but had failed. Yang was a person who had grown up in China, had received a Western education and had proven himself a highly successful businessman. Kim hoped that with such a rich background, Yang could lead this compact economic and foreign trade zone to success.
The powers at Yang Bin’s disposal would exceed those of the former governor of the ill-fated zone in Rajin-Sonbong; he would be free to allocate land for use as he saw fit, promote foreign investment, and could even introduce a bit of “capitalism” and let the zone serve as a laboratory for the “market economy.” The income generated from the zone would be treated as payback for his earlier investments in North Korea’s agricultural modernization.
“President Yang, you don’t have to answer me right away. Think about it for a while. When you have made your decision, please inform me. But provided you take this job, you must succeed. You cannot fail. And the results in Sinuiju must be better than that in the Rajin-Sonbong Special Economic Zone. Otherwise, we will not be able to face our country.”
Suddenly Kim Dongkyu looked very serious. By “we,” apparently he meant himself and these high officials working in the government’s bureaus and ministries.
Yang Bin sat alone in his living room after Kim Dongkyu left. He was smoking, as he tended to do when lost in deep thought.
The following day, Yang Bin told Kim Dongkyu that he appreciated the trust that North Korea government placed in him. He appreciated the deep affection that Marshal Kim had shown him. And, he had decided to accept the proposal to lead the Sinuiju zone, and make it more successful than the Rajin-Sonbong zone.
A luncheon celebration was hosted by several departments in the North Korea government, and senior officials from the Ministries of Foreign Affairs and Commerce, the Economic Cooperation and Promotion Committee, and Pyongyang General Horticulture Bureau all attended. As a courtesy, Yang Bin held a reciprocal banquet in that evening.
The next day, accompanied by Kim Dongkyu, President of Pyongyang General Horticulture Company and officials from the Ministries of Foreign Affairs and Commerce, Yang Bin visited Sinuiju. The 27 square kilometers provided by North Korea government was far from both the Yalu River Bridge and customs at the China-Korea border. Its location and lack of even basic facilities—no harbor or airport—would make raising money from international investors difficult.
Afterwards, Yang Bin told the government that they must rethink their plans for the 27-square-meter export zone. Once roads were laid and infrastructure installed, there would be little space for foreign investors to build their factories or office buildings.
“You have to provide places for foreign investors and experts to eat and drink, sleep and so on. When their wives and lovers show up, where are these guests going to stay? As you know, Westerners, and the Japanese, they all enjoy their women very much,” Yang Bin said with a grin.
His ever serious-looking North Korean partners smiled, knowingly.
“We’ve got to have five-star hotels here, like a Shangri-La or a Hilton, and villas in a first-class villa zone. We’ll show foreign businessmen and travelers that the facilities in Sinuiju are no less impressive than those in other free trade zones. Ours will even be more beautiful than theirs.”
The North Korean representatives laughed happily.
“President Yang, you aren’t boasting, are you?” asked Kim Dongkyu with a smile.
“No, I’ m not. I am serious,” replied Yang Bin. “Oh. Mr. Han,” he said, pointing to the North Korean official opposite. “You’ve been to Holland Village and stayed at my villa. What are your impressions?”
“Mr. Yang’s villa zone was truly beautiful,” confirmed Han, formerly general manager of a North Korean trading firm in the former Portuguese enclave. “Definitely not inferior to those in Macao!”
The North Korean officials nodded, suitably impressed.
“I will make Sinuiju the best foreign trade and investment zone in the world! We should dare to compete with European cities,” continued Yang. “We should establish a zone as beautiful as Geneva, so that merchants and tourists from all over the world would want to visit and spend their US dollars here! It will certainly become the bright spot of all of Northeast Asia. Not just a bright spot in Korea. Excuse me, I don’t mean South Korea! Or Japan. But in Sinuiju, North Korea.”
Yang Bin’s words were passionate, witty and stirring. The Korean officials nodded their heads in unison.
Then Yang Bin made another proposal, which was to enlarge the area of the zone to include key infrastructure such as an airport and a harbor. The North Korean officials replied that they would have to brief the Central Committee of the North Korean Labor Party on this proposal, and seek its approval.
To Yang Bin’s surprise, the Party replied quickly: Marshal Kim Jong II instructed that they adopt Yang’s proposal to enlarge the Sinuiju zone to a total of 82 square kilometers, including all the area of northern Sinuiju. Henceforth, this entire area would be known as the “Sinuiju Special Economic Zone.”
Ma Ning recalled details of how the zone was expanded, both land-wise and in terms of its administration. “On March 9, 2002, Qu Ren-Tian, Dandong’s Deputy Mayor, saw us off at the Yalu River Bridge. This was the first time that I had accompanied Yang Bin to Sinuiju. Noting the high rank of those officials who came to meet us, I could sense that the Koreans held Yang Bin in high esteem. The cars we took carried the emblem of the National Defense Committee of North Korea, and had apparently been dispatched from Pyongyang. The road in front of Yalu River Hotel where Yang Bin, his delegates and President Kim stayed, was cordoned off. And the attendants and cooks in the hotel were all transferred from Pyongyang on short notice to receive Yang Bin.
“That afternoon, President Kim Dongkyu of Pyongyang General Horticulture Company, Chairman Kim Yong-Shu of the Economic Cooperation and Promotion Committee of North Korea, Yang Bin and I held a small meeting. President Kim Dongkyu took out a map and told Yang Bin that according to Comrade Kim Jong II’s instructions, the area of the administrative region was to be increased from the original 27 square kilometers to the current 82 square kilometers.
“The boundaries of the administrative region were marked on the map by Kim Jong II himself, and he had also penned his instructions there. What had been a plan for an economic development zone, was now to be a special administrative region, closer to Shenzhen or Zhuhai in China. And he hoped that the Economic Cooperation and Promotion Committee could begin negotiations with Yang Bin on the practical details of the project in the shortest delay.”

