Korea Focus 2013 08

Table of Contents

- Korea Focus - August 2013 - TOC - Politics 1. Kaesong Should be Locomotive for Inter-Korean Cooperation 2. Japan’s Election Choice and Ties with Korea 3. Korean War in Retrospect 4. North Korea’s Diplomacy toward the United States Observed in Washington, D.C. 5. Bystander to Chinese Investments in Africa 6. Anti-Japanese Independence Movement ― Precious Asset of Korea-China Friendship

- Economy 1. Impact of U.S. Fed’s Exit Strategy on Korea A Matter of Timing 2. solution to Economic Crisis Lies in Overseas Markets 3. Who’s Driving Conglomerates Abroad 4. Prerequisites for 70 Percent Employment Rate 5. Why Entrepreneurial Spirit Counts 6. Disclosure of Tax Haven Clients

- Society 1. Goguryeo that I Met 2. Koreans, Japanese and Chinese Born in 1958, the Year of the Dog 3. Globalization and Policy on Language Education 4. A Black American’s Perspective of the Korean Wave

- Culture 1. Golfer Park In-bee’s Perseverance and Challenge 2. Admiral Yi Sun-sin’s War Diary 3. A Novel Makes a City Reborn 4. Singing Haiku in the Age of K-Pop 5. Korean Cuisine Reborn in Delectable Poems

- Essay 1. Chances of North Korean Reform with Reemergence of Pak Pong-ju 2. Economic Cooperation in Northeast Asia and Inter-Korean Economic Cooperation 3. ‘Jobs without Growth’ More Dangerous than ‘Growth without Jobs’ 4. Job Performance of Older Workers at SMEs 5. Four Korean-speaking Groups in the China-North Korea Border City of Dandong Their National and Ethnic Identities and How They Interact

- Feature 1. Living in the DMZ for Six Decades 2. Monk Paints to Practice Meditation Everyday for 30 Years

- Book Reviews 1. Lee Kun-hee as a CEO, Lee Kun-hee as a Man 2. Complete Works of Ko Yu-seop, Pioneer of Korean Aesthetics

- Interview 1. Lee Eung-jun: “The Guardian asked me why Korean writers don’t write about unification. I wonder why, too.”

- COPYRIGHT

- Kaesong Should be Locomotive for Inter-Korean Cooperation - Japan’s Election Choice and Ties with Korea - Korean War in Retrospect - North Korea’s Diplomacy toward the United States Observed in Washington, D.C. - Bystander to Chinese Investments in Africa - Anti-Japanese Independence Movement ― Precious Asset of Korea-China Friendship

Kaesong Should be Locomotive for Inter-Korean Cooperation

Editorial The JoongAng Ilbo

The Kaesong (Gaeseong) Industrial Complex has survived. Officials from South and North Korea agreed yesterday to resume operations of the joint industrial park as soon as possible. A joint committee will set the schedule and discuss how to compensate the losses that manufacturers suffered from the long suspension of operations.

The knottiest issue before the final round of negotiations was whether North Korea should have to guarantee that no arbitrary suspension of operations will occur again. The South had insisted that the North was solely responsible for the closure. A compromise was reached and both sides vowed to prevent another stoppage. Thus, the Kaesong complex will reopen more than four months after the North pulled its 53,000 workers out.

Operators of the 123 South Korean manufacturing plants in the complex, together with all other people of the South, have anxiously watched government authorities dealing with the North for the past four months. Unyielding on concessions, both sides seemed to be on a collision course. When the North withdrew all of its workers, the South responded by ordering the exit of all Southern personnel from the complex. Working-level negotiations started but each round was fruitless, forcing the Seoul government to issue an ultimatum of a “grave decision,� which meant a permanent closedown. Finally, when the government started procedures to make insurance payoffs to manufacturers, the North changed its attitude.

The Peaceful National Unification Committee of the North announced on August 7 that it would guarantee no suspension of the complex “under any circumstances” in the future and Seoul officials assessed it as a “forward-throwing move.” The two sides agreed on the reopening in the next meeting.

It was obvious that both sides were unwilling to put an end to the Kaesong project, which carried the hope of inter-Korean economic cooperation and even was considered a seed for reunification.

So it was fortunate that the worst was averted and it is hoped that the settlement will lead to further improvement of inter-Korean relations. It could even be a blessing if the two sides were able to understand each other`s position better. We may expect a development that can be described as “the soil hardened after rain.” Since its inception, the Kaesong project has been affected by the political climate between the two Koreas. Enterprises investing in the KIC will be saved from such worries as both sides now pledge other matters will not affect operations.

When a stable operation is guaranteed, more investment will be made. Furthermore, the South and the North this time agreed to take measures to increase global competitiveness of the complex. The accord to improve provisions regarding transportation, communication and customs affairs is certain to make the latest incident a case of “turning a misfortune into an opportunity.” The Kaesong complex should now serve as a locomotive pulling endeavors for strengthening inter-Korean cooperation and stabilizing peace on the Korean Peninsula.

President Park Geun-hye is expected to offer a new vision of common advancement by both the South and the North in her National Day address. She is able to send a bold message to the North with the settlement of the drawn-out dispute over the Kaesong complex. We now anticipate that the “Korean Peninsula trust process” the President has advocated will move forward with greater strength. And everyone is yearning for the day when the North Korean nuclear problem comes to a solution and eternal peace is finally at hand on the peninsula.

[ August 15, 2013 ]

www.koreafocus.or.kr

Japan’s Election Choice and Ties with Korea

Kim Ho-Sup Professor Department of Political Science Chung-Ang University

Japanese Prime Minister Shinzo Abe scored a major political victory as his Liberal Democratic Party and its coalition partner, New Komeito, secured a handsome majority in the July 21 upper house elections. Coupled with a landslide win in lower house polls last December, Abe now has control of both legislative chambers until at least 2016. That should end Japan`s streak of six short-term prime ministers since the departure of Junichiro Koizumi in 2006.

A primary factor of the upper house victory was a package of aggressive economic policies that offered voters an escape from two decades of economic malaise. After taking office late last year, Abe initiated the so-called “Abenomics,” which aims for a 2 percent inflation rate to fight chronic deflation, introduces monetary easing to weaken the yen and injects major fiscal stimulus to reanimate the spending psychology of consumers. The measures so far have been successful in arousing public support.

Thanks to its booming economy, Japan was on the cusp of becoming a global power in the 1970s and 1980s, but it subsequently became entrapped in persistent low growth, sapping its national competitiveness and rendering it into a mere regional power in recent years.

Given its thumping election mandate, what sort of foreign policies can be expected from the Abe administration? Should its right-wing tilt become even more evident, Japan will be engulfed in fierce diplomatic disputes with its neighbors, including Korea. The Abe government`s public pronouncements have defended or affirmed Japan`s past militarism. Several leading figures of the Abe cabinet have made official visits to Yasukuni Shrine, which commemorates Japan`s war dead, including convicted war criminals of World War II, defying countries invaded by imperial Japan. In addition, some officials continued to deny the mobilization of sexual slaves to service Japan`s imperial army and in effect negate a 1995 speech by former Prime Minister Tomiichi Murayama, in which he publicly apologized for Japanese atrocities during the Second World War.

Unless the Abe administration changes its historical perception, it would be difficult to see an amelioration of relations between Korea and Japan soon. The recent Yasukuni visit by Abe cabinet members led to the cancellation of a Korea-Japan foreign ministers meeting and President Park`s first state visits have included Beijing, the first time that a new Korean president has gone to China before Japan.

The more Korea advances in its democratic development, the more the government`s diplomacy toward Japan will be influenced by public opinion. Although President Park gave priority to Beijing in view of China`s soaring status she must have been mindful of the Abe cabinet`s historical perception and the potential backlash to an early visit to Tokyo.

One option that cannot be ruled out, should the Abe administration`s relations with Seoul remain stalemated, is that Japan would attempt rapprochement with North Korea. In fact, Abe sent a highranking emissary to Pyongyang last May, marking a turnaround in Tokyo`s persistent tough stance toward North Korea over the issue of repatriating Japanese citizens kidnapped there. The surprise visit was an unusual diplomatic move, coming at a time when the North is under international sanctions for its provocative nuclear threat. It might have been designed to show a hidden card in quest for a diplomatic breakthrough on the Korean Peninsula.

Seoul must be fully prepared to cope with a variety of possible diplomatic gambits by the Abe cabinet, some of which could be quite unconventional. In light of the possibility that Tokyo may resort to unorthodox acts to meet its ends, Seoul`s foreign policy and diplomatic activities need to be multifaceted in dealing with a mountain of pending issues ranging from the much discussed historical perception to the territorial dispute over Dokdo Isles. South Korea`s diplomatic posture toward Japan should also be resilient because, like it or not, close cooperation between the two countries would be

essential if an emergency situation flares up on the Korean Peninsula due to misconduct by North Korea.

[ The Maeil Business Newspaper, July 23, 2013 ]

www.koreafocus.or.kr

Korean War in Retrospect

Lee Hong-koo Former Prime Minister Advisor, The JoongAng Ilbo

The Korean War, which erupted on June 25, 1950, has now become a conflict that exists largely in records and history books. The civilians and soldiers who survived three years and one month of bloody fighting are in their eighties and nineties today. The time has come for us to reassess the historical significance of the war, based on personal recollections soon to disappear.

History may well be defined as a product of a perennial effort to realign and integrate streams of events and grant meaning to them. A notable example of such creative reproduction is a book reflecting on contemporary Korea, “The Era We Live in Today,� written by Choe Chung-ho, professor emeritus of Ulsan University, and published last spring. It is an extension of his 1980 dissertation on Korea`s contemporary history and the Korean War, in which the historian/journalist stressed that sabotaging or neglecting contemporary history can never be justified.

The beginning of modern history varies depending on countries and scholars. The French generally mark the 1789 Revolution as the threshold of their modern history, the British the Parliamentary Reform Act in 1832, the Germans the American participation in World War I and the Bolshevik Revolution in 1917, and the Japanese the Meiji Restoration in 1868.

Choe is quite persuasive in arguing that the Korean War was the starting point of Korea`s

contemporary history. He categorizes the war as a crisis that “drew the world into Korea” and “Koreans out to the world.” Accordingly, he regards the conflict as a fratricidal civil war that involved rival ideological and social orders in the world.

It is true that the Korean War, joined by the United States and China, along with 16 countries allied under the banner of the United Nations, created global awareness of the Korean peninsula, providing an opportunity to have Korean history included in world history.

However, the globalization process of the Korean peninsula and its people can also be seen as a consequence of Korean independence movements waged through the first half of the 20th century and complex international relations after World War II ended and the Cold War ensued. The independence movements aimed at replacing dynastic rule with a modern state but were divided into two camps. One sought a liberal democratic order championed by the United States and Britain and the other pursued a Soviet model of Marxism and Leninism.

On the other hand, the Allied Powers of World War II secretly agreed to partition the Korean peninsula, and Soviet and U.S. forces subsequently occupied the North and the South, respectively, in 1945. Three years later, separate governments with opposing ideologies were set up, leading to the Korean War two years later. The Communist Party`s victory in China`s civil war in 1949 must have infused confidence into Joseph Stalin, Mao Zedong and Kim Il-sung that they could win a war against South Korea.

The objective of the Korean War was to achieve national unification. Instead, it left the nation in catastrophic havoc, solidified territorial division and confrontation that was worse than before. In the six decades that have elapsed since then, the failure to take advantage of the end of the Cold War and achieve peaceful reunification is the biggest regret.

The Soviet Union`s extensive reforms initiated by Mikhail Gorbachev`s perestroika and glasnost policies, together with Deng Xiaoping China`s historical shift to positive reforms and a market economy, changed the direction and balance of global politics and the world economy.

Under such international circumstances, it was a matter of course for the two Koreas to take tangible steps in their search for peace, mutual cooperation and ultimate unification. In late 1991, North and South Korea concluded a Basic Agreement with the common goal of restoring a shared national community through their coexistence and co-prosperity in a broad range of fields. They also

proclaimed a joint declaration for denuclearization of the Korean peninsula to ensure the safety of 70 million Korean people, an appropriate choice for the two Koreas to take.

Two decades have since passed and the Korean peninsula is still covered by ominous clouds of tension, prompting one to harbor skepticism about the Korean people`s wisdom and historical consciousness to take control of their fates. One lesson of the past six decades is that it isn`t wise to recklessly opt for an all-out defiance of global and historical trends. It can lead to isolation under the name of independence.

Now is the time when resolute determination is required of both Koreas to return to the orbit of coexistence and co-prosperity, as mutually agreed upon in the 1990s, toward the end of the Kim Ilsung era. Haven`t we made the same resolution repeatedly on each anniversary of the Korean War that the Korean peninsula must be steered toward peace so it will never experience another tragic war?

[ The JoongAng Ilbo, June 24, 2013 ]

www.koreafocus.or.kr

North Korea’s Diplomacy toward the United States Observed in Washington, D.C.

Park Hyun Washington Correspondent The Hankyoreh

These days, at almost every seminar on the North Korean nuclear issue in Washington, D.C., I hear the same joke that the highest-ranking American citizen who has met with new North Korean leader Kim Jong-un is former NBA star Dennis Rodman. The audience roars with laughter every time.

Rodman`s nickname, “The Worm,” implies his image among the Americans. Though famous and popular, he is known as a freewheeling “Dennis the Menace,” whom the mainstream American society is reluctant to accept. Hence there is a hint of mockery in their laughter.

Personally, I sympathized with Rodman`s enthusiastic appearance on TV after his visit to Pyongyang in February. He called Kim his friend and was eager to convey Kim`s message that U.S. President Barack Obama should “call him.” He asked, “Don`t hate me,” in March when a TV anchor bombarded him with harsh questions as a way of reproaching him for visiting the North at a time when the reclusive country was streaming threats. Despite his efforts, the Americans don`t seem to take his behavior seriously. The prevailing sentiment is that Rodman was victimized by the North`s propaganda scheme.

The North has long sought U.S. guarantees of the regime`s safety and normalization of relations with Washington. In this context, we can understand why Kim met Rodman. But it is doubtful whether the

North gained anything by inviting the retired basketball star, if it really wanted to convey its message to Washington through a high-profile public figure.

Some experts compared Rodman`s meeting with Kim with the failure of former New Mexico Governor Bill Richardson and Google Chairman Eric Schmidt, who visited Pyongyang almost at the same time as Rodman. It is hard to understand why Kim met Rodman but avoided the other two visitors, who are both popular and highly reputed, the experts said.

It is worth noting why the North`s National Defense Commission recently proposed, in an “important statement,” high-level talks with the United States. In the past, the North had held “behind-thescenes” contacts before full-scale talks. In other words, the North used to make public its talks with Washington only after it discussed an agenda with U.S. officials through the so-called “New York channel.” But I never heard of any preliminary fine-tuning this time. As was expected, Washington wants Pyongyang to show its commitment to denuclearization in “action, not words.”

Taking lessons from their predecessors` failures, the current U.S. policymakers are eager to get Pyongyang to make promises before entering negotiations. They know they won`t be free from responsibility, if they fail in negotiations. “This situation is quite different from the past when the North didn`t seem to have a clear-cut intention of possessing nuclear weapons,” a diplomatic source said. “It`s now hard to find any U.S. government officials who are willing to take charge of talks with Pyongyang.”

Under these circumstances, Han Song-ryol, deputy chief of the North`s mission to the United Nations, will return home soon. He has been called the “symbolic point man for the New York channel,” and his departure will be a setback to the North`s diplomacy toward the United States.

U.S. advocates of negotiations are losing ground. A good example is Christopher Hill, former assistant secretary of state for East Asian and Pacific affairs and a leading advocate of dialogue. Until last year, he had criticized the Obama administration at seminars for not entering into negotiations with North Korea. But when I met him recently, he focused more on pressure than dialogue. Former U.S. Secretary of State Madeleine Albright expressed similar views when she attended the “Asan Washington Forum 2013,” hosted by the Asan Institute for Policy Studies recently in Washington, D.C.

Of course, there are reasons for their change of opinions, one of which might be that the North`s

diplomacy toward the United States is not functioning properly. It appears Pyongyang needs a more subtle, flexible approach to bring Washington to the table.

[ June 28, 2013 ]

www.koreafocus.or.kr

Bystander to Chinese Investments in Africa

David K. Wright Professor, Department of Archaeology and Art History Seoul National University

I am an archaeologist who has been working in Kenya for over 15 years, and routinely visiting Africa since 1991. Last year, while riding in the back of a Land Cruiser near Lake Turkana, I received one of the biggest surprises of my many trips to Africa.

As we pulled into a small village, I heard the sound of children yelling while running up to our truck.

In all of my previous experiences, Kenyan children yell “MZUNGU!” at foreigners as a way of greeting. Mzungu literally translates to “European,” but it is the general word used for a non-African.

However, the children running after our truck were not yelling “mzungu,” they were yelling “Chine.”

This impressed me as an important moment, when the children of rural Africa are no longer associating foreigners with white-skinned missionaries and aid workers, but are growing accustomed to seeing Chinese businessmen. In Lake Turkana, Chinese companies are drilling oil for export to international markets.

Chinese investment in Africa has grown enormously over the last 10 years. According to the United Nations Conference on Trade and Development (UNCTAD), Chinese investment on the African continent has grown from US$911 million in 2000 to $68 billion in 2010.

The focus of Chinese investment has been on infrastructure, avoiding the public perception that they are complicit in political corruption. Africans are noticing the construction of new roads, bridges and buildings with the stamp “Made in China.” This type of investment is much more fungible than other types of economic aid that often get consumed by corrupt politicians and crony businessmen.

The Bretton Woods system and forced “structural adjustments” imposed on Africa in the1990s by the International Monetary Fund (IMF) left many Africans with the feeling that the developed world`s priorities were in maintaining the current political order as ordinary Africans suffered in poverty. This had the effect of disenfranchising many Africans from the political process, and left governments unaccountable to their citizens` needs.

It also left many Africans with the impression that the G20 nations were complicit in the growing wealth disparities between themselves and corrupt government officials. In the meantime, while China began investing heavily in Africa, the rest of the world took “safe bets” in the developed economies of Europe and North America.

According to The Economist, unweighted annual GDP in African countries grew from 3 percent in the mid-1980s to more than 5.5 percent in 2010. Of the world`s 10 fastest growing economies between 2000 and 2010, six come from the African continent (the remaining four are in Asia).

In contrast, GDP in developed European and North American economies over the same period grew by less than 2 percent with some countries` GDP actually shrinking. It turns out that the “safe bets” weren`t so safe after all. Africa still has problems with good governance, but sitting on the sidelines has proven to be costly for those who are not investing in the continent.

Korea is now trying to catch their Chinese competitors. Samsung is investing heavily in mobile and PC technology in Africa, and companies such as Dongmyeong, Taejoo and STX are trying to access the booming construction market. But the Chinese maintain a virtual monopoly on low-cost consumer goods and electronics. Korean car companies also have been eclipsed by Toyota and Peugeot, despite the high demand for low-cost, high-quality vehicles in the African market.

The lack of knowledge that Koreans have about African business and political cultures is impeding the success of their investment. Additionally, poor knowledge of the English language is denting the market potential of Korean companies. Most Chinese businessmen and engineers speak English or

French fluently and many have learned Swahili and other local languages. Koreans must prioritize improving their understanding of how developing economies in Africa work so that they can be competitive in the age of globalization.

If Koreans fail to do this, they will be forced to watch China and other countries saturate the investment markets of Africa until it is too late. Prioritizing English language training, cross-cultural exchange programs, and international studies programs in high schools and universities are necessary for Korea to compete with China. Waiting for the world to come to Korea is not a realistic and viable strategy to grow the national economy into the future.

[ The Chosun Ilbo, June 18, 2013 ]

www.koreafocus.or.kr

Anti-Japanese Independence Movement ― Precious Asset of KoreaChina Friendship

Chang Seok-heung President, Institute of Korean Independence Movement Studies Professor, Department of Korean History, Kookmin University

The old building of the Korean Provisional Government in Shanghai has attracted about 300,000 visitors annually since it was restored to its original condition in 1990. Initially, most of its visitors were Koreans. But an increasing number of Chinese people have visited and they now account for about half of all the visitors.

Of some 100,000 annual visitors to the Korea Volunteer Veterans Museum in Shexian, a remote area in Hebei Province, some 2,000 to 3,000 are Koreans with the Chinese making up the rest. This is also the case with the old buildings of the Provisional Government of Korea in Chongqing and Liuzhou.

Currently, there are about 20 exhibition or memorial halls commemorating Korean independence campaigns throughout China, attracting a combined number of more than 1 million visitors each year.

A total of 200 staffers are working at these institutions that have been designated by the Chinese government for protection as cultural properties. Most of the staffers are Han Chinese, except in the northeastern region where many Korean Chinese are living. At first they had difficulty communicating with Korean visitors due to language barriers. But they have been learning Korean to provide Korean language services.

The Independence Hall of Korea has supported these 20-odd Chinese exhibition and memorial halls through annual meetings on research, exhibition and education. Some 30 senior officials and staffers from the Independence Hall of Korea and the Chinese institutions gathered for their 11th meeting in Changsha, China, in late May. The participants reviewed their performance over the past year and discussed future plans.

As the new president of the Institute of Korean Independence Movement Studies, I attended the meeting for the first time. I was impressed by the enthusiasm and sincerity of the Chinese participants toward memorializing the spirit of the Korean independence movement. They had a correct understanding of what the movement for Korean independence means and why such exhibition and memorial halls were built in China. They studied hard with sincere attitudes to deepen their understanding of the movement.

It was a short five-day event. But we shared our views and friendship through our common academic interests. All of these Chinese institutions are functioning almost as branches of the Independence Hall of Korea. Just like a family, they are playing active roles in publicizing the significance of the Korean independence movement across China.

In the meantime, the Independence Hall of Korea has maintained close cooperative relations with overseas institutions and museums in its quest to become a world-class peace museum. Joint academic conferences and exhibitions have been organized under a string of exchange agreements signed with the Chinese People`s Anti-Japanese War Museum in Beijing in 2007; the September 18th History Museum in Shenyang and the Japanese-Russian Prison Site Museum in Lushun, Dalian, in 2011; the Unit 731 Museum in Harbin and the Xian Museum in Shaanxi Province in 2012; and the Nanjing Massacre Museum in Nanjing this year.

What is especially noteworthy is that the Chinese are enthusiastic about proposing exchanges, advocating bilateral friendship and goodwill. They call for enhancing friendship based on the two countries` historical consensus about anti-Japanese struggles. Currently, the Japanese-Russian Prison Site Museum in Lushun is hosting a special exhibition on the Korean independence movement, highlighting An Jung-geun, among other leaders of anti-colonial campaigns. The Independence Hall of Korea will hold an exhibition on atrocities committed by imperial Japan's Unit 731 this autumn.

Ahead of President Park Geun-hye`s state visit to China, we have higher expectations for enhanced Korea-China ties than ever before. It is also high time to emphasize Korea-China friendship looking

ahead to a new era in Northeast Asia. The joint anti-Japanese struggle waged by Korean and Chinese independence fighters to achieve Korea`s independence and defend peace in Northeast Asia is a precious historical asset for the future.

As a researcher of the history of independence movement, I regard the common struggle for independence as the most valuable legacy in the history of Korea-China friendship in the past 100 years. It is all the more important now to further promote mutual friendship based on their common experience in anti-Japanese campaigns when both countries need to silence Japan`s intemperate language and behavior concerning its colonial past and to establish historical justice.

[ Kyunghyang Shinmun, June 25, 2013 ]

www.koreafocus.or.kr

- Impact of U.S. Fed’s Exit Strategy on Korea: A Matter of Timing - solution to Economic Crisis Lies in Overseas Markets - Who’s Driving Conglomerates Abroad?

- Prerequisites for 70 Percent Employment Rate - Why Entrepreneurial Spirit Counts - Disclosure of Tax Haven Clients

Impact of U.S. Fed’s Exit Strategy on Korea: A Matter of Timing

Yoon Deog-ryong Senior Research Fellow Korea Institute for International Economic Policy

Our economy is being challenged by a change in international sentiment since Ben Bernanke, chairman of the Federal Reserve Board, suggested that the Fed would soon begin to reduce its quantitative easing, which has provided more than $2.5 trillion since late 2008 through bond purchases.

Quantitative easing has contributed to a steady recovery in the United States by cutting down on the private sector`s bad debt, reducing long-term rates and costs of borrowing, and, by doing so, encouraging investment. S&P 500 rose 30.5 percent during QE1, 11.9 percent during QE2 and another 8.9 percent during QE3, and the VIX, a popular measure of the implied volatility of S&P 500 index options, has been on the decline since QE1. Home sales increased by a monthly average of 45,000 in QE1, 27,000 in QE2 and 39,000 in QE3.

Bernanke said in March that quantitative easing would continue until the jobless rate fell below 6.5 percent and inflation rose above 2.5 percent. But on June 19 he said tapering could begin in the second half of 2013 if economic conditions continue to improve. He said the Fed would gradually reduce the monthly $85 billion in bond purchases, terminate QE in mid-2014 and consider withdrawing liquidity in mid-2015.

The takeaway that Bernanke wanted was that QE would continue until 2015. Nonetheless, financial markets focused on his tapering timetable. Bonds and stocks fell not only in the United States but throughout the world. At the same time, the U.S. dollar gained because scaling back quantitative easing would reduce the amount of dollars in circulation.

Bernanke was accused of making a rash remark on quantitative easing, not only because it shook the financial markets but because the first-quarter growth was at 1.8 percent in the United States, well below the previously expected 2.4 percent.

On July 10, Bernanke said he would keep the current level of quantitative easing for a while and that when the jobless rate was cut to the target level, it would still take some time until the Fed raised its benchmark rate. As he started to allay the jittery markets, stability began to return, with stocks rising, bond yields dropping and the dollar declining.

Still, it is necessary for Korea to be prepared for an end to quantitative easing. A credit squeeze may follow when it ends. If so, it has two implications for our financial market. It will mean a decline in overall liquidity for one thing and the tightening of dollar liquidity for another.

When less liquidity is available to the domestic financial market, it is necessary to be prepared to respond to economic actors who will suffer from rising interest rates. More specifically, it is needed to take stock of overleveraged households and business enterprises and check the possibility of them going bankrupt when interest rates rise. It is also needed to run stress tests on financial institutions and check the impact of higher interest rates. These are nothing but “déjà vu” steps that were conducted several times as our society went through financial crises. Our government has officials with know-how and highly experienced experts who can do the job.

Among the group potentially at risk are heavily indebted households, construction companies, shipbuilders and shipping companies. It is necessary to take preemptive action against their debt.

When it comes to policies on the financial market, it is the timing of their implementation that counts.

The government and the Bank of Korea have recently drawn up a plan to inject as much as 6.4 trillion won into a troubled bond market, if necessary -- a preemptive measure which is laudable. Additional measures may be needed to deal with potential risks before 2015.

There is a limit to what our authorities can do when it comes to the tightening of liquidity in the foreign exchange market because they cannot serve as the lender of last resort. As of the end of June,

our short-term foreign debt was equivalent to about 30 percent of our assets denominated in foreign currency -- an amount small enough to manage in the short term.

It is argued that foreign investors may cash in up to one-third of their securities holdings, which were estimated at 377.9 trillion won at the end of June. But the one-third ($98 billion) plus short-term foreign debt is less than two-thirds of our foreign exchange reserve, minimizing the chances of another financial crisis. Moreover, there are few markets other than the United States that are attractive to investors, which means there is little likelihood that foreign capital leaves the Korean market en masse. Given that we also have a currency swap arrangement worth $56 billion with China, we are highly prepared for a shortage in liquidity in the foreign exchange market.

Still, we will have to keep our economic fundamentals sound if we are to be trusted in the markets.

As such, we will have to ensure exports will keep momentum rolling and that current-account surpluses will continue to be produced. It is desirable to build up our foreign exchange reserve when possible. Our authorities will have to move fast when our trust is at risk in the market. It is the timing of policy implementation that determines whether or not a crisis can be avoided.

[ The Chosun Ilbo, July 12, 2013 ]

www.koreafocus.or.kr

solution to Economic Crisis Lies in Overseas Markets

Yoon Deok-ryong Senior Research Fellow Korea Institute for International Economic Policy

Korea`s economic growth rate is falling, prompting major institutions at home and abroad to lower their 2013 forecasts. Moody`s Investors Service, a leading global credit rating and research firm, now predicts the growth rate this year will be 2.5 percent. Both the Bank of Korea and the Organization for Economic Cooperation and Development foresee expansion a tick higher at 2.6 percent, while the Asian Development Bank (ADB) and the International Monetary Fund forecast 2.8 percent.

Despite the global financial crisis in 2008, Korea managed to attain an average economic growth rate of 4.5 percent for 10 years between 2001 and 2010. That is why international investors have flocked to the Korean market. At present, however, Korea is weighed down by moderating economic expansion in Asia, the global economy`s main engine.

The Asian Development Bank predicts the average growth rate in the region will be 6.6 percent this year. The ADB`s 2.8 percent forecast for the Korean economy is its second-lowest prediction for the Asian economies. More worrisome are projections of chronic low growth due to structural deficiencies.

Such pessimism was expressed by major domestic think tanks during a recent session of the National Economic Advisory Council, a presidential advisory body. They said the growth rate was on track to

gradually fall to the 3-percent range by 2020 and the 2-percent range by 2030. Their proposed countermeasures included expanded growth engines, strengthened foundations for growth, accelerated government policies, overhaul of the public sector and stable macroeconomic management. President Park Geun-hye reportedly said at the meeting that the nation`s economic paradigm should be changed from a catch-up economy to a world-leading creative economy.

Analyses and countermeasures are not always right. But one of the most important elements in policymaking is timing. From the standpoint of ordinary people beset with rising unemployment and falling income, daily life is like a war. In times of crisis, survival itself is regarded as a victory.

Ordinary working people and small and medium-sized enterprises are still confronted with such dismal realities.

We obviously need to strengthen our foundation for economic growth and implement a paradigm shift. But such policy pledges may sound hollow to those who are afraid they will not survive until the pledges are realized.

One of the most realistic solutions is to expand exports. Exports are the most important determinant to Korea`s economy, owing to their comparative advantages. A Bank of Korea study released in February concluded that exports contributed to more than half of Korea`s economic growth in the 2000s. The finding was based on an analysis of net exports` contribution to gross domestic product growth, using a new method that excludes the effects of importing intermediary goods for export. The ratio of net exports` contribution to Korea`s economic growth was 35.3 percent between 1990 and 2000, and surged to 53 percent between 2001 and 2012.

Korea`s economic stability thus depends on its external transactions. The share of foreign trade is extraordinarily high in the Korean economy. Korea`s dependence on foreign trade, a ratio of exports and imports to gross national income, rose from 105.2 percent in 2010 to 112.9 percent in 2011 and 112.7 percent last year. The ratio of Korea`s dependence on foreign trade stayed above 100 percent for three consecutive years.

With the Korean won not being internationally convertible, trade is the most important source of foreign currencies. Accordingly, one of the policymaking authority`s most important tasks is to ensure trade stability by securing and supplying the proper amount of foreign currencies. During the 1997 Asian foreign exchange crisis and a global financial crisis in 2008, the nation`s economic policymakers` biggest task was sound management of the foreign exchange market.

Keeping the current account balance in the black is the key to economic stability in Korea. The current account balance is the sum of all external economic transactions, excluding capital transactions. The balance on goods, the result of exports and imports, accounts for the biggest proportion of the current account balance. Moreover, income account balance, services account balance and balance of transfer are included in the current account balance. Therefore, the current account balance is generally regarded as a yardstick of a nation`s competitiveness.

In the Korean economy, surpluses in the balance on goods have so far offset deficits in the services or income account balance. Therefore, the current account surplus has been the main source of foreign money and has been utilized as a gauge of the nation`s export capability. Chances are high that a drop in exports will push the current account into the red, slow down the economic growth rate and destabilize the foreign exchange market. To ramp up economic growth and promote macroeconomic stability, we have no choice but to pay more attention to overseas markets.

A paradigm shift of the Korean economy and strengthening of its growth foundation should not be overlooked. Those tasks should be implemented in tandem with the export drive. We should not weaken our attention and efforts to expand overseas markets, which have been the foundation of our economic growth.

[ The Chosun Ilbo, June 10, 2013 ]

www.koreafocus.or.kr

Who’s Driving Conglomerates Abroad?

Shim Shang-bok Director, JoongAng Economic Research Institute The JoongAng Ilbo

BASF, the world`s largest chemical company based in Germany, announced in March that it would move its Asia-Pacific electronic materials headquarters from Hong Kong to Seoul this year. BASF also said it would establish a new regional research and development center for electronic materials in Korea. The company said the size of its investment in Korea won`t be as large as expected, but Korean media gave extensive coverage to the company`s plans.

The business plans of global enterprises, such as inroads into new markets and construction of new overseas plants, tend to make headlines, primarily because of their job-creation potential. Without exception, job creation is a supreme goal in any country and the nationality of corporate investors is not important. That`s why governments all over the world are devoted to creating a business-friendly environment.

Cheong Wa Dae, Korea`s presidential office, has complained that large domestic conglomerates are still reluctant to make fresh investments despite their ample cash reserves. Unable to disregard pressure from the presidential office, conglomerates have pretended to comply. Some companies have rehashed their investment plans, while others have repackaged past projects.

Many conglomerate affiliates also have announced plans to promote a large number of part-time

workers to full-time positions. Government officials and regulators frequently boast of their deregulatory accomplishments. But their self-praise is empty as long as conglomerates remain reluctant to increase investments and inbound foreign investment fails to meet expectations.

The share of domestic production at Hyundai Motor Co. fell to 38 percent in the first five months of this year, compared with 45 percent a year earlier. In other words, Hyundai`s overseas plants, including those in China, Russia, Brazil, the United States and the Czech Republic, accounted for 62 percent of the automaker`s global output. Samsung Electronics Co. is currently building a large-scale semiconductor plant in China`s Xian, while expanding facilities at its non-memory chip plant in Austin, Texas, and at a mobile phone manufacturing plant in Vietnam.

Samsung`s investment in its Line-17 system semiconductor plant now under construction in Hwaseong, south of Seoul, is dwarfed by its massive overseas investments. LG Electronics Inc. built a solar cell production plant in the southeastern Korean city of Gumi in 2010 but no other major domestic investment has followed.

Some critics, citing new Korea-bound investments by BASF and other global enterprises, may accuse Korean conglomerates of failing to invest at home. BASF`s investment decisions towards Korea are in line with its own business strategy. Global enterprises make decisions that are most advantageous to themselves. Then why are Korean conglomerates reluctant to invest at home? Why are they going abroad despite the importance of job creation at home?

The Korean conglomerates may have viewed their overseas inroads as more advantageous to themselves after a comprehensive consideration of land price, cost of labor, tax, distribution costs and social sentiment against large conglomerates.

In 2007, when Samsung Electronics unveiled its plan to build a mobile phone factory in Vietnam, the company said the new facility would produce low- to mid-priced models and its Gumi plant in Korea would service the high-end market. But the circumstances have changed. At present, Samsung`s Vietnam plant employs over 30,000 Vietnamese and annually produces up to 120 million mobile phones, mostly high-end smartphones. The output is more than triple that of the Gumi plant.

Despite such a reality, however, the Korean government`s corporate policy is going in the wrong direction. The authorities call for extending retirement age to 60, promoting part-time employees to full-time positions and lowering corporate tax benefits. Anti-corporate sentiment is still widespread

and labor organizations are raising their voices.

The authorities say that job creation is the top priority but they are giving investors reasons to go abroad. Some people insist that enterprises always think about their own interests only and are indifferent to social issues. If domestic enterprises continue to be pressured for that reason, we`d better give up our hope for job creation.

[ The JoongAng Ilbo, June 18, 2013 ]

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Prerequisites for 70 Percent Employment Rate

Nam Sung-il Professor of Economics Sogang University

The Korean government has unveiled a road map to enlarge the middle class by boosting the employment rate of those aged 15 and over from the current 64.2 percent to 70 percent by 2017. The breadth of the map – 137 policy tasks – suggests that civil servants at the relevant government ministries and agencies devoted a lot of hard work into the ambitious project.

The core strategy calls for creating new jobs in line with the administration`s objective of “creative economy” and expanding the scale and scope of the job market. Special emphasis will be placed on raising female employment and the number of part-time jobs. Judging from the experience of advanced countries that attained 70 percent employment rate, those policy tasks should be surely implemented.

The nation’s employment environment has been straightforward so far, with emphasis put on male participation and full-time employment. The employment rate for Korean men already exceeds 70 percent. In contrast, the employment rate for Korean women is 53 percent, far short of the rates in developed nations. In advanced countries, the ratio of part-time jobs in total employment exceeds 20 percent with the part-time employment ratio of women at 37 percent. But the ratio for Korea remains in the 10 percent range.

It is time to shift to a new environment of gender equality in the job market. That`s the justifiable task of the times, regardless of the 70 percent employment goal. Can this policy goal be achieved? What should be changed to achieve the goal?

I sought the opinions of two of my former female students, who are now in the position of employer and employee, respectively. Woman A is a mother working for a large conglomerate. She has returned to work after taking her first maternity leave, which lasted one year. She is now pregnant with her second child. The working mother says her company`s flexible working arrangement is very helpful.

She can flexibly choose her duty hours as long as she works eight hours each day.

Woman A backs the purpose of part-time employment or other forms of flexible working hours system but believes that female employees may find it difficult to apply for those arrangements under the present circumstances. She said her company had also set up a smart work center and received applications from its employees, but the turnout rate was too low.

She explained that the lack of interest in the smart work center may be related to the widespread perception in Korean society that off-site and out-of-sight employees tend to work fewer hours. She said that the most dreaded thing for working mothers is negative prejudice against them, or the prevalent perception and atmosphere that working mothers work fewer hours. Unless the negative prejudice against working mothers and any institutional disadvantage to their job careers are removed, flexible work arrangements can hardly take root in our society.

Woman B is the president of an up-and-coming market research company that employs about 60 people. As a self-made woman who climbed the corporate ladder, Woman B has so far recruited a large number of women. Moreover, the demand for professional women is growing in the market research field. But she told me that her company will not hire women anymore. She complained that her company can hardly operate normally with about one-fourth of its female employees away on maternity and childcare leave.

I advised her to take advantage of alternative and part-time employment arrangements, as well as the government`s social insurance premium subsidies, in order to overcome the chronic labor shortage.

But she said that the government`s temporary support can hardly offset extra expenses and problems, which include the cost of hiring new part-time or experienced workers, the cost of training new employees, the difficulty in transferring alternative staff after regular employees return from leave, and operational disruptions caused by frequent personnel reshuffles.

Above all, she said, the issue of labor market inflexibility deters the hiring of new employees, because it is very difficult to dismiss underperforming employees. The remarks by Woman A and B shed light on the realities faced by working mothers in their respective positions.

The solution is to maximize the employment of women. The quantitative change can spur the needed qualitative change in social perceptions, which emphasize male employment and full-time jobs. In other words, a steady increase in the number of working women will turn unique female characteristics into universal ones. Then, the social atmosphere will be conducive for the changes.

But the number of jobs will not increase as fast as expected, unless the problems raised by Woman B are resolved. As long as labor market inflexibility remains entrenched, enterprises are unlikely to increase employment regardless of demand for alternative labor. This problem cannot be solved by enterprises` attitude changes or government support. Instead, laws and systems should be changed.

Britain, the Netherlands and Germany, which have all managed to raise their employment rates to 70 percent in a short period of time, have something in common. Those countries stimulated part-time employment. In addition, they have improved labor flexibility and boosted employment through legal and systemic deregulations. Germany, for instance, has seen its employment rate rise after lifting all regulations on labor dispatch and easing rules on employment security in 2003.

More women in the workplace and a wider array of employment models are the urgent tasks regardless of an employment target. To that end, enterprises should change their perception towards working women and the government should take a leading role. Legal and systemic changes are also necessary to help improve labor flexibility. Now, the National Assembly has a role to play. We expect the parliament, particularly the ruling party, to have a strong sense of duty.

[The Dong-a Ilbo, June 8, 2013 ]

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Why Entrepreneurial Spirit Counts

Angel Gurria Secretary-General Organization for Economic Cooperation and Development

The OECD welcomes Korea`s ambitious road map aimed at raising its employment to 70 percent of the working-age population (aged 15 to 64) by 2017. Since 2003, Korea`s employment rate has remained close to 64 percent. Boosting it to 70 percent would provide numerous benefits, both economic and social. On the economic side, expanding employment creates a virtuous circle of growth, as job creation increases household income and private consumption, thus prompting more investment and hiring by the business sector.

Stronger domestic demand is necessary to accelerate Korea`s economic growth, which has remained sluggish at around 2 percent annually since the first quarter of 2011. Expanding employment is also essential to cope with Korea`s population aging, which will be the fastest among the 34 OECD countries. Korea`s population, the fourth youngest in the OECD at present, will be the second oldest by 2050.

How can Korea achieve 70 percent employment rate? There is no magic formula, but stress on fostering a more “creative� economy, changing the way people work, emphasis on gender equality, reducing the importance of tertiary education, and developing a more flexible employment and wage system could be significant enablers.

The road map correctly identifies developing a “creative economy” and reforming the way of working as keys to boosting employment. A creative economy is promoted by facilitating new start-ups, partly by relaxing entry barriers. Korea needs to restore the strong entrepreneurial spirit that created today`s chaebol. Next, the new companies have to be encouraged to grow. Policies for small and mediumsized companies (SMEs) should be streamlined while enhancing incentives for growth.

Given that SMEs account for about 91 percent of the service sector jobs, addressing their problems goes hand-in-hand with policies to tackle weaknesses in services. In the OECD area, service sector productivity is almost 90 percent of that in manufacturing. In Korea, however, service sector productivity is only about half of manufacturing, the largest gap in the OECD area. Correcting the imbalance requires strengthening competition in the service sector by removing entry parries, accelerating regulatory reform, upgrading competition policy and increasing openness to international competition.

Changing the way of working is also crucial. It requires a reduction in working hours, creating highquality part-time jobs and encouraging flexible work schedules. Reducing working hours involves complicated problems, as many Korean workers favor earnings over leisure. As for employers, they prefer to meet increased labor demand through longer working hours rather than increased hiring given the fixed costs of hiring and the employment protection that makes it expensive to dismiss unnecessary workers. Overcoming these obstacles requires an agreement by the social partners.

The employment rate of women in Korea in 2011 was 53.5 percent (of the working-age population), the seventh lowest among the 34 OECD countries. Given the high level of education of Korean women ― 60 percent have a tertiary education, the second highest in the OECD area ― low female participation implies that Korea is under-utilizing valuable human capital.

The relatively low number of part-time jobs is one factor behind the low female participation rate in Korea. In Korea, part-time work is classified as non-regular employment, which brings a number of disadvantages, including lower hourly wages. This weakens the attractiveness of part-time employment, particularly for highly-educated women. It is essential to create “high-quality” part-time jobs that are classified as regular employment, accompanied by more flexible hours.

The low female employment rate reflects the withdrawal of a majority of women at the time of marriage or childbirth, although most return later, resulting in an M-shaped pattern not found for Korean men or for women in the OECD area as a whole. The withdrawal of women reflects the

challenge of combining employment with family responsibilities. OECD statistics show that on average, women devote two hours more per day than men in unpaid household work, but in Korea the gap is three hours. Greater gender equity in unpaid work would facilitate female employment. In addition, there is a need for more high-quality, affordable childcare.

Another factor discouraging female employment is the gender gap in earnings. In 2011, women employees were paid only 60 percent as much as men, a gap that has remained virtually unchanged since the mid-1990s. Korea`s gender wage gap, the largest in the OECD, reflects a high share of women engaged in non-regular employment with low wages, as well as a low proportion in management positions.

It is necessary to create better job opportunities for women to attract them to the labor market, in part by reducing dualism and expanding the weight of performance in setting wages, thereby narrowing the gender wage gap. In short, reforms are needed to offer women the hours, jobs, wages and careers that would encourage them to work.

Korea`s youth employment rate is low by international comparison, partly due to high enrollment in tertiary education. However, it also reflects a mismatch problem, as the rising share of youth with tertiary education have difficulty in finding suitable employment. At the same time, SMEs face a chronic workforce shortage. To resolve the mismatch problem, it is essential to reduce the overemphasis on tertiary education by improving vocational education and providing effective training courses that meet labor market needs.

The departure of workers from the labor market at a relatively young age in Korea is a waste of human capital. The mandatory retirement age set by private firms in 2010 averaged 57, but many workers actually leave well before that age. Many become unemployed or self-employed in low-productivity activities. The low retirement age reflects a strong link between tenure and wage, which makes older workers more expensive.

Achieving the 67.8 percent employment target for the 55-to-64 age group requires a flexible employment and compensation system based on ability rather than age to ensure that older workers remain attractive to employers. The recent decision to require companies with more than 300 employees to set a mandatory retirement age at 60 or above beginning in 2016 is a step in the right direction.

We congratulate President Park Geun-hye on this comprehensive framework to boost employment.

Given the nation`s rapidly aging population, the emphasis on increased employment is very timely and we have the utmost confidence in Korea`s ability to achieve the target. A number of OECD countries have achieved this transition in a relatively short period of time and we are ready to use the experience of the OECD and its member countries to help Korea get there.

[ Korea Economic Daily, June 5, 2013 ]

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Disclosure of Tax Haven Clients

Kim Se-hyung Editor-in-Chief The Maeil Business Newspaper

A seemingly perfect Pandora`s box has suddenly been opened to the public, probably according to God`s will. Wealthy Koreans who have hid their money in the offshore tax haven of the British Virgin Islands may not have imagined being caught red-handed.

Newstapa, the online site operated by the Korea Center for Investigative Journalism, has released a list of the offshore tax heaven clients. They include, among others, Lee Soo-young, chairman of OCI; Choi Eun-young, chairwoman of Hanjin Shipping Holdings; former Central Banking Corporation president Kim Seok-ki and his actress wife Yoon Suk-hwa; and Chun Jae-kook, the eldest son of former President Chun Doo-hwan.

It is not illegal to have a shell company or set up accounts in offshore tax havens, dubbed “treasure islands.� But there is a proviso attached. Anybody who has more than US$100,000 in offshore tax havens is obliged to report the money to the National Tax Service. Chun Jae-kook, who opened an account even with an Arabian bank, seems to be taken aback. President Park Geun-hye, coincidentally or not, reportedly criticized the previous governments for failing to seize slush funds from former President Chun Doo-hwan.

Personally, I felt somewhat relieved that big shots were not included in the list. In particular, rumors

were rampant during the past military dictatorship that former presidents, chaebol heads and politicians, among others, owned secret Swiss bank accounts. If a well-known conglomerate chairperson was on the Newstapa list, the tremors can hardly be imagined, particularly amid the nation`s ongoing drive for economic democratization.

At this juncture, we need to have a closer look at the true identity of the treasure islands. During the Thirty Years` War from 1618 to 1648, Switzerland realized that war-weary wealthy people had an instinctive urge to secretly flee to neutral states along with their families and assets. Around that time, Switzerland declared itself as a permanent neutral state. Later, it enjoyed a boom during the two world wars.

Switzerland revised its banking and taxation law in 1934, vowing for the first time to heavily punish those caught disclosing secrets of banking clients. Thus, it reaped huge amounts of money from Jews, Adolf Hitler and Nazi officers, British military officers and many others who had transferred their wealth to Swiss banks but failed to survive World War II.

As far as an effortless and lucrative business is concerned, competition is always fierce. Luxembourg, Belgium, Andora, Liechtenstein and 14 British territories in the Caribbean Sea have successively jumped into the so-called “treasure island business.” The U.S. state of Delaware has also joined. The U.S. Congress was recently upset after it was disclosed that Apple evaded US$44 billion (about 50 trillion won) in taxes by sending all its overseas earnings to a business entity set up in Ireland, which offers a special corporate tax rate of only 2 percent.

“Treasure Islands,” a 2011 book written by Nicholas Shaxson, claimed that the family of then North Korean leader Kim Jong-il concealed $4 billion in Luxembourg. Shaxson argued that the biggest treasure islands are Manhattan and London, not the Cayman Islands, the Bahama Islands and the Bermudas. The financial authorities in Seoul believe that Hong Kong is the most favored destination for wealthy Koreans. In fact, slush fund accounts of CJ Group and an imprisoned Korean shipping tycoon were found in Hong Kong.

The International Consortium of Investigative Journalists recently disclosed a list of owners of shell companies based in the British Virgin Islands, saying a Pandora`s box has been cracked open. But the list was just a tip of the iceberg of problems. In Korea, government debt is on the rise, tax revenue decreases and social bipolarization deepens. But wealthy individuals and enterprises are fleeing to treasure islands. That is the reality here.

In 2002, the Organization for Economic Cooperation and Development defined the following features of tax havens: no or low taxes, lack of transparency and lack of effective exchange of information.

The organization then instructed 35 treasure islands worldwide to overhaul their practices.

Following the outbreak of a global financial crisis in 2008, the United States attempted to crack down on secret Swiss bank accounts. The U.S. government imposed a fine amounting to some US$800 million on UBS, demanding that the Swiss bank hand over a list of major American clients. The Swiss government last week promised to revise its banking secrecy act enacted 80 years ago.

But treasure islands are continuously honing their own financial techniques through the help of the world`s smartest law and accounting firms. Using the so-called saucissonnage technique, for instance, tax havens chop their clients` accounts into pieces to better ensure their secrecy. In the latest disclosure of tax haven clients, however, the secret caches were brought to light by amateurs.

The long list of shell company owners came from just one of the 60-odd treasure islands worldwide.

What does that mean? Korea has signed an information exchange agreement only with two of them.

The National Tax Service has yet to detect a single secret bank account in Switzerland.

[ June 14, 2013 ]

www.koreafocus.or.kr

- Goguryeo that I Met - Koreans, Japanese and Chinese Born in 1958, the Year of the Dog - Globalization and Policy on Language Education - A Black American’s Perspective of the Korean Wave

Goguryeo that I Met

Yun Myung-chul Professor of History Dongguk University

I had a special reason to revisit the historic sites of Goguryeo [Koguryo] Kingdom around Jian, China, last month, although I have been there many times before. In July 2012, Chinese news media reported that a stele dating from Goguryeo had been discovered along the Maxian River, west of Jian in Jilin Province, and that it appeared to differ from the stele of King Gwanggaeto. I wanted to see it.

Jian is the site of Gungnaeseong [Guoneicheng, or Guonei City as known in China], the second capital of Goguryeo. A large basin surrounded by several layers of mountain ridges stretching all the way from Mt. Paektu, Jian embraces the Yalu [Amnok] River as Seoul has the Han River and the Cheonggye Stream.

Goguryeo was founded in Huben, today`s Huanren, in Liaoning Province, in the first century B.C. The founders of the ancient kingdom built a fortress on the craggy ridges of Mt. Wunu. The walled city, built by utilizing steep rocky cliffs soaring 200 meters high and equipped with Cheonji (Heavenly Pond), was considered impregnable. King Chumo established his kingdom here, declaring his heavenly lineage and worshiping Haemosu as the heavenly emperor. Looking up at the fortress from beneath the mountain, I was overwhelmed by its divine vigor.

After looking around the fortress at Huben, I headed to Gungnaeseong, which was four hours away

by car. The area along the Maxian River, near Jian, has more than 1,000 tombs of Guguryeo, forming one of the world`s largest clusters of ancient tombs. They include the Tomb of One Thousand Autumns (Cheonchuchong) and the Great Western Tomb (Seodaemyo), both inscribed on the UNESCO World Heritage List, as well as the Tomb of the General (Janggunchong) and the Tomb of King Gwanggaeto.

King Gwanggaeto`s tomb, resembling a pyramid with a diameter of some 60 meters, stands magnificently with a shrine at the top, and the Tomb of the General is firmly embedded between craggy mountains and the Yalu River. It may be said that any ancient stele found in this area is highly likely to date from Goguryeo.

After discovering the stele, China immediately organized a research team to identify its origin, and announced the results several months later. The stele is about 170 meters high with an inscription of 218 Chinese characters on the front face, of which some 150 have been deciphered so far. It is far smaller than the stele of King Gwanggaego.

According to China`s research, the stele was made of stone similar to that used to build the Tomb of the General, indicating that it was made during the reign of King Gwanggaeto (r. 391-413) or his son, King Jangsu (r. 413-491). After the discovery of the stele was announced, China abruptly opened a new museum, which had remained closed for years after completion, and exhibited what it claimed to be the “real stele.”

I was told to leave my cell phone and camera behind, before I was allowed to enter the museum. The stele was placed in a very large glass box. It was smaller than I anticipated and the inscription was undecipherable because the viewing distance was more than three meters. Chinese researchers said the stele has a typical Chinese style. I felt it had an unnatural and arrogant feeling, instead of simplicity and vitality that characterize other artifacts of Goguryeo.

Whether intentionally or not, the stele was offered for public viewing but access was actually denied, making the verification of its origin and integrity impossible. I could only see the shadow of the Northeast Project lurking behind the huge glass box.

Goguryeo was a “big” country with a special character. It occupied a large territory and its people were strong in body and spirit. They were skillful warriors who contested for supremacy over the Chinese central plains by strategically deploying cavalry and naval forces, demonstrating their pride

as the most powerful nation in the region over centuries.

Goguryeo possessed enormous spiritual energy and free will, a divine aesthetic sensibility for communicating with the heavens, and outstanding scientific technology for manufacturing weapons and building mountain fortresses. It also displayed magnanimous leadership to pursue exchange and coexistence with all ethnic groups in East Asia. In our DNA is ingrained the soul of Goguryeo and in our blood is pulsating its powerful energy.

In view of the paucity of historical records about Goguryeo, the “new Goguryeo stele from Jian� can be a valuable source of information. But its excavation, interpretation and research are entirely left in the hands of the Chinese. In this regard, Korean academic circles, including the Northeast Asian History Foundation, need to be more aggressive in pursuing joint research with China in diverse fields.

We have long been seized by the colonial view of history, which has confined the boundary of our national history to the Korean peninsula. It`s been many years since Korean history was even excluded from college entrance examinations. History is not about the past but the present; it offers a model for future progress. Let us study about Goguryeo.

[The Dong-a Ilbo, June 4, 2013 ]

www.koreafocus.or.kr

Koreans, Japanese and Chinese Born in 1958, the Year of the Dog

Hisashi Michigami Director, Public Information and Cultural Center Minister, Embassy of Japan in Seoul

When I say, “I am a dog. I was born in 1958, the Year of the Dog,� people smile back to me.

Those Koreans born in that Year of the Dog are baby boomers. When they were in elementary school, they were put in either the morning class or the afternoon class, each one accommodating as many as 70 students. I hear competition was fierce in the classroom. At the time, no electricity was supplied to rural villages.

These people belonged to the last generation that experienced hunger. The quality of life noticeably improved when they entered adolescence. At 30, these people watched the Seoul Summer Olympics and witnessed industrialization and democratization as their nation made rapid progress in politics as well as in economy.

But they were hit hard when they were in their 40s, when their nation went through the Asian financial meltdown of 1997-98. Now in their 50s, they are coping with the residual effects of the global economic crisis of 2008, worried about their children`s employment opportunities and about being pushed into retirement.

In contrast, those born in 1958 in Japan, like me, are not baby boomers. Rapid economic growth and

global appreciation of Japanese culture already were under way when we were born. Before we were 10, Tokyo hosted the Summer Olympics and the Shinkansen bullet trains began service. Then Japan became the second-largest economy.

I ate cake almost every month when I was in elementary school because all my friends, including those from not-so-well-to-do families, had birthday parties. I became an apolitical student in pursuit of an affluent life. The first half of our life was very different from that of our peers in Korea.

In the 1980s, the United States was miffed when it felt it was being defeated by a nation which it had crushed in war. Japan, which has since then had low rates of growth (which is not abnormal among advanced nations), now is seeing some signs of recovery.

Those born in China in 1958 are also different. They remember hunger as well as poverty. When they were in elementary school, the Cultural Revolution caused nationwide chaos, dealing a devastating blow to their academic and cultural progress. They grew up, watching adults fly into rage and shake their fingers at others and listening to them denouncing others in their speeches.

Many of them were deprived of opportunities for higher education because they were banished to perform manual labor in rural areas. In 1978, admissions to universities started again at the instruction of Deng Xiaoping, giving bright students access to prestigious universities. This news moved those born in 1958.

The economy began to develop when China made a decision in favor of reform and opening in late 1978. Its model was Japan. Hundreds of millions of Chinese also gravitated toward Japanese movies and TV dramas.

Beijing hosted the Summer Olympics when those born in 1958 turned 50. They detest the kind of chaos the Cultural Revolution brought on them. Among them are quite a few cool-headed and openminded elitists who acknowledge that China is evaluated low by the international community and that it does have many weaknesses.

I was speechless when I heard some of my Chinese friends born in 1958 recount their hardships. One of them said he doesn`t remember how his face looked when he was a child. Another said none of his friends knew who was who when they saw a picture taken of them when they were in kindergarten. I was also shocked when my Korean friends said they went to school in morning and afternoon shifts

and had no electricity at home. Though we are of the same age, we have treaded different paths in life. And we don`t know how different our lives have been.

Of course, many Chinese have a good understanding of Japan. According to an opinion poll in China, 21 percent of the respondents said “our nationalism and anti-Japan emotions� are the main obstacles to Sino-Japanese relations. I highly appreciate the self-criticism. I also hear some Chinese say that relations with Japan are very important for them and that China has much to lose if it fails to improve relations with Japan at an early date.

Those of us in neighboring countries are in the same generation but have had different lives, values and views about the state. On the other hand, we may have similar feelings about life as we share worries about employment opportunities for our children while wrapping up one part of our life for retirement. I earnestly hope that we will be able to understand each other better. We have much to learn about each other. Each life is precious. There is no hierarchy. We have undoubtedly found rewards in hardships and many overwhelming moments in stability. I wish the best of luck to everyone born in 1958.

[The Chosun Ilbo, June 19, 2013 ]

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Globalization and Policy on Language Education

Shin Kwang-yeong Professor of Sociology Chung-Ang University

Globalization is a new word that appeared in the latter half of the 20th century. Each country has its own perception about it and responds to it in its own way. It is translated as segyehwa in Korea, gurobaruka in Japan and quanqiuhua in China. It roughly means transition to an open world in which goods, capital, information and people move around without being constrained by time and space, and are led by supranational organizations or groups.

Globalization has been accelerating since East European socialist countries were integrated into the capitalist market economy in 1989-92. It is bringing changes so fast as to render predictions impossible, as countries respond with their own collective knowledge and ethos.

One of the most surprising responses has come from Sweden`s Folkpartiet Liberalerna (Liberal People`s Party), which holds the post of education minister in the current conservative coalition government. In June 2011, the education minister said he wanted Sweden to be the first European country to introduce Chinese language classes to every primary school. He demanded Chinese language classes in all elementary schools within a decade.

In the summer of 2010, the Liberal People`s Party declared that the replacement of English with Chinese for foreign language education in elementary school was its policy. A globalization commission of 20 people representing the business, labor, political community and government, with

the education minister serving as its chair, had concluded after a two-year study that Chinese would be more influential than English in the 21st century and that Sweden needed to prepare accordingly.

The linguistic policy of one of the farthest countries from China was nothing short of shocking. It differed so much from Korea, which has paid no particular attention to China in its education policy even though it lies next door. Instead, Korea`s education policymakers single-mindedly adhere to English, believing that globalization depends on a sound command of English.

Sweden`s education policy is farsighted. Chinese language education in elementary school will demand enormous resources and manpower. As such, it is being introduced gradually, in elementary schools within 10 years and in middle schools within 15 years.

Ten or 15 years is too long for Koreans, given that each new education minister launches his own policy with hopes of getting quick, visible results before his tenure ends. Indeed, it is often said in Korea that education needs a “great plan that spans 100 years.� But its education policy changes too frequently.

The need for benchmarking is indiscriminately bandied about with everybody trumpeting globalization. Benchmarking means copying another country`s policy or using it as a reference. What Korea needs to learn is not a policy to be benchmarked but the ethos and philosophy behind it.

Otherwise, benchmarking will be only skin-deep and the resultant policy will soon be replaced.

Would it too much to demand that our nation`s policy on language education, not be influenced by beliefs held by a few individuals but instead be a product of farsighted practical research on changes that are occurring in the world?

[ Kyunghyang Shinmun, June 19, 2013 ]

www.koreafocus.or.kr

A Black American’s Perspective of the Korean Wave

Emanuel Pastreich Professor, College of International Studies Kyung Hee University

I received an unexpected email in February 2013, from a young woman who was studying public health at Harvard University. Mariesa Lee Ricks explained that her mother was Korean and that she had a great interest in Korean culture. Mariesa said that she hoped to find out how K-pop and Korean social media can play a role in bringing positive messages to youth around the world.

Mariesa added that she hoped to visit Korea to carry out research. I wrote back to tell her that I would be in Boston soon on a business trip, and we agreed to meet then.

I did not recognize her at first. I was taken aback for a split second when she introduced herself because she turned out to be an African American, and I had imagined a half-Korean, half-Caucasian woman who looked like my daughter Rachel. I was impressed that Mariesa did not display the slightest sense of discomfort or uncertainty in the few seconds that it took me to get over my embarrassment. She was clearly an extremely mature and composed woman with a strong sense of herself.

We sat down at the cafĂŠ for a cup of coffee and muffins and Mariesa started to tell me how her research was far more than academic interest, but part of a vision for her own cultural and ethical mission and an extension of her experiences since childhood. The Korean Wave was an essential part of a search

for greater diversity and acceptance of both herself and others. She imagined it as something far larger than just the catchy songs of Psy.

“When I heard about social issues like bullying and suicide among young people in Korea, I was deeply concerned as someone who has cousins at middle school in Korea. But I was also aware of the increasing ethnic and cultural diversity of Korea, and of the explosion of innovation and cultural vitality to be found in that country,” Mariesa said.

She wanted to learn about how youth issues in Korea were being addressed and the potential for serious innovation. She sees in the Korean Wave a chance to reinvent the experience of youth, whether in Korea or the United States.

That vision is linked to the critical role Mariesa`s Korean and African American heritage has played in her cultural and intellectual development. Her Korean heritage was essential when she grew up in Atlanta. Her grandmother and mother maintained close ties with Korean culture and the Korean community, which was made easier by the burgeoning Korean population in the part of the city where they lived.

“My father`s family had a limited understanding of Korean culture, but fortunately my mother and grandmother were eager to introduce their culture, whether through funny stories from their childhood in Korea or through cooking kimchi jjigae (spicy Korean stew) for everyone, or teaching some Korean phrases,” she said. “So I developed an appetite to try new things and to explore new combinations of culture. That is the appeal of the Korean Wave for me.”

“Thanks in large part to my Korean heritage, I have developed an intense desire to honor my parents and family ― a trait that has spurred me to be extremely aware of how my decisions and actions impact others,” she said. “At the same time, American values of individuality have allowed me to feel comfortable taking risks and exploring my own interests.”

Mariesa developed her own personal interpretation of the Korean Wave. Along the way she found many traits in common between the cultures of African Americans and of Koreans. Both groups have encountered cultural and political repression, whether slavery and Jim Crow in the African American case, or foreign invasions and occupation in the case of Korea. Out of such pain emerged “a strong sense of resilience, spirituality and the importance of community, which made the blending of cultures in my family seem more natural,” she said.

That cultural melding allowed Mariesa to see something immensely valuable in Korea. She notes that as the world grows smaller, the Korean Wave is a powerful means to find common ground between diverse populations through the appreciation of Korean culture.

Korea continues to be an inspiration for Mariesa as she works within American society to change assumptions and create a fairer and more open environment. Above all, Korea represents strength in the face of adversity for her. It is perhaps ironic that this testimony to Korea`s potential comes from a place where most Koreans would not expect it. But the Korean Wave today is not being made up by advertising executives or bureaucrats. It is a true movement of like minds around the world who wish to explore the tremendous potential of this East Asian culture, one that hints at a third civilization for the global society.

[ The Chosun Ilbo, June 6, 2013 ]

www.koreafocus.or.kr

- Golfer Park In-bee’s Perseverance and Challenge - Admiral Yi Sun-sin’s War Diary - A Novel Makes a City Reborn - Singing Haiku in the Age of K-Pop - Korean Cuisine Reborn in Delectable Poems

Golfer Park In-bee’s Perseverance and Challenge

News Commentary Yonhap News Agency

Park In-bee, the world`s No.1-ranked female golfer, has achieved the remarkable feat of winning the first three majors of an LPGA season. The last woman golfer to do it was Babe Zaharias of the United States in 1950, and the last male golfer was Ben Hogan, also of the United States, in 1953. In addition to the three majors ― the Kraft Nabisco Championship, the Wegmans LPGA Championship and the U.S. Women`s Open ― Park has won three other tournaments this season.

In 2008, one month shy of her 20th birthday, Park replaced her compatriot Pak Se-ri as the youngest ever U.S. Women`s Open champion. With her six wins this year, Park has eclipsed Pak`s record for most LPGA victories by a Korean golfer in a season.

Now, Park is poised to challenge for the so-called “Calendar Grand Slam,” four major tournaments in a single season, which no one has achieved in LPGA history. If she wins the British Open in August or the Evian Championship in September, she will achieve the monumental feat. I look forward to her setting another major record.

Park`s rise to the world`s No. 1 spot is ascribed to her perseverance and challenging spirit. Inspired

by Pak Se-ri, she started to play golf, but becoming a professional golfer was not an easy road. If she had given up golf without overcoming the severe slump that she had after winning the U.S. Open five years ago, she would not have the current winning streak.

Feeling extreme stress, Park was believed to be thinking about abandoning golf. However, she did not give up. She concentrated on improving her swing while receiving psychological counseling. In any sport, it requires tremendous patience and a strong will to overcome a slump.

Without succumbing to frustration, Park steadily improved her swing and this April, she finally bounced back to the No. 1 spot in the world. With her season`s prize money surpassing US$2 million, she leads the LPGA tour in money, world ranking and the Player of the Year point race. I applaud her for overcoming her long slump and standing up marvelously.

Korean golf is enjoying a renaissance these days. A lot of Korean female golfers are occupying top slots in world rankings. Among them are Shin Ji-yai who claimed the Women`s British Open and Choi Na-yeon who grabbed the U.S. Women`s Open in 2012, and Kim In-kyung and Ryu So-yeon who ranked second and third in the just-ended U.S. Women`s Open this year. Male golfers such as Choi Kyung-ju and Yang Yong-eun are also playing well.

I hope that the strong showing of Korean golf will continue. Golf will become an official sport in the 2016 Summer Olympics in Rio de Janeiro, Brazil. In an interview with the Yonhap News, Park revealed her wish to win a gold medal at the Rio Summer Olympics. Park`s challenge and victory will again inspire other younger Korean players. However, for the Korean golf to continue to make progress, the domestic golf environment should be improved.

In Korea, golf is still regarded as a sport for the privileged few and the membership golf courses in large metropolitan areas are charging fees beyond the means of ordinary people. Golf courses should be made more accessible to the public and negative perceptions should be removed. I hope the government will positively consider measures to popularize golf and foster its development.

[ July 1, 2013 ]

www.koreafocus.or.kr

Admiral Yi Sun-sin’s War Diary

Kim Jun-hyuk Professor of History Humanitas College, Kyung Hee University

The war diary of Admiral Yi Sun-sin was included in the UNESCO`s Memory of the World Register at the 2013 UNESCO International Advisory Committee, held in Gwangju on June 21. The famous diary, titled Nanjung Ilgi, covers a seven-year span from January 1592, when Yi was appointed commander of the Jeolla provincial naval command, to November 1598, shortly before he died at the Battle of Noryang. It offers a vivid account of the admiral`s personal agonies and patriotism, as well as his outstanding strategic ability and leadership.

UNESCO lauded the 16th century war diary for its value as the heroic commander`s personal journal as well as its significance as a historical source. The appointment of Yi was unconventional. It caused great controversy since Yi was given a drastic promotion in which he jumped six ranks, from the magistrate of Jeongup. He was a general who stood out in ground battles but lacked experience in naval warfare. No doubt most courtiers questioned the king`s faith in his ability.

Yi actually had little knowledge about the seas off the Jeolla province in southwestern Korea. He had no idea about where his ships would intercept the invading Japanese fleets and how to repel them.

Therefore, he gathered local residents on the yard of the provincial naval command every night, entertaining them with food and drinks as they made straw shoes and spun yarn. The admiral, clad in plain clothes, mingled with the civilian men and women, enjoying casual conversation.

At first, they were afraid of the admiral but over time they came to talk and laugh with him, even exchanging jokes, as they were fascinated by his personal charm. The local residents, most of them engaged in fishing, told him stories about the sea routes they had been traveling to catch fish and dig clams. Thus they provided him with vital topographical information, such as, “This port is notorious for whirlpools that make every ship capsize,” or “Reefs are hidden in that neck of rapids so ships are surely stranded and broken.”

Yi carefully remembered every piece of geographical information they offered; he would visit those sites the next morning if they were nearby, and dispatched his officers to inspect the distant locales.

What the people said was correct. Eventually, by referring to these useful bits of information he put together and studied, the admiral was able to win one battle after another, achieving historic accomplishments in naval warfare.

These days, Korea as well as the international community is undergoing confusion amid global economic recession and the North Korean problem. At a time like this, the leadership of those responsible for state management draws attention. I hope that our president and government officials will carefully heed the public`s opinions and employ wise and talented people to serve for the country, following the footsteps of Admiral Yi.

[ Maeil Business Newspaper, June 26, 2013 ]

www.koreafocus.or.kr

A Novel Makes a City Reborn

Hong Chan-sik Chief Editorial Writer The Dong-a Ilbo

A new wave of identifying modern cultural heritage since the beginning of the 20th century has swept local governments lately. The Seoul Metropolitan Government has embarked on the “Future Cultural Heritage in Seoul” project for the preservation of historic sites related to the founding of the Republic of Korea, including old houses of famous politicians, studios of writers and artists, and old industrial sites such as the Guro Industrial Complex that epitomizes the nation`s industrialization process.

The Incheon Metropolitan Government is also very active in revitalizing its ample modern cultural heritage sites. The Jajangmyeon Museum opened at an old building, the site of an early Chinese restaurant in Incheon Chinatown. This restaurant, named Gonghwachun, which opened in 1908, is known as the birthplace of the Korean-style black bean paste noodles. This museum attracts some 1,000 visitors on weekends, serving as the linchpin in rejuvenating the area.

The city of Daegu is turning its narrow streets carrying an old ambience into a great tourism attraction, dubbed “modern alleys.” What used to be shabby, deserted alleys have been revived to entice curious visitors.

Gunsan is another city no less rich in modern cultural heritage. After the opening of its port in 1899, a settlement for foreigners was created through which a quick influx of modern culture occurred.

During the Japanese colonial period (1910-1945), Gunsan was used as a port to ship rice grown in the nearby Honam Plain to Japan. Old buildings that used to house banks, the customs office and other facilities still remain in the city along with other historical structures.

Last week, Gunsan hosted a meaningful event to celebrate the opening of galleries, concert halls and literature cafes at early modern historical buildings which have been renovated for respective purposes. These buildings are mostly clustered in a modern cultural heritage belt in the inner harbor area. They include the Gunsan Customs Office building constructed in 1908, local branches of the 18th Bank of Japan, dating to 1907, and of the Chosun Bank, completed in 1922, and the Modern History Museum, which was established in 2011.

I visited Gunsan on the occasion of the opening ceremony. I wanted to see how the fresh idea of turning modern cultural heritage into an arena of culture and arts had been realized. I was also curious to find out the linkage between Chae Man-sik`s 1938 novel, “The Muddy Stream” (Tangnyu), and the area.

“The Muddy Stream” is set in Gunsan in the 1930s. It begins with a scene where a middle-aged man named Jeong is assaulted by a whippersnapper in the middle of a grand avenue in front of the Rice Exchange. In the novel, the Rice Exchange is described as the heart of Gunsan, and banks and brokerages surround the area. Jeong, who suffered multiple failures at the exchange, was seriously distressed. He tried to make a deal work without any seed money, but unfortunately, the plummeting rice prices got him into even more trouble and that is why he ended up getting his collar grabbed by a youngster.

The 1930s was a chaotic time when traditional values had collapsed with a new economic order beginning to take shape. People flocked into the port city in pursuit of money and jobs. Jeong was one of those immigrants who sold his rice paddies and crop fields to move to this port of new opportunities. He was a typical Korean of the colonial period. The author probably thought that Gunsan represented the trends of those days and set his story there.

The Rice Exchange is long gone, but the old bank buildings have been restored to their original shape.

Among other extant landmarks depicted in the novel are the fisheries wholesale market called Jjaebo Seonchang (“Harelip Wharf”), where Jeong would let out a sigh; the Kongnamul Gogae (“Bean Sprout Hill”) where he lived; Jejungdang Pharmacy where his daughter, Cho-bong worked; and Geumho Hospital where Seung-jae, an aspiring doctor and an admirer of Cho-bong, worked.

Before the restoration, the Chosun Bank building had been used as a night club and a karaoke bar until the building caught fire and stood as an eyesore for a long time. The 18th Bank of Japan building used to serve as a second-hand goods exchange store. The area found its way out of prolonged depression through Chae Man-sik and his novel, based on which the local city government recreated it as a space for culture and arts. This is a fine example of how much power a great work of art can have.

There was once a time when modern cultural heritage was considered a nuisance. Early modern buildings worthy of preservation, such as the cinemas in downtown Seoul like Kukdo Theather and Scala Theater, the old houses of writers Choe Nam-seon and Hyeon Jin-geon, have all been demolished without much publicity and now they are gone forever. This is because the owners of those structures feared their property rights would be limited once their buildings were registered as modern cultural heritage sites.

Another obstacle to preservation efforts is the viewpoint which regards modern cultural relics as remnants of the colonial period. But if we look at other countries, not many are busy taking down the traces of their colonial past. For example, China has well preserved the colonial architecture in Shanghai and Qingdao.

As depicted in the novel “The Muddy Stream,� the modern cultural heritage in Gunsan symbolizes the colonial exploitation and oppression that Koreans suffered under Japanese rule. However, just as we can renew our resolve to win over Japan looking at the Seodaemun Prison, there are great historical lessons we can learn from Gunsan`s old buildings. When our mindset is mature enough to regard our modern cultural heritage without feeling any discomfort, Korea`s national status will rise a notch.

[ July 3, 2013 ]

www.koreafocus.or.kr

Singing Haiku in the Age of K-Pop

Kim In-gyu Professor, Department of Economics Hallym University

“A cicada shell; / it sang itself / utterly away.” This is a haiku by the Japanese poet Matsuo Basho (1644-1694). Haiku is the world`s shortest poetic form that contains 5-7-5 syllables. It took the West by storm when introduced in the 19th century. American poet Ezra Pound (1885-1972), often dubbed the pioneer of 20th century modernist literature, is said to have found in haiku the original form of imagism (poetry in which precision of imagery and economy of the language are most valued).

Haiku transcends time and borders and is loved by many people around the world. The former Korean Minister of Culture Lee O-young said: “Haiku is the most international heritage in traditional Japanese culture.” Haiku written by masters such as Basho and Kobayashi Issa (1763-1827) have even made it into the American elementary and middle school textbooks. A famous piece by Issa goes, “One man / and one fly / waiting in this huge room.” American elementary and middle school students start writing poems by practicing haiku writing.

However, despite the geographical proximity, Koreans are not familiar with haiku. This is because we have kept our doors shut on Japanese culture. Haiku cannot be found in any textbooks for elementary, middle or high schools in Korea. Unless you are particularly interested in Japanese culture, you are least likely to have heard about haiku. In view of imperial Japan`s policy to obliterate Korean culture during the colonial period, it was natural that Korea adopted a closed-door policy

towards Japanese culture. But the doors remained closed for too long.

Consequently, B-grade and low-brow Japanese pop culture has crept in through the cracks between the doors. High-brow culture such as haiku, which is loved by people around the world, has not been introduced. It is a great misfortune for both Korea and Japan that Koreans` frame of reference for Japanese culture is largely confined to the B-grade and low-brow pop culture.

Relations between Korea and Japan are ever worsening these days. The immediate cause is the inappropriate remarks on past history by Prime Minister Shinzo Abe and remarks on the comfort women by Toru Hashimoto, co-leader of the Japan Restoration Party. However, Koreans` ignorance of Japanese culture has also played a part.

Psychologists say that man cannot be free from the tendency of relying on confirmation bias. Once Japan is defined in our minds as a country of B-grade and low-brow pop culture, we will find it difficult to see the good sides of their culture. Bestselling writer Rolf Dobelli explains in his book, “The Art of Thinking Clearly,� that the Internet space where people of similar minds get together is where negative confirmation bias is augmented and reproduced.

Until last year, thanks to hallyu (the Korean Wave) and K-pop, Japan had a positive sentiment toward Korea. The friendly atmosphere, however, started cooling down after President Lee Myung-bak called on the Japanese emperor to apologize for Japan`s past wartime atrocities in August last year.

Prime Minister Abe and Osaka Mayor Hashimoto`s instigations have further aggravated the situation.

In a BBC opinion poll on national reputation conducted two weeks ago, only 19 percent of Japanese respondents said they had positive views about Koreans, a big drop from last year`s 34 percent.

Korea has achieved remarkable economic growth through an open economy. Culture has much to benefit from an open-door policy as well, and the success of K-pop is a good example. Openness is a system that pursues mutual gains. Open culture requires mutual understanding. Although K-pop is enjoying worldwide success, more than half of the profit still comes from Japan. Unless we have a deeper understanding of Japanese culture, it will be difficult to sustain the success of K-pop in Japan.

Friendship through the popularity of Korean pop culture has provided a robust foothold for economic and political exchanges between Korea and Japan in recent years. But politicians of both countries have instigated hostile sentiments among their people to weaken the foothold. Even the opinion leaders who should try to stop such instigations are joining the bandwagon.

Kim Jin, an editorial writer of the The JoongAng Ilbo, wrote in his column on May 20 that the atomic bombings on Japan were “God`s punishment.” Yoshibumi Wakamiya, former editor-in-chief of the Asahi Shimbun, known for his pro-Korean views, responded by carefully conveying the rage of atomic bomb victims and many other Japanese citizens, in his column contributed to this newspaper on May 30. On behalf of Koreans who worry about the souring Korea-Japan ties, I would like to apologize to the atomic bomb victims and other Japanese citizens who are friendly toward Korea.

I also suggest introducing haiku and sijo (traditional Korean three-line verse) in school textbooks in each other`s country. I want to see in Korean school textbooks the famous piece by the widely loved haiku poet Masaoka Shiki (1867-1902), which reads, “A summer shower / the rain beats /on the head of the carp.” Likewise, I would be happy to find in Japanese textbooks a popular work of sijo by Yi Jo-nyeon (1269-1343):

Pear blossoms blush under white moonlight, The Milky Way glitters in the midnight sky; How, Nightingale, should you know the spring That is budding on those branches high?

Yet you burst my heart with your passionate song And I cannot sleep the whole night long.

[ The Dong-a Ilbo, June 13, 2013 ]

www.koreafocus.or.kr

Korean Cuisine Reborn in Delectable Poems

Shin Dal-ja President Korean Federation of Poets

I wonder how many Koreans know that soybeans originated from the Korean peninsula. I also assume that not many people know that the government of Joseon dispatched “tofu missions” to the court of the Ming Dynasty in China.

Beans are so rich in protein that they are called the “meat from the field.” Traditional Korean soybean paste (doenjang) is becoming popular as a natural cancer fighter and the fast-fermented soybean paste (cheonggukjang) as an effective diet food. It is truly amazing how our ancestors so successfully developed soybeans into such a beneficial food ingredient by taking advantage of its outstanding nutritional value.

As seen in the case of soybeans, Korean cuisine forms a wondrous haven of nourishing foodstuffs.

But the story of Korean food does not end here. In this digital age when the entire global community can simultaneously discuss the same subjects of common concern, Korean food has emerged as a new culture code, fascinating the palates and eyes of people around the world. The so-called “K-food” has become a delightful new cultural content for the global village.

The Korean Federation of Poets has recently issued a collection of poems written about 76 kinds of Korean food, which are poetic reinterpretations of Korean dietary culture and traditions that can

delight the palates of people every day. It isn`t simply because of Korea`s enhanced national competitiveness and cultural prestige owing to K-pop that people in other countries have come to love Korean food. Rather, they came to realize the quality of Korean food, which naturally spawned their interest.

Hence it may be said that the growing recognition of the health benefits of Korean food is helping to raise Korea`s brand value and cultural prestige, as more and more people understand that Korean cooking methods enliven the unique flavors of ingredients and do not destroy their nutrients but produce even greater nutritional value. More important than anything else is that Korean cuisine is not merely about cooking skills that come from fingertips but from love of family.

The just published poems are beautiful and delectable works brewed with the personal memories and experiences of the poets about each of the 76 kinds of Korean food. Each poem embodies an individual poet`s image of old hometown, and memories of the taste of water, glitter of sunshine and mother`s loving hands and voice. Korean food, in a word, represents nostalgia, love and creation.

These “food poems” will deliver to readers the flavors of Korean food ripened with the poets` personal lives and pride in their native dietary customs.

Most of the foods depicted by the poems are prized delicacies made from seasonal agricultural, livestock and fisheries products that are easily available. Among them are the royal hot pot, sinseollo, which used to be served to the king; the chicken soup with ginseng, samgyetang, a popular health food enjoyed in the summer; the indispensable cabbage and radish kimchi, called baechu kimchi and kkakdugi, respectively; and the time-honored soul foods like seonji haejangguk (hangover soup with ox blood), sujebi (hot soup with hand-torn dough flakes), and makgeolli (unfiltered rice wine).

The poetic language creates a feast of rich and deep flavors. Compiling this poetry collection was a thrilling project in that it has given a new life to the ingenious experiences of poets by transforming tastes for the palate into tastes of imagination. Translating the flavors of Korean food into poetry, that is the core of cultural content, means imbuing Korean food with a fresh sensibility and value to nurture greater sympathy, comfort and mutual benefit than poetry of any other theme.

This poetry collection was planned in conjunction with the National Agricultural Cooperative Federation`s “I Love Farm” campaign. It was intended to offer momentum to promote public health and awareness in our native food, and further propagate the value of our dietary traditions as well as agriculture and rural communities. I hope this poetry collection will thus help increase the inner

strength of Koreans through love and healing in the family and society, and also widen the scope of Korean poetry.

[ The Munhwa Ilbo, June 21, 2013 ]

www.koreafocus.or.kr

- Chances of North Korean Reform with Reemergence of Pak Pong-ju - Economic Cooperation in Northeast Asia and Inter-Korean Economic Cooperation - ‘Jobs without Growth’ More Dangerous than ‘Growth without Jobs’ - Job Performance of Older Workers at SMEs - Four Korean-speaking Groups in the China-North Korea Border City of Dandong Their National and Ethnic Identities and How They Interact

Chances of North Korean Reform with Reemergence of Pak Pong-ju Lee Su-seok Senior Research Fellow Institute for National Security Strategy

I. Introduction Pak Pong-ju, the architect of wage and price reforms in North Korea in 2002, has made a political comeback. He recently reemerged as head of the Light Industry Department of the Workers` Party.

Now the state media is identifying him again as the prime minister. During his absence, Pyongyang implemented major economic measures, including currency reform, which failed miserably.

After Kim Jong-un became the North`s supreme leader last year, many believed he had abandoned economic advancement to pursue military provocations, but he suddenly picked the economic reformist to head his cabinet. Pak`s reemergence came as Kim was raising tensions on the Korean peninsula to new heights with a series of long-range missile launches and a nuclear test, the third since 2006. Many now wonder if the appointment is a prelude to economic and external policy changes and realignment of the North`s power structure.

This paper reviews Pak Pong-ju`s first tenure as prime minister and looks into the circumstances that led to his return to the top Cabinet position. Then the possibility of North Korea`s shift to economic reform and openness under Pak`s stewardship will be explored.

II. Role of Pak Pong-ju during the Kim Jong-il Era and Conflict between Party and Government 1. Prime Minister Pak Pong-ju and Pragmatism

1) Pragmatism in North Korean Style The earlier tenure of Pak Pong-ju as prime minister was marked by pragmatism in North Korea. The leadership began acknowledging the importance of economic policies as the North endured the “March of Tribulation� of the mid-1990s. It recognized that maintaining the ruling system would be difficult if food shortages were not resolved. Ultimately, Kim Jong-il, the supreme leader, exhibited a change in perception about the importance of economic reform.

Kim avoided making explicit comments but occasionally offered remarks that suggested a positive understanding of reform and openness when he addressed other matters. Notably, Kim stressed pragmatism in managing the economy. The global socialist market had collapsed and Kim sought a dramatic shift in export structure and trade methods in order to enter capitalist markets.

Pragmatism was then linked to the sciences. As he pushed for a “strong and prosperous state� objective, Kim especially stressed the development of sciences. After his death, the Rodong Sinmun, the party organ, listed nuclear and satellite development, political ideologies and science and technology as the main points of his deathbed instructions.

The late leader also exhorted party cadres and economic officials to stick to practical interests.

Economic bureaucrats should focus on practical gains, he stressed. In the recruitment of young cadres, the first criterion of qualification is loyalty, but practical ability is the prerequisite for loyalty and creative power, according to Kim.

Pointing to the economic reforms of July 1, 2002, Kim said that pragmatism should be the principal method to resolve problems. The reforms rationalized wages and commodity prices and increased the scope of autonomy for enterprises. Kim said they were aimed at ensuring practical gains and motivating workers` to produce, thereby increasing the total material wealth of society and improving the people`s quality of life. Although they were generally incompatible with the country`s systemic characteristics, North Korea pushed the measures with great fervor. The deepening economic crisis in the 1990s forced the regime to turn to pragmatism.

2) Emergence of the First Pak Pong-ju Cabinet North Korea accelerated campaigns to increase harvests and pursued economic development as the best way to maintain social discipline during the 1990s economic crisis. Kim Jong-il was keenly aware that practical outcomes have precedence over ideology and defense. He identified Pak Pongju as the best technocrat who could singularly promote economic development independent of ideological matters.

When Pak was promoted to prime minister from minister of chemical industry, there were high expectations for the new economic improvement measures. The basic concept was to expand the role of the Cabinet in overall economic programs and increase the autonomy of individual factories and enterprises. Pak was chosen as the man who would direct these reforms.

Born in 1940, Pak graduated from Tokchon University of Technology and began his career as manager of the Yongchon Food Factory. After serving as manager of some other production facilities, Pak became an alternate member of the Workers` Party Central Committee in October 1980. He worked as the chief secretary of the Namhung Youth Chemical Complex for many years until he was named deputy director of the party`s Light Industry Department in 1993. The following year, he joined the party`s Economic Policy Supervisory Department as its deputy director. He was a delegate to the 10th and 11th sessions of the Supreme People`s Assembly in 1998. He was named prime minister in September 2003 and was removed in 2007.

Pak was the lead architect of the July 1, 2002 measures. His career rise from a plant worker to prime minister was dramatized in a two-part series of movies, titled “Guarantee.� It was an extremely rare case in North Korea where no living person was glorified in a movie except for Kim Il-sung and his son, Kim Jong-il.

Pak Pong-ju has visited South Korea along with Jang Song-thaek, Kim Jong-il`s brother-in-law, as members of an economic inspection team. At that time, Pak drew attention from South Korean hosts for his inquisitive manner, questioning details of technological and managerial matters. When he was named prime minister, seven other Cabinet members, mostly in charge of economy-related departments, were replaced. The reshuffle demonstrated that economic revival was the primary goal of the regime at that time.

2. Cabinet’s Expanded Role and Conflict with Party

Occasional statements of Kim Jong-il and the New Year joint editorials of major North Korean newspapers emphasized the need to expand the role of the Cabinet in boosting the economy. But the interference of the party and the military prevented the Cabinet from taking a firm grip on economic administration. It is not rare for economic officials to argue that the party`s economic ideas and theories should be strictly followed to achieve economic development. In short, the Cabinet should implement policies under the party`s guidance.

The prime minister of the Cabinet thus has more responsibility than power. His position in the governing structure of the North is lower than what is generally recognized in other state systems.

According to the late Hwang Jang-yop, the top North Korean ideologue who defected to South Korea, being appointed prime minister causes grief rather than joy to the appointee and his family because

he may be sacked any time for any bad turn of events. Under the control of the party and the allpowerful National Defense Commission, the prime minister had little authority in economic matters.

When economy did not work as smoothly as expected, the prime minister was promptly replaced.

After Pak Pong-ju, another economic technocrat Kim Yong-il was named prime minister but he was removed after the botched currency reform of November 2009. He was held responsible for the policy failure which caused social and economic turmoil. Choe Yong-rim, former Pyongyang city party chief, held the position until Pak Pong-ju`s appointment.

Pak Pong-ju`s initial appointment as prime minister broke the mold on traditional and systemic limitations placed on the position. He was to play a bigger and stronger role than the usual figurehead of the Cabinet in charge of economic policy implementation and Kim Jong-il granted him exceptionally extensive powers. In short, Pak was entrusted to do everything to invigorate the retarded economy. That led to his orchestration of the 2002 reforms.

Around the time of Pak`s appointment, a restructuring of party and state organizations took place, and significant parts of the economic activities of the party and the military were returned to the Cabinet. The Cabinet itself had a makeover as many old officials retired and professional expertise was stressed in placing bureaucrats. The prime minister was given the power to make Cabinet appointments, which previously belonged to the party. This was expressed in a directive by Kim Jongil. Pak subsequently set up a special office in the Cabinet to help its departments and other agencies to have easier access to economic issues and policy measures, thus drastically expanding the Cabinet`s role in economic administration.

However, from the first half of 2005, disputes arose among power groups in Pyongyang over economic policies, particularly the speed of reform and the party`s role in state affairs. In order to reaffirm its traditional authority in policy-making and interpretation, the party began to emphasize adherence to socialist methods, and Kim Jong-il also mentioned abuse of power by the Cabinet. In June 2006, Kim even commented that the Cabinet was performing reconnaissance for capitalists.

Such remarks revealed the leader`s difficult situation between the party and the Cabinet.

Apparently to check Pak Pong-ju while placating the party and the military, Kim Jong-il brought in Pak Nam-gi in July 2005. Pak Nam-gi, who was the budget committee head of the Supreme People`s Assembly, was named the head of the newly created Planning and Finance Department of the Workers` Party. Pak Nam-gi recovered part of the Cabinet`s power for the party and the two Paks

shared authority on economic administration for some time.

But eventually Pak Pong-ju was sacked amid the joint moves of the party and the military to hold him in check. Some economic experts who had advised him on economic policies were accused of corruption and demoted to provinces. Later, Pak Nam-gi was reported to have been executed for his role in the disastrous currency reform. The fates of these top bureaucrats revealed how dangerous it is to be in charge of economic reforms in North Korea.

III. Reemergence of Pak Pong-ju in the Kim Jong-un Era and New Power Structure 1. Political Significance of Pak Pong-ju’s Comeback

Before he was reinstalled as prime minister, Pak Pong-ju served as manager of the Sunchon Vinalon Complex, a deputy department head of the party Central Committee, an alternate member of the Central Committee, and head of the party`s Light Industry Department. Kim Jong-il must have wanted to use Pak again and spared him from political purge. With his economic expertise uncontestable in the North, Pak was a valuable asset for future economic reform. In 2008 when he fell ill, Kim Jong-il appointed him to the party Central Committee with certain intent to reinstate him, maybe for his son and successor.

Pak`s comeback has several political implications. First, it is related to the generational shift now under way in the North. The Cabinet under Choe Yong-rim before Pak Pong-ju had many aged people, including Deputy Premier Kang Nung-su who was in his 80s. There also were several ministers in their 70s. The average age of the Pak Pong-ju Cabinet is much lower. Kim Jong-un might wish to work with younger people rather than those who had served under his father and grandfather.

Generational transition is also taking place in the military. Last year, Kim Jong-un reshuffled the top military brass, appointing Choe Ryong-hae, who is in his early 60s, as chief of the General Political Bureau. More recently, he appointed Jang Jong-nam, who is in his 50s, as minister of the People`s Armed Forces. Kim Jong-un must be wishing to work together with younger officers in the military and young, economy-savvy officials in the Cabinet.

Second, by bringing back Pak, Kim Jong-un wants to inform his people that his goals include economic development and improvement of the people`s quality of life. Pak officially returned to his previous post at a ceremony of the Supreme People`s Assembly on April 1. He has not taken any

conspicuous actions comparable to those during his earlier tenure, but the North Korean media have shown him giving detailed instructions on economic matters, indicating how anxious the leadership is to demonstrate its commitment to the economy.

Since last year, Kim Jong-un has said that he would not make his people tighten their belts. But economic difficulties in the North are growing ever more serious as the international community is intensifying sanctions against North Korea for its repeated military provocations. The North Korean leadership cannot completely ignore the people`s complaints about their plight. Therefore, Pak Pongju has been resurrected to nurse the people`s dissatisfaction, let them harbor expectations for economic revival and foment their loyalty to the regime.

Third, Pak`s appointment may help improve the North`s external economic conditions. The regime`s internal durability obviously has been weakened amid protracted economic stagnation and its external economic circumstances offer no relief. As such, a reformist economic expert like Pak can be useful in promoting closer relations with socialist nations that adopted market economy, notably China.

For some time, North Korea pursued close economic cooperation with China through the creation of special economic zones. However, their bilateral relations turned markedly cool after Pyongyang`s third nuclear test. The appointment of Pak as prime minister could signify that he would explore external economic cooperation separately from the political and military courses. Pak is expected to mount considerable efforts to restore amicable ties with China, visiting Beijing in the near future.

Fourth, Pak`s appointment could be an attempt to ensure balanced power sharing between the party, the military and the government. The North`s military provocations these past years can be attributed to the influence of hard-line military officers. Persistent tension on the peninsula will only help further concentrate power in the hands of the military. Kim Jong-un should think that his grip on power will be secure only when power sharing is balanced.

The reemergence of Pak Pong-ju indicates that Kim Jong-un recognized the need for pragmatic approaches in economic matters, in contrast to the ideology-oriented philosophy of the party and the military. Pak Pong-ju may now represent the revival of pragmatic leadership displayed in the Kim Jong-Il era. Party cadres and military officers could be exhorted to replace their rigid ideological thinking with pragmatism.

2. Tasks of the Pak Pong-ju Cabinet and Generational Shift

Prime Minister Pak Pong-ju held his first cabinet meeting in an expanded form on April 22. At the meeting, participants discussed how to implement Kim Jong-un`s directives issued at the plenary session of the Workers` Party Central Committee, which was convened in March. Major topics included simultaneous development of economic and nuclear programs, review of the first-quarter economic development plan, readiness for the second-quarter plan, and the tasks specified by Kim Jong-un at the national light industry fair held in March, according to North Korean media reports.

As for the party`s call for simultaneous development of nuclear arms and people`s economy, the Cabinet reportedly discussed how to cope with the international sanctions that followed the North`s nuclear and missile tests. Noteworthy was the meeting agenda item concerning Kim Jong-un`s instructions made at the light industry fair. Kim urged normal operations of plants producing consumer goods, prompting considerable speculation over what action may be forthcoming.

After the cabinet meeting, Pak inspected sites of industrial activities. On April 23, he first visited a fertilizer plant in Haeju, South Hwanghae Province, and a cooperative farm in Chongdan County. At the farm, he stressed the importance of perfect management of the basic production teams. On the same day, Pak attended the opening rally of the 28th Central Science-Technology Festival in Pyongyang. A Choson Sinbo report on the event said that the presence of the prime minister at the opening ceremony “proved how much importance the nation gives to the development of science and technology in the construction of an economic powerhouse.”

On April 29, Pak visited the Youth Coal Mining Complex in Sunchon, South Pyongan Province, the main coal production area of the North, as well as the nearby Sunchon Chemical Complex. During a workers` council meeting at the coal mine, the prime minister reportedly discussed “the problems of establishing the right business strategy and carrying out rational labor management to meet the demands of the socialist economic management of the new century.”

The new slogan of “economic management of the new century” drew further attention to Pak`s role in the North`s possible economic reform as there also were reports on new measures to improve the economic management systems. Pak`s next reported activity was a visit to Namhung Youth Chemical Complex in Anju, South Pyongan Province, on May 13.

On his visits to farms, mines, power plants and other production sites, Pak encouraged workers and mentioned improved management methods of agricultural and manufacturing industries. His

activities raised expectations for some major economic reform measures like the July 1, 2002 package. He could be identifying the present situation to prepare for dramatic reform measures.

Let`s take a look at the new faces in the Pak Pong-ju Cabinet. North Korea announced the appointment of nine new Cabinet members when it reported the convening of the seventh session of the 12th term Supreme People`s Assembly on April 2. They were Ri Mu-yong, Ri Chol-man, Kang Yong-su, Pae Hak, Ri Hyok, Ri Chun-sam, Kim Kyong-jun, Kang Ha-guk and Thae Hyong-chol.

Deputy Premier and Chemical Industry Minister Ri Mu-yong, born in 1948 – eight years younger than Pak Pong-ju – was the chief engineer at Namhung Youth Chemical Complex, where Pak was the chief party secretary. He succeeded Pak as chemical industry minister in 2003. He was relieved of the ministerial position in May 2011 but retained the deputy premiership. Last April, he was again given the concurrent position as chemical industry minister, probably at the recommendation of the prime minister. Ri is expected to play increasingly important roles in the Pak Pong-ju Cabinet and is likely to succeed Pak in the next reshuffle.

Minister of Urban Management Kang Yong-su has risen from the bottom of the ministry, having proved his administrative ability as the deputy chief of the construction unit for the Mansudae area in central Pyongyang. National Resources Development Minister Ri Chun-sam and Land and Environment Preservation Minister Kim Kyong-jun have both been recognized by Pak during his first tenure as prime minister.

Agriculture Minister Ri Chol-man had chaired the rural finance committee of North Pyongan Province until April last year when he became a deputy premier in a surprise appointment. Ri, now 45, is expected to introduce innovative steps to the North`s rural economy. Fisheries Minister Ri Hyok was formerly manager of the marine office in Sinpo, South Hamgyong Province, and Public Health Minister Kang Ha-guk had broad medical service experiences as director of the Pyongyang Municipal People`s Hospital No. 1 and No. 3.

It may not be accurate to say that personal relations with Pak Pong-ju led to the appointment of the new ministers. But technocrats who had opportunities to prove their capabilities while working with Pak were selected for the important jobs to tackle difficult economic tasks. The Pak cabinet is expected to exercise all its powers as well as expertise for economic turnaround.

3. Cooperation between Party and Government

The new Pak cabinet bears stark differences from the earlier one. In the mid-2000s, Pak had few supporters other than Kim Jong-il and there actually were many conservatives who opposed drastic economic reforms. Now, Pak has far better circumstances; first of all, he is a member of the party`s Political Bureau. Not being a member of the Politburo during his earlier tenure, Pak was subjected to the party`s interference and supervision, but now, with his elevated status, he can play a more emphatic role, which will give him broader responsibilities.

The fact that Jang Song-thaek and Choe Ryong-hae are the key figures in the party and the military, respectively, will help Pak significantly in performing his duties. Jang is widely known as a strong advocate of economic reform and openness, and speculation had it that Pak was given the job on Jang`s recommendation. It is not hard to imagine that both Jang and Pak, when they visited South Korea years ago, might have been convinced of the desirability of opening up their national economy, witnessing the outcome in the South. Jang visited China last year to ask for economic assistance.

Realizing that North Korea has no future without dramatic changes to its economic system, Jang is expected to firmly back Pak`s management of the economy.

Since the military is also undergoing generational shift, no determined opposition to Pak`s reform is anticipated. There are reports that trading firms under the control of military commands are being transferred to the Cabinet in the name of unified planning and guidance by the state. Yet, Pak will be cautious in exercising reforms that could provoke backlashes from the party and the military, remembering how he was unseated earlier. It is expected that the second Pak Pong-ju Cabinet will maintain fairly cooperative relations with the party in contrast to serious conflicts that marked the party-government ties during his first term as prime minister.

IV. Possibility of Reform and Openness The appointment of Pak Pong-ju as prime minister last April naturally raised speculation about the North heading to economic reform and openness. It was surprising that, at a time when military tension remained high on the peninsula, Pyongyang tapped an icon of economic reform to be the prime minister.

North Korea today shows somewhat relaxed public control and weaker durability of its internal systems. This is the result of long accumulation of absurdities under the absolute one-man leadership structure. Under this system, any impromptu decision by the absolute leader becomes an inviolable

state policy. The concentration of all powers in the single leader requires that all resources, both human and material, are primarily devoted to the idolization of the leader instead of being put into social development.

In the decision-making process, adherence to the party`s ideology leads to unreasonable policies. The party and the military are always given priority in the distribution of resources, so the general administrative organizations cannot adequately perform their missions. North Korean rulers took the July 1, 2002 measures to address these problems amid continuing economic crisis, thereby seeking to strengthen the regime`s internal control. Some experts interpreted these steps as signs of readiness for reform and openness. However, reform means challenge to the monolithic ruling system and North Korean authorities are fundamentally opposed to changes. The earlier reform moves by Pak Pong-ju lasted only a few years because of party resistance.

The Kim Jong-un era may not be much different. Pak Pong-ju was reappointed because the new ruler understood that economic revival was impossible under the current system. The new Cabinet will attempt systemic changes but on limited scales. Changes may be possible in the socio-economic areas but the absolute leadership structure is unchangeable in the political and military aspects. As long as the basic nature of the North Korean system remains unchanged, contradiction between the socioeconomic and political-economic realms will grow and the Kim Jong-un regime will have only limited choices if it seeks reform.

Long-range missile and nuclear programs are not dealt with by the Cabinet but by the military and the related industrial sector. The secretariat of the Workers` Party Central Committee is in charge of the military industrial sector; hence the Cabinet has little to do with this business. The expanded Cabinet session in April declared a policy of simultaneous drives for economic growth and nuclear development, confirming once again that the Cabinet faithfully follows decisions by the party and Kim Jong-un.

The simultaneous drives have multiple implications. First, the policy is based on the logic that nuclear armament is a prerequisite for economic development. While attributing the current economic adversities to harassment by the United States, North Korean leaders claim that national endeavors can be concentrated toward economic advancement and improvement of the people`s lives on the basis of nuclear deterrence against the United States. They are simply trying to turn the dissatisfaction of the people to outside factors and setting forth dual national objectives that are impossible to attain.

The current Pak cabinet bears the responsibility of economic development, but it cannot present a drastic reform package like the earlier one. Its primary task is to help stabilize the nascent Kim Jongun regime. To carry out this task, the Cabinet will seek to improve the people`s lives with stable supply of light industry goods. In order to reduce the impact of international sanctions, the regime will try to increase economic cooperation with China, exploring the establishment of more special economic zones with Chinese investment.

In this process, North Korea may adopt measures related to investment protection and infrastructure improvement when they are demanded by the Chinese partners. Yet, no economic reforms that contain the possibility of destabilizing the Kim Jong-un regime can be expected. This is the limit to the changes in the North.

V. Conclusion During the early and middle part of the 2000s, North Korea sought improved ties with the United States, internally taking a reform package dubbed the “July 1 Economic Management Improvement Measures.� But these steps were ultimately aimed at consolidating its monolithic leadership structure and there has been little change to the North Korean system that has been maintained since the 1950s.

What is notable these days is there are some signs of limited changes that result from the new leadership`s awareness that the survival of their system is impossible if they continue to rule with old methods.

The reemergence of Pak Pong-ju as prime minister reflects the degree of economic difficulties now facing the North. The regime can attempt a rudimentary form of internal reform with a little mood of opening but no political changes that some other socialist states have ventured in the name of reform and openness. Thus, a few basic reform steps may be taken to activate foreign trade and limited opening may be allowed in specially designated zones.

It is totally up the Kim Jong-un regime whether it will seek to revive economy through effective reform measures, increase foreign investment through external opening, and broaden exchanges with Western economies. And it is up to Pyongyang`s decision whether it will join the international community by developing a state system befitting the 21st century or remain a pariah state with isolationist policies glued to Cold War legacies of the 20th century. It is hoped that North Korea will make the right choice to normalize its system and improve the lives of its people.

[ KDI Review of the North Korean Economy, May 2013, published by the Korea Development Institute ]

www.koreafocus.or.kr

Economic Cooperation in Northeast Asia and Inter-Korean Economic Cooperation Chun Hong-tack Executive Director, Center for International Development Korea Development Institute

Rhee Yeong-seop Professor, Graduate School of International Studies Seoul National University

I. Linking Cooperation in Northeast Asia Since the 1990s, particularly after the Asian financial crisis, regional cooperation has been a prime objective in Northeast Asia. As such, the North Korean threat to political and economic stability comes to the fore and getting Pyongyang to join the effort is a pressing need. As for South Korea, it is pinning its hopes on intra-regional collaboration becoming a catalyst to inter-Korean cooperation and the ultimate goal of reunification. In spite of its growing importance, the linkage of the Korean peninsula and intra-regional cooperation has not been fully discussed so far.

This study examines how closely intra-regional collaboration in Northeast Asia and inter-Korean exchanges and cooperation are related, and propose ways to promote inter-Korea economic cooperation by providing the North with opportunities to participate in intra-regional cooperation.

II. Different Views of Intra-regional Cooperation Until now, the overriding view has been that North Korea is a detriment to the regional collaboration.

However, North Korea could provide its neighbors with increased opportunities in infrastructure construction, resource development and investment. Furthermore, North Korea`s geopolitical features could help it contribute to future intra-regional cooperation. For example, the North could act as a land bridge for transcontinental projects, such as the connection of Trans-Siberian Railway and TransKorean Railway, and natural gas pipelines running from Russia through North and South Korea.

North Korea has so far adopted a bipolar stance toward regional economic cooperation. On one hand, it resists opening up and reforming to join the global economy because it would mean ceding its

centrally planned economy and liberalizing all economic activities, including manufacturing, trade, finance, and so on. The North also suspects the creation of economic blocs by advanced nations is a preliminary phase to globalization. Accordingly, the regime leadership warns that a full understanding of the globalization driven by advanced countries is needed and stresses the socialist system should be maintained.

On the other hand, North Korea favors the economic collaboration and integration that developing countries are pursuing, regarding it as springboards to economic self-sufficiency. Its positive perspective derives from the assumption that complementary cooperation between countries with varying degrees of economic development and different geographic conditions could facilitate their rapid economic growth. In particular, economic exchanges and collaboration between countries with geographical proximity are easier and more likely.

Pyongyang also has a positive attitude toward regional financial cooperation among developing countries. It pointed out the establishment of a regional common fund designed to help developing countries to overcome insufficiency of funds and extensive activities of the African Development Bank (ADB) as exemplary cases. The ADB`s activities, which have been highly regarded by the communist country, include credit provision, investment cooperation, and technical assistance for its member countries.

In sum, Pyongyang is carrying forward practical foreign trade policies and is in favor of South-South cooperation, or collaboration among developing countries. Particularly, North Korea has been recently focusing on the Rason Economic and Trade Zone and the Hwanggumpyong development project. In this regard, South Korea may seek multilateral projects that include China and Russia as well as North Korea to take advantage of the existing regional cooperation framework, rather than bilateral collaboration with the North.

In addition, it is desirable to consider establishing a regional common fund and a development bank that Pyongyang could utilize for its economic development. If such regional economic cooperation projects were utilized effectively, the chances of integrating North Korea into the global community would probably increase.

III. North Korea’s External Economic Relations Connecting regional economic cooperation in Northeast Asia to North Korea`s economic exchanges

and collaboration with foreign countries would have many positive consequences. Among them, Pyongyang could be expected to vigorously participate in bilateral or multilateral forms of international economic cooperation. However, the North so far has limited economic interaction with the global community. To identify the cause, it is necessary to examine the current conditions and characteristics of North Korea`s international trade, attraction of foreign capital and multilateral economic cooperation, and to define the obstacles.

1. External Trade

North Korea`s foreign trade reached US$4.22 billion in 1990, but spiraled downward amid the collapse of the former Soviet Union and East European socialist states in the following years. From 1991 to the 2000s, annual trade hovered around $2 billion.

With the beginning of the new millennium, the amount of trade skyrocketed due to increased activity with China and South Korea: it surpassed $3 billion in 2001 and reached $4.684 billion in 2005, surpassing the $4 billion mark in the 15 years since 1990. In the aftermath of the global financial crisis Pyongyang saw its trade figures temporarily fall in 2009, but the numbers rose again to $8.03 billion, up 31.9 percent year-on-year, in 2011. (Refer to Figure 1)

In the beginning of the 2000s, South Korea, China and Japan accounted for more than 60 percent of North Korea`s foreign trade. North Korea`s trade dependence on South Korea and China further increased after Japan`s trade sanction against North Korea, due to the North`s abduction of Japanese citizens, nearly halted its trade with Japan in the mid-2000s. In North Korea`s total trade, China and South Korea accounted for 70.1 percent and 21.3 percent, respectively, in 2011, representing a combined share of 91.4 percent. (Refer to Table 1)

Meanwhile, apart from trade through the Kaesong [Gaeseong] Industrial Complex in North Korea, inter-Korean trade has practically stopped since 2011 due to sanctions that followed the North`s torpedo sinking of the South Korean Navy`s patrol boat Cheonan and shelling of Yeonpyeong Island.

It is not an exaggeration to say that since 2011 China has become North Korea`s sole trade partner.

(The total amount of inter-Korean trade reached $1.71 billion in 2011 and $1.97 billion in 2012, respectively. However, excluding Kaesong transactions, the amount of trade was only $3.9 million in 2011 and $800,000 in 2012.)

Apart from the growing dependence on China, there are two other characteristics of the North`s trade since the 2000s. First, the increased volume of trade has been negligible. North Korea`s total trade volume was equivalent to less than 1 percent of that of the South in 2011. When its trade volume is measured by the amount of real exports per capita (at 2006 constant dollar values), it is similar to that of China or of Vietnam in the early 1990s. The amount of real exports per capita recorded $65 in 2006, equivalent to only 1/11 of China and 1/7 of Vietnam. Meanwhile, the trade to GDP ratio (the ratio in relation to PPP GDP) was 13.6 percent as of 2006, considerably lower than 28.8 percent of China and 44 percent of Vietnam.

Second, major export items to China are mostly composed of underground resources such as minerals, coal and iron ore, and this concentration is ever intensifying. Underground resources accounted for 52.1 percent in 2005, 59.1 percent in 2008 and 68 percent in 2012. As for the items heading for South Korea, the share of consumer goods made up 70.4 percent in 2005 and 60.8 percent in 2008. The high proportion taken up by consumer goods results from the nature of inter-Korean trade transactions; general and processing trade taking place in the Kaesong complex are centered on light industry articles including apparel.

However, with inter-Korean trade activities practically suspended since 2011, North Korea`s export dependence on China and the share of primary goods in its total exports to China have mushroomed; the share of essential strategic items, such as energy, grain and fertilizer made up 35.3 percent in 2005 and 28 percent in 2012, representing approximately one-third of total imports.

North Korea`s current trade structure is the byproduct of the collapsed Soviet bloc, which has crippled its industrial foundations, and international sanctions over Pyongyang`s nuclear program, which have stifled access to foreign hard currency and export markets. In addition, the North`s international credit rating dropped after its default on external debt in the 1980s. Essentially the North must start over in nurturing its export industry.

To expand external trade and boost the economy, North Korea needs to resolve political issues including its nuclear program and carry out economic reform and open up. When solutions to political issues begin to emerge, measures should be offered for North Korea to develop new export markets and invite foreign investments by utilizing the economic cooperation framework established by Northeast Asian countries. By doing so, Pyongyang could be coaxed to join the regional collaboration process taking place in Northeast Asia.

2. Foreign Capital Attraction and Multilateral Cooperation

Like other statistical data, North Korea does not release official data on the inbound flow of foreign money. And the credibility of estimated data made public by international organizations such as the United Nations Conference on Trade and Development (UNCTAD) has been in question due to limited calculation methods. Since the mid-2000s, China`s Ministry of Commerce, the North`s largest investor, has released statistical data on its investments in the longstanding ally. However, it is widely known that a large amount of investments by Chinese governmental agencies and state-owned companies are unofficial; small-scaled investments are said to be made without the approval of the Ministry of Commerce.

Despite such shortcomings, the data regularly provided by the UNCATD and China`s Ministry of Commerce, provides a creditable account of foreign investments into North Korea. The inflows plummeted after the North`s nuclear test and subsequent U.N. sanctions in 2006. However, China increased its investments and, of the total foreign investments in North Korea between 2007 and 2010 that amounted to $151 million, China accounted for 51.5 percent, or $78 million.

Around 2000, China began encouraging local companies to invest overseas. In line with Beijing`s

overseas investment policy, Chinese corporate investments in North Korea have covered a wide range, including industrial infrastructure, distribution and manufacturing.

Woo Yeong-ja, a research fellow at the Chinese Academy of Social Sciences in Liaoning Province who examined China`s investments in North Korea, including unofficial transactions, reported that China invested in North Korea more than $53.69 million in 2005 and $58.74 million in the first half of 2006. The figures amount to about 10 times more than official statistics.

Although China`s investments in North Korea, with unofficial investments included, are said to reach $100 million annually, the amount pales in comparison to foreign investments in other developing countries. For instance, while pushing ahead with economic reform and openness, Vietnam aggressively wooed foreign investors and attracted annual investments of $760 million between 1991 and 1995 and $1.773 billion between 1996 and 2000, respectively.

Two factors explain North Korea`s failure to draw foreign investment and its heavy dependence on China: 1) an unfavorable economic and investment environment such as a backward industrial infrastructure, inadequate legal institutions and a rigid bureaucratic system; and 2) great investment risks resulting from sanctions imposed by the international community for its nuclear program. The North`s total dependence on China for economic exchanges and cooperation is undesirable not only for North Korea itself, but also for South Korea, which needs to build far closer economic ties with the North to achieve the ultimate goal of creating a unified Korea in the future.

Among the economic cooperation projects in which North Korea is involved, two cases deserve attention from the perspective of Northeast Asian regional collaboration: the Tumen River Area Development Program (TRADP) and the related Rason special economic zone development.

The TRADP, symbolic of the region`s economic cooperation efforts, began in the early 1990s in the form of multilateral collaboration involving the two Koreas, China, Russia and Mongolia. It was regarded as a highly feasible project because all of the parties involved were strongly motivated.

North Korea needed to prop up its economy in the wake of the Soviet bloc`s demise. China wanted to narrow the economic development gap between the Maritime Province of Siberia and inland areas.

And all of East Asia was searching for ways to escape economic doldrums.

However, the TRADP failed to achieve any tangible progress. At the turn of the century, China and Russia announced their separate, competitive investment plans, but without success. In 2005, the

TRADP was converted into the Greater Tumen Initiative (GTI) to expand the development area but it failed to make any headway. As for the Rason special zone development project, both multilateral and independent efforts were also fruitless.

The failure of the TRADP can be traced to the absence of specific means to raise necessary funds in the first place, and the failure to attract inbound foreign investments. The same applies to the Rason special zone project, plus it was hobbled by the North`s unfavorable political and economic environment for foreign investors and excessive dependence on offshore investments for infrastructure construction, the first priority to induce investments. The exclusion of South Korean firms that expressed great interest in the development of the area, also served as a negative factor.

In conclusion, the unsatisfactory outcomes of North Korea`s economic cooperation at bilateral and multilateral levels and excessive dependence on China for international economic collaboration were the result of the North`s failure to draw much needed foreign investments due to political issues, including the North`s nuclear ambitions.

If these political issues are addressed, however, other obstacles will still remain such as a hostile investment environment and a lack of funds to construct infrastructure, a prerequisite for the attraction of foreign money. Therefore, there is a slim chance that North Korea will see foreign investment inflows other than those from China and South Korea for some time to come. In addition, North Korea will likely prevent any South Korean companies from exclusively participating in the development of the North Korea-China borderland areas as it did in the Rason development project.

Meanwhile, in spite of the political and economic obstacles, China has continued to invest in North Korea as long as it benefits its national interests. And since the mid-2000s, while pushing ahead with development of the three northeastern provinces, the Chinese government has tried to link the development projects of the Chang-Ji-Tu, Rason, Dandong and Hwanggumpyong areas. In this context, China`s investment in North Korea will continue for years to come, centering on Rason and Hwanggumpyong projects, along with exploitation of underground resources.

Consequently, it is desirable to prepare for a possible scenario that inter-Korean relations will improve as sticky political issues are resolved. To that end, South Korea needs to persuade the North to take part in Northeast Asia`s regional cooperation efforts by creating a regional common fund or a development bank, which North Korea can use to mobilize funds for infrastructure creation. South Korea also needs to seek ways to participate in multilateral development of the borderland areas

between China and North Korea, eventually achieving inter-Korean cooperation while lessening the North`s heavy economic dependence on China.

IV. Promoting Inter-Korean Cooperation through Regional Cooperation There are three ways to form mutually beneficial relations by allowing North Korea to use Northeast Asia`s regional economic cooperation framework to revive its languishing economy and sustain collaborative activity: trade cooperation, monetary and financial cooperation, and multilateral cooperation. As of now, it is hard to imagine putting these ideas into practice. But it will become possible when political issues, including North Korea`s nuclear program, have been resolved and inter-Korean relations improve subsequently.

1. Measures for Trade Cooperation

As discussed above, boosting North Korea`s external trade requires securing export markets and drawing foreign investments essential to fostering its export industry. There are two ways to diversify North Korea`s export routes and increase the inflow of foreign investment through regional FTAs.

First, special economic zones in North Korea, including the Kaesong Industrial Complex, must be designated as outward processing zones in South Korea-China FTA or South Korea-China-Japan FTA negotiations. Outward processing is a production method in which locally produced products, halffinished goods or parts, are transferred to a third country for cheap labor and production facilities and then re-imported; an outward processing zone is an industrial park or a certain area situated beyond the border of a nation where such processing occurs.

If North Korea is designated an outward processing zone, products made by South Korean companies in the Kaesong Industrial Complex can be exported as South Korean goods to countries that agreed on the designation. As a result, North Korea can enjoy various benefits including the effect of increased exports. In addition, naming of the Kaesong Industrial Complex as an outward processing zone would help North Korea integrate into the international economic order and open up while the North Korean nuclear issue remains pending. The North will thus be able to access not only Chinese and Japanese markets but also other global markets, bypassing South Korea. Inter-Korean relations also would be expected to improve.

China already has agreed to discuss designating North Korea as South Korea`s outward processing

zone during South Korea-China FTA negotiations. However, to reach agreement the inter-Korean joint industrial park needs to remain in operation while negotiations are under way.

Along with intra-regional FTAs, the creation of a comprehensive economic partnership agreement (CEPA) between the two Koreas also would be mutually beneficial. First, an inter-Korean CEPA will force North Korea to match its institutions that govern external economic exchanges to those of South Korea or international regulations, which will incorporate North Korea into the global economic networks. In addition, an FTA or a CEPA will generally lead to improving investment environments in diverse dimensions: improvements in policy transparency and administrative institutions, and standardized application of regulations. An inter-Korean CEPA will also likely work for North Korea to a greater extent in that its improved investment environment will translate into greater capital inflows from South Korea and other foreign countries.

Furthermore, an inter-Korean CEPA will bring additional benefits aside from North Korea`s reform and opening up and improvement of inter-Korean ties. So far, tariffs have not been imposed on interKorean trade transactions. Some countries probably would seek tariff-free treatment with North Korea themselves. Under this most-favored-nation treatment, if country X grants country Y a special favor (such as lower customs duty for one of their products), country X has to do the same to all other negotiating parties or pact members. However, the South Korean government has refuted such demands on account of distinct characteristics of inter-Korean relations.

Article 3 of the South Korean Constitution stipulates that “the territory of the Republic of Korea shall consist of the Korean peninsula and its adjacent islands.” This means North Korea is also part of its territory. Laws and regulations related to the development of inter-Korean relations define relations of the two Koreas not as relations between two sovereign states but as “a special relationship temporarily formed in the process of seeking unification.”

Therefore, the Korean government has maintained that inter-Korean transactions should not be regarded as international trade practices but as trade between the same nation; this type of trade truncations do not need the approval of the international community. If the two Koreas agreed to form a CEPA, this would cement the South Korean government`s case that customs-free treatment for goods from North Korea is a tentative measure for an area under its territorial jurisdiction.

2. Measures for Monetary and Financial Cooperation

One of the reasons behind the development failures of the Tumen River area and the Rason special economic zone lies in North Korea`s lack of funds and the subsequent effects of its heavy dependence on foreign currency for infrastructure construction essential for attracting foreign investments.

Therefore, it is practical to seek ways to establish a regional common fund and a financial institution for the development of the Northeast Asian region that North Korea can utilize when it builds infrastructures for the Rason and Hwanggumpyong areas in connection with the Chang-Ji-Tu development project.

There have been measures proposed to reinforce monetary and financial cooperation in East Asia, particularly to enhance collaboration among South Korea, Japan and China. By virtue of establishing the A3Fund and the Northeast Asia Development Corporation, the two issues of regional economic cooperation and North Korea could be connected.

Originally, the A3Fund was a plan to create a common fund primarily led by South Korea, China and Japan to supplement or replace the function of the Chiang Mai Initiative Multilateralization (CMIM) agreement. The CMIM is designed to provide emergency funds during a crisis but another equally important function is to support mega projects carried out in the Northeast Asian region.

The Northeast Asia Development Corporation is a plan for South Korea, China and Japan to found a joint investment company or an affiliated firm by contributing small amounts of capital mainly through their government-run banks (such as an export-import bank or a development bank). The establishment of a joint investment company is aimed to raise funds to develop the Northeast Asian region by issuing bonds in intra-regional markets and specialize in investing in various projects, including infrastructure construction taking place within the region.

Therefore, if the A3Fund and the Northeast Asia Development Corporation are used effectively, it will become possible to provide funds for the development of underdeveloped areas in Northeast Asia, including the Tumen River and the Dandong-Sinuiju areas, and for infra-building projects such as connection of railroads, construction of power generating facilities, ports and roads. Accordingly, North Korea could reap benefits from its cooperation.

Since project opportunities such as the development of local areas in North Korea and the Northeast Asian region could considerably raise the value of the A3Fund and the Northeast Asia Development Corporation, they will be able to facilitate regional economic collaboration efforts on the monetary and financial front. Therefore, when North Korea`s nuclear issue is resolved and inter-Korean

relations are improved, it would be worthwhile to consider pushing for the creation of these two regional financial institutions.

3. Measures for Multilateral Cooperation

Among the multilateral cooperation projects taking place in the Northeast Asian region, including the Korean peninsula, the hallmark projects are the pipeline natural gas (PNG) project to link gas pipelines in South Korea, North Korea and Russia; trans-continental railway connection projects; and development projects in the borderland areas between China and North Korea, in which South Korea, North Korea and China are involved.

First, trans-continental railway projects, including the Trans-Siberia Railway (TSR) and the TransKorea railway (TKR), to link railroads from Japan and South Korea through Siberia or China into Europe could lead to closer inter-Korean ties and regional economic cooperation efforts. It is because, more than anything else, all countries ― Japan, the two Koreas, China and Russia ― through which trans-continental railroad lines are passing, share common interests in such projects. For example, linking railroad lines is needed for Japan to conduct trade with Europe, for China to develop its three northeastern provinces, and for Russia to exploit underground resources in Siberia and to perform logistics services throughout the Far East.

As for South Korea, given that any forms of trans-continental railways could be completed only when trans-Korea railway lines are connected, railway connection projects will provide the country with opportunities to reinforce its position in the Northeast Asian region. As mentioned earlier, North Korea can also benefit considerably from these projects, including improving infrastructure, obtaining foreign currencies and enhancing external relations.

Second, the PNG project to link gas pipelines in South Korea, North Korea and Russia is the most symbolic project to promote regional cooperation in energy. This project, expected to bring a winwin situation to all three nations in terms of economic interests, is likely to generate considerable economic effects and thus has a high chance of realization. Russia, the world`s biggest natural gas holder and exporter, will be able to secure stable export routes as well as to exploit new gas fields in the Far East region; South Korea will also be able to stably import natural gas at much cheaper prices by land than by sea.

It was found that transporting natural gas through land pipelines is 30 to 70 percent cheaper than

through shipping. When transit fees for Russia-Ukraine gas pipelines are applied, North Korea is expected to gain more than $100 to 150 million annually in pipeline transit fees and can expect labor income and profits from regional development by participating in the PNG project.

Third, in August 2009, the Chinese government approved the “Outline of the Tumen River Area Cooperative Development Program Considering Changchun-Jilin-Tumen as Pilot Zone for Development and Opening,” to take the initiative in the Tumen River development project and decided to fully support it at the state level. According to the plan devised by China`s State Council, or cabinet, the Changchun, Jilin and Tumen River areas will be used as pilot zones to lead economic development and openness to push forward the “Northeast Revitalization Plan” in the three northeastern provinces, China`s dilapidated industrial bases; the on-going joint development of the Tumen River area will be taken to a new level.

In response to Beijing`s move, Pyongyang announced a Standing Committee prescript of the Supreme People`s Assembly to raise Rason to the status of a special city on January 4, 2010. As it is impossible to independently develop the Rason area and it is difficult to draw investors from the United States or Europe due to its nuclear program, North Korea is attempting to develop the Rason area by attracting Chinese capital and corporate investments. North Korea and China are also carrying forward a plan to build infrastructures related to land and maritime traffic routes, power supplies and communication networks in the Rason area in order to realize the area`s industrial development. As for traffic routes, the two nations are planning to establish open traffic networks with multiple access points.

North Korea and China are planning to develop Rajin as a hub port in the Rason area along with Sonbong, Chongjin and Ungsang ports. Former Chinese Premier Wen Jiabao agreed with visiting North Korean officials in March 2009 on China`s rights to use wharf No. 1 of Rajin port, renovate wharfs No. 2 and No. 3, and build and use wharf No. 4. In March 2010, China`s Changli Group obtained a 10-year usufruct for wharf No. 1 of Rajin port and later at the end of the same year also secured the right to develop and use wharf No. 4, No. 5 and No. 6. Meanwhile, North Korea and Russia reached an agreement on connecting railroads between the North`s Rajin and Russia`s Hasan regions and rebuilding Rajin port; Russia`s right to use wharf No. 3 of Rajin for 50 years was also ratified.

Considering railway and gas pipeline connection projects require military and security guarantees, they will generate additional benefits such as building political trust and reducing military tension as

well as economic gains. Although these projects have been discussed based on the common interests of concerned nations, no tangible progress has been made yet. This is largely because of the lack of solid trust between the two Koreas and difficulties in securing huge funds necessary for the projects.

Therefore, resolving the pending political issues, including North Korea`s nuclear program, and improving inter-Korean relations are essential prerequisites for carrying forward the large-scale multilateral cooperation projects. At the same time, it is necessary to establish a regional development finance institution and a common fund to provide financial assistance to the mega projects for infrastructure construction. Also, in view of future ties between the two Koreas, South Korean companies should seek ways to participate in the development of Rajin port along with China and Russia.

<References> Kim Sang-gi, “Assessment of North Korea-China Trade in 2012 and Future Prospects,” KDI Review of the North Korean Economy, 2013-01, Korea Development Institute, 2013.

Kim Seok-jin, “North Korea`s Trade Potential and Reform Challenges,” KDI Review of the North Korean Economy, 200805, Korea Development Institute, 2008.

Ri Kyong-yong, “Strengthening Cooperation between Developing Nations on Monetary and Financial Front within Economic Blocs,” Economic Studies, Vol. 1, Pyongyang: Science Encyclopedia Publishing Company, 2005.

Paek Sun-chol, “Enhancement of Regional Economic Cooperation by Southeast Asian Countries through Development of the Mekong River Basin,” Economic Studies, Vol. 3, Pyongyang: Science Encyclopedia Publishing Company, 2001.

Woo Yeong-ja, “Chinese Corporate Investments in North Korea: Current Situation and Prospects,” Journal of Unification Education Studies, Vol. 6, Institute for Unification Education, 2007.

Yun Seong-hak, “Analysis of Economic Effects of Gas Pipeline Connection on the Korean Peninsula,” Proceedings of the 2011 Forum on Reconciliation and Co-prosperity, Korean Council for Reconciliation and Cooperation, 2011.

Lee Seong-gyu, “Impact of the South Korea-North Korea-Russia PNG Project on the Northeast Asian Gas Market,” EXIM North Korea Economic Review, Autumn 2011, Export-Import Bank of Korea, 2011.

Lee Yun-sik, “Effects, Issues and Challenges of the South Korea-North Korea-Russia PNG Project,” KINU Policy Study Series, 2011-05, Korea Institute for National Unification, 2011.

Lee Jae-ho, Go Il-dong and Kim Sang-gi, “North Korea-China Economic Cooperation under the Northeast Asian Structure of the Division of Labor,” Study Report, 2010-08, Korea Development Institute, 2010.

Chang In-baek, “Crushing the Imperialists` Maneuver for Economic Globalization: An Important Means to Maintain the Socialist Economic System,” Economic Studies, Vol. 3, Pyongyang: Science Encyclopedia Publishing Company, 2001.

Jeong Hyeong-gon et al., Changes in North Korea`s Policies for Foreign Investment Attraction and the Course of InterKorean Economic Cooperation, Korea Institute for International Economic Policy, 2011.

UNCTAD, World Investment Report.

[ KDI Policy Forum, No. 257, June 13, 2013, published by the Korea Development Institute ]

www.koreafocus.or.kr

‘Jobs without Growth’ More Dangerous than ‘Growth without Jobs’ Lee Jun-hyup Research Fellow Hyundai Research Institute

I. Toward 70 Percent Employment Rate Bolstering the employment rate is the best means of ensuring both sustainable growth and quality of life. For Korea to pull itself out of the middle-income trap and ascend to the ranks of advanced countries, it must boost its employment rate (or the ratio of employed against the economically active population). This will require maximum use of its human resources. The higher a nation`s employment rate, the larger the per capita GDP becomes. For example, the OECD (Organization for Economic Cooperation and Development) member countries with per capita income of $30,000 or higher had an average employment rate of 69.0 percent in 2011. Korea`s rate was 63.9 percent.

Increased individual income through vigorous job creation is the surest way to improve quality of life. Countries with high employment rates show not only high per capita GDP but also low Genie coefficients, which reflects sound income distribution. The OECD member nations with per capita GDP of $30,000 or more have an average Genie coefficient of 0.308, better than Korea`s 0.311.

Higher economic growth will be required for Korea to join the ranks of advanced countries and enjoy higher quality of life, as well as achieve the new government`s goals of 70 percent employment rate and higher labor productivity. * Virtuous cycle: Jobs with growth → improved productivity → strengthened competitiveness → economic growth → increased employment * Vicious cycle: Jobs without growth → lower productivity → weakened competitiveness → economic contraction → sluggish employment

Korea`s employment rate climbed steadily until the 1997-98 Asian financial crisis. Since then it has stagnated at 63-64 percent. Between 1989 and 1997, the number of employed (aged 15-64) increased by an average of 422,000 annually to push up the employment rate from 60.6 percent to 63.7 percent.

The currency crisis reduced the number of employed by 1.24 million in 1998, shaving the nation`s employment rate by 4.5 percentage points from 63.7 percent to 59.2 percent. In 1999-2002, the number of employed rose by 477,000 on average a year (or 1.91 million over four years), with the employment rate returning back to the pre-crisis level of 63.3 percent. Between 2003 and 2012, the number of employed increased by only 188,000 a year on the average, causing the employment rate to stagnate.

To attain its targeted 70 percent employment rate within its tenure, the administration needs to create 2.39 million jobs over the next five years, or 478,000 jobs annually. This means the economy will need to expand at an average of 8 percent annually. But considering the nation`s economic structure and job creation ability, this will be very difficult to achieve.

According to the government`s report, titled â&#x20AC;&#x153;Mid- to Long-term Manpower Supply-Demand Projections 2011-2020,â&#x20AC;? Korea can expect to create a yearly average of 235,000 jobs, assuming its economy averages 4.1 percent growth annually. At a time when its high-growth strategy has reached its limit, Korea will have to seek to accomplish its employment goal based on a thorough analysis of its economic, employment and governance paradigms.

II. Major Reasons for Stagnant Employment Rate The background to the stagnant employment rate can be examined in terms of labor demand and supply as well as institutions and practices. Among these, labor demand is currently the most crucial factor.

* Labor demand: Slowing investment, population aging and stagnated creativity and innovativeness have combined to weaken the ability of business to create jobs. Thus, demand for labor is sluggish.

* Weakened link between growth and employment: As the nation`s economic model shifted from labor-intensive to capital-intensive amid its continuous export-led expansion, the link between growth and employment has sharply diminished.

* Labor supply: The late entry of young adults into the job market, the departure of women in their 30s from the workforce, and the early retirement of middle-aged workers have combined to increase the number of unemployed people who are able to work. The increase of highly-educated workforce and the resultant gap between desired and available jobs have lowered the youth employment rate, while career disruption has intensified among women because of childbirth and child rearing. Also, the underdeveloped job market for the elderly and the corporate culture forcing early retirement have sharply increased involuntary retirement.

* Institutions and practices: Socio-economic institutions and practices fall short of effectively backing up businesses` abilities to create jobs and expand the supply of high-quality labor. The lack of social consensus and the labor-management culture devoid of win-win spirits have shredded employment

flexibility and security, leading to the stagnation of creativity and innovativeness on the part of both businesses and workers. A dual labor market structure has intensified because of the corporate strategy to cut labor costs and employment rigidity among large businesses and regular workers.

When job shortage becomes serious (excessive labor supply), demand for labor is an important factor, and, if labor shortage becomes serious (excessive labor demand), supply of labor becomes crucial. In Korea today, job shortage is a more serious problem.

1. Erosion of Growth Potential

Sluggish corporate investment and population aging, aggravated by the global financial crisis, have severely compromised the ability of the economy to grow enough to generate meaningful job creation.

According to the Hyundai Research Institute`s estimation by using H-P filtering method, Korea`s potential GDP has sharply fallen since the Asian financial crisis. Before the oil shock (1970-1983), the nation`s potential growth rate reached 9.2 percent on average annually, and it remained at a relatively higher level of 8.1 percent until the Asian financial crisis (1984-1997). After the currency crisis (1998-2008), however, the potential growth rate plunged to 4.5 percent, and, after the global financial crisis (2009-2012), it fell further to 3.8 percent.

Investment slump, population aging and stagnation of creativity and innovativeness are the major reasons for eroding growth potential and slow job creation.

* Investment slump: The growth rate of corporate investment plunged from 12.5 percent in 19701983 and 11.2 percent in 1984-1997 to 4.2 percent in 1999-2007, and 1.0 percent in 2009-2012. * Population aging: The growth rate of the economically active population has also continued to fall,

from 2.9 percent to 1.8 percent, 0.7 percent and to 0.8 percent, during the same period. * Stagnation of creativity and innovation: The growth rate of total factor productivity (TFP), as the yardstick of creativity and innovativeness, stagnated at 0.13 percent in the 1980s, 0.33 percent in the 1990s and 0.13 percent in the 2000s (Korea Productivity Center, 2012).

2. Weakened Link between Growth and Employment

Changes in economic structure and weakened trickle-down effect of exports have combined to undermine the link between growth and employment. The employment elasticity, which shows the correlation between growth and employment, has plummeted since the 2008 global financial crisis.

There are some surrogate variables that measure correlations between growth and employment, such as employment elasticity (growth rate of the employed/GDP growth rate), employment inducement coefficient, and the number of employed people against the value added. This report uses employment elasticity, which is suitable for long-term analysis, as a surrogate variable. Korea maintained relatively high employment elasticity of 0.356 during 1970-1983 and 0.350 during 1984-1997, but after the Asian financial crisis, saw it plunge to 0.323 during 1998-2012.

Changes in economic structure and export-led economic growth have been the primary causes of weakening correlation between growth and employment.

* Changes in economic structure: As the economic structure shifted from labor-intensive to capitalintensive, the economy has expanded but its effects on job creation have fallen short of meeting expectations. * Export- and manufacturing-led economic growth: Korea has maintained an economic growth strategy based on exporting manufactured goods, which shows low employment inducement coefficients. The employment inducement coefficient of exports in 2009 was 9.8 persons per 1 billion won, far lower than that of consumption (18.6 persons per 1 billion won) or investments (16.3 persons per 1 billion won).

3. Low Economic Participation by Youth and Women

The youth employment rate has fallen while those preparing for employment are on the rise, delaying their entry into the labor market and dragging down their employment rate sharply. The youth employment rate plunged 4.7 percentage points, from 45.1 percent in 2004 to 40.4 percent in 2012, while the number of young people preparing for work jumped from 297,000 to 411,000. Major reasons were the gap between supply and demand in the job market, and the disparity between college education and manpower demand.

As the younger generation flocks to stable workplaces such as large businesses and state enterprises, misalignment between supply and demand in the labor market has widened, pulling down the employment rate and increasing the number of people between jobs. College education has failed to meet manpower demand in both quantity and quality. Total college enrollments have exceeded labor market demand, reflecting the nation`s problem of excessive schooling and disparity between desired and available jobs.

Women in their 30s leave the labor market as they are unable to shoulder the burden of bearing and rearing children, aggravating manpower shortages. The female employment rates in different age groups form an M-curve, peaking at 68.0 percent with those in their late 20s, and sliding down to 54.8 percent with those in their early 30s and further to 54.1 percent with those in their late 30s before rebounding.

The male employment rate, on the other hand, surges from 70.4 percent for those in their late 20s to 89.0 percent for those in their early 30s and further to 91.7 percent for those in their late 30s.

4. Early Retirement of Middle-aged People

The premature retirement by the pre-baby boomer generation (born in 1946-1954) and baby boomer

generation (born in 1955-1963) has severely depressed the overall employment rate. The employment rate of the pre-boomer generation has plunged over the last eight years. Meanwhile, baby boomers entered into a downward trajectory in 2008.

Although most people desire to retire at 65.5 on the average (Statistics Korea, Household Finance Survey 2011), they actually leave the labor market at the age of 54 on the average (Bang Ha-nam, 2009), resulting in a serious gap between the desired and actual retirement ages. People belonging to the pre-baby boomer generation entering their retirement period beginning at age 54 saw their employment rate shed 13.3 percentage points over the past eight years, from 68.5 percent in 2004 to 56.2 percent in 2012. The employment rate of the baby boomer generation has also begun to fall noticeably, from 76.8 percent in 2008 to 74.3 percent in 2012, after the global financial crisis, which coincided with their retirement age.

Two major factors have combined to result in the above-mentioned phenomenon: bridge jobs have not been developed and Koreans have generally failed to prepare themselves for retirement life. As Korea`s bridge job market is still narrow and underdeveloped, many workers involuntarily retire when they want to continue to work until the age of 65.5 on average (due mostly to the lack of jobs).

Individually, many Koreans fail to prepare for second careers after they retire from their primary jobs.

5. Lack of Harmony between Employment Flexibility and Security

The better the harmony between employment flexibility and security, the greater the creativity and innovativeness of businesses and workers for generating corporate growth and job creation.

* Corporate side: For companies to swiftly cope with a rapidly changing economic environment and create business opportunities, employment flexibility is very important. Employment flexibility can be divided into two categories ― flexibility in lay-offs and flexibility in wage, working hours and job assignment.

* Workers` side: Employment security is essential for enjoying a financially stable life and realizing self-fulfillment. Employment security can be divided into two major categories ― “workplace-based security” which makes it difficult for employers to fire their employees, and “society-based security” which provides minimal standard of living for dismissed workers and opportunities for moving toward better jobs.

When harmony between employment flexibility and security is achieved through labor-management consensus, businesses and workers can enhance their creativity and innovative ability. Thus, businesses can grow and create more and better jobs.

In Korea, the employment structure of large businesses and regular workers is in stark contrast to that of small and medium-sized firms (SMEs) and non-regular workers, both of which have inefficient aspects.

* Large businesses and regular workers: Workplace-based employment security is high (lay-off is difficult), while flexibility in wage, working hours and job assignment is low, resulting in inefficiency in manpower management. * SMEs and non-regular workers: Workplace-based employment security is low, while flexibility in wage, working hours and job assignment is high, making it difficult for workers to exercise their creativity and innovativeness. * Society: Unemployment insurance for the jobless is insufficient, and active labor market policies that encourage re-employment are lacking. This puts the livelihoods of individuals in immediate risk when they are forced to retire.

6. Dual Structuring of Labor Market

As the gap between participants in the primary and secondary labor markets widens and social mobility dissipates, the supply-demand misalignment in the labor market has deepened, and the use of high-quality manpower has dropped, weakening the nation`s growth potential. As the dual structuring of labor market intensifies and mobility falls between regular workers and non-regular workers as well as between large businesses and SMEs, wage gap has been magnified.

* Non-regular workers: Wages of non-regular workers fell from 65.0 percent of regular workers in 2005 to 56.6 percent in 2012. * Part-time workers: Employment conditions of part-time workers have particularly aggravated with their wage portions against regular workers dropping from 64.0 percent to 50.7 percent over the cited period. * SMEs: Wages of employees at SMEs also exacerbated from 59.8 percent to 56.4 percent of regular workers during the same period.

Amid the economic globalization and intensifying competition, efforts to reduce labor costs have

prompted widespread use of subcontracting. That, in turn, has led to rampant unfair business practices between large and small companies, deepening the gap in employment. With corporate burdens swelling because of rigidity in employment and wages, employers tend to restrict new recruitment while resorting to indirect hiring and subcontracting.

III. Ways to Increase Employment Rate To raise its employment rate to 70 percent, Korea needs to reach social consensus on fundamental

remedies to shift its economic paradigm and adopt a web of closely interrelated measures for those who have difficulties landing jobs.

1. Economic Paradigm Shift

Korea should shift its economic paradigm to a â&#x20AC;&#x153;job-creating, high value-added structureâ&#x20AC;? to achieve both growth and job creation. It means a shift to an economic structure, in which creative human capital and technological innovation, not labor or capital input, serve as the core elements that determine sustainable growth. In this economic structure, those industries which have high value added and great job creation ability will become growth engines.

Korea`s move to a job-creating, high value-added economic structure means that businesses will create more and better jobs, which will be possible by replenishing growth potential and strengthening the links between growth and employment.

Toward that end, the government will have to develop industries with greater abilities to create jobs and produce higher value-added as future growth engines; nurture promising SMEs and domestic demand-oriented firms with greater potential for job creation and high value-added production; foster parts and components industries that help to enhance the effects of exports on domestic production, investment and employment; and relax unreasonable regulations that hinder corporate investment.

In the short run, the government should focus on vitalizing job-creating investments, especially those into research and development, which will lead to the expansion of growth potential. In the long run, it will need to reconfigure the industrial structure for higher value-added production.

2. Employment Paradigm Shift

By establishing a creative labor model that features flexibility and security, the nation will be able to enhance the creativity and innovative