1997 revisited: “Sindo County Economic and Foreign Trade Zone”
North Korea’s idea of establishing an “economic and foreign trade zone” in Sinuiju did not begin with Yang Bin in 2002. As early as 1997 North Korea had similar plans, but they were eventually aborted.
During 1994-97, North Korea suffered massive flooding. Almost nothing was harvested, a particularly heavy blow for an economy virtually dependent on agricultural output. To make things worse, the US and the West in general enforced economic sanctions against North Korea. Assistance did come from friendly neighbors such as China and Russia, but it was insufficient and North Korea found itself in a difficult position.
Pak Jingyun, an overseas Korean businesswoman with US citizenship, voluntarily donated rice and oil to North Korea. Motivated by patriotism and a belief in internationalism, she was still a merchant with limited resources. So she openly called upon her friends, acquaintances and international charities to also donate food and medical supplies to North Korea. Her call won the admiration of Marshal Kim II Sung and Secretary-general Kim Jong II.
Via the intermediary of the North Korea Asia Pacific Peace Commission, the North Korean government began talks with Pak’s Kumgangsan International Commercial Group, eventually granting her the rights to develop Sindo County (including Silk Island) within Sinuiju, as a means of expressing their gratitude to her.
They hoped that she would attract foreign capital to jointly develop tourism and commercial activities in the “Sindo Economic and Foreign Trade Zone.”
Here is a translation of the related news item that appeared in the Korea Central Daily on March 9, 1997:

North Korea Authorizes
Sindo County Open Zone

(Mar 9, 1997) The North Korean government has authorized the establishment of a duty-free shopping center, dancing halls and an entertainment complex (with gambling) at the mouth of the Yalu River. All foreign guests will be granted visa-free access, and “South Korean investment is also welcome.”
According to reports, North Korea has designated Sindo County near the Yalu River as an open development zone where foreigners may enter and make short stays without a visa.
A well-informed source said on March 8 that “Ms. Pak Jingyun, President of Kumgangsan International Commercial Group, has been granted the rights to develop a large-scale, duty-free shopping center and entertainment city in Sindo County, North Korea.”
“North Korea has designated Sindo County as an open zone in order to attract Chinese tourists,” said a well-informed source.
The opening of Sindo is based on the model of Hong Kong’s return to China (on July 1). China created a framework specifically to meet the needs of Hong Kong. The North Korea government considers that even if the economic zone is entirely opened, there would be almost no negative impact on the citizens of North Korea.
The well-informed source also said, “The Kumgangsan International Commercial Group is in the process of attracting investment from overseas Chinese. But investments from the rest of the world are also welcome, including from South Korea.” Meanwhile, “the plan is for duty-free shopping centers to be open to the public even in temporary buildings right from the start.”
Sindo County is located in the Yalu River delta, covering an area of 81 square kilometers, and comprises several islands including the 71-square-kilometer Silk Island.

But the North Korean government sent Pak Jingyun a Letter of Appointment via the North Korea Asia Pacific Peace Commission on April 3, 1997, almost one month after the above news item was published.
The translation of the Letter of Appointment is as follows:

Letter of Appointment

In order to undertake preparation work for developing Silk Island, territory of the Democratic People’s Republic of Korea, into an international tourist site, we hereby invest President Pak Jingyun of Kumgangsan International Commercial Group with the following limited authority:

1. To make an initial draft of the Silk Island Master Development Plan;
2. To attract capital from foreign entities or foreign entrepreneurs and undertake preparations for joint-venture business with them;
3. According to international practice, gather information on the possible utilization of the land on the island and conduct background studies on the foreign individuals and firms that are interested in the rights to use that land;
4. Draft an initial plan for accommodating foreign tourists.
As Kumgangsan International Commercial Group exercises the limited authority invested in it, it must remain in close contact with the North Korea Asia Pacific Peace Commission or its designated bodies within the government of the Democratic People’s Republic of Korea. All work and activities undertaken by Kumgangsan International Commercial Group should strictly follow the relevant government regulations, and ensure that the nation’s political and economic interests are protected.
North Korea Asia Pacific Peace Commission
April 3, 1997

Pak Jingyun began preparations for her project upon receipt of the Letter of Appointment. It seemed crucial to build good relations with government officials in Dandong City, and gain their support, since Silk Island (the main island in Sindo County) was located directly across the Yalu River from Dandong.
During April 9-15, 1997, Pak Jingyun visited Dandong’s municipal leaders and exchanged ideas about the North Korean island’s development plan. Their conversation was set down in a memorandum. In order to help readers, experts and researchers interested in this history, the translation follows below:

Memorandum
A record of a conversation between the Dandong Municipal Leadership and Ms. Pak Jingyun, President of Kumgangsan International Group, regarding the development of Sindo County.

At 10 a.m. on April 10, 1997, Liu Ting-Yao, Mayor of Dandong Municipal People's Government, Tang Yong-Lin, Deputy Mayor of Dandong Municipal People's Government, Mi Ke-Qing, Deputy Mayor of Dandong Municipal People's Government, Su Yong-Sheng, Secretary-general, and Geng Ren-Tao, Director of the Dandong Foreign Economic Council, met with Ms. Pak Jingyun, President of the Kumgangsan International Group, and her team. They held a conversation on the development of Sindo County.
During their conversation, Ms. Pak Jingyun showed them the Letter of Appointment issued by the North Korea Asia Pacific Peace Commission. Ms. Pak said that this was only a transitional arrangement and in due course the North Korean government would give her a formal Letter of Appointment, with which she could set out to prepare the preliminary work for the development of Sindo County. The present development would start from Silk Island, and would be extended to other islands in Sindo County.
Before the master development plan is finalized, she will first promote tourism and international trade. From a long-term perspective, Sindo should serve a similar function for North Korea as Hong Kong does for China.
Ms. Pak believes that the main challenge for the project is raising capital, and one cannot rely entirely on Dandong. Investments must be sought from South Korea, Hong Kong, Taiwan and Japan. Her move to cooperate with Dandong City would be welcomed by foreign businessmen. Ms. Pak said that she would be in charge of attracting investment from these countries, while the Dandong Government would be in charge of attracting capital from within China. In order to increase the attractiveness of investing in Sindo County, it should carry out the same policies as those in the Rajin-Sonbong Free trade Zone, or even more preferential in some aspects.
To facilitate cooperation, Ms. Pak suggested that both parties co-establish a collaborative body in which there should be one fluent English speaker from the China side. The Korean side would also join this body. President Pak promised that when she came next time to Dandong in May, she would invite the leaders of Dandong City to tour Sindo County.
The Dandong Government should provide President Pak with the names of the representatives (around ten) who will visit Sindo before she goes to Pyongyang. She stated that they would hold a press conference in Dandong.
Mayor Liu Ting-Yao extended his congratulations to President Pak Jingyun for the Letter of Appointment and indicated that the Dandong Municipal Government would help her with the development of Sindo County. He also suggested that Ms. Pak hold her press conference on May 18 to coincide with the Dandong Silk Festival.
Mayor Liu Ting-Yao said that the relevant departments of Dandong City had already prepared to welcome the opening up of Sindo County. If Ms. Pak had any suggestions or requests, Dandong City would do its best to cooperate. If Ms. Pak needed assistance from Dandong on planning, Dandong could also assist her. Geng Ren-Tao, Director of the Dandong Foreign Economic Council, would be in charge of communication and cooperation between the two parties. The Foreign Economic Council and Su Yong-Sheng, Secretary-General in charge of the Silk Festival Office, would jointly prepare for the press conference.
April 14, 1997

From this memorandum, we can see that Ms. Pak Jingyun hoped that the Sindo Economic and Foreign Trade Zone Sindo “should serve a similar function for North Korea as Hong Kong does for China.” It was said that the North Korean government had accepted this idea as well.
According to one source, the Sindo County Economic and Foreign Trade Zone failed because Pak Jingyun didn’t succeed in attracting foreign investors. But according to another source, it failed because there were military facilities on Silk Island and as a result, the North Korean army would not accept a plan calling for the establishment of an open trade zone within Sindo County.
For whatever reasons, North Korea’s 1997 plan to open up some islands in the delta of Yalu River and establish an “Economic and Foreign Trade Zone” was put on the back burner.
Then four years later, North Korea raised the same topic, only this time it was Yang Bin who was tapped to lead the project. The location was not merely “some islands” and the zone was no longer an “Economic and Foreign Trade Zone”. Yang Bin went further and faster than his predecessor—he brought a team of advisers and experts to push forward quickly. The project having been under the careful guidance of General Secretary Kim Jong Il all along, the North Korean government took a startling step: On September 23, 2002, it announced the opening of the Sinuiju Special Administrative Region.

Footnotes:

1-2. On the morning of May 9, 2002, I visited Cai Zhe-Fu, Secretary of the Dandong City Chinese Communist Party. The photo was taken at Dandong Hotel.

3. As to the question “How did North Korea know about Yang Bin, the agricultural entrepreneur?”, when I accompanied Yang Bin to Pyongyang in June, 2002, I asked a North Korean official with whom I was on familiar terms. “It was Marshal Kim Jong II who had us look into it,” he said with a smile. “We fully investigated his background, and later, he was invited to Pyongyang to visit and negotiate with us, all at the behest of the Marshal…”

4. On April 25,2002, after I visited Pyongyang-Euro Asia Joint Venture Company and its greenhouses in Huacheng Cave, Pyongyang, I interviewed Wang Yu-Min, Director and Vice-president of the company.

5. On May 11, 2002 and Nov 27, 2002, I visited Zhou Xiang, Director of the Reception Office in Euro-Asia Group.

6. From a conversation with Yang Bin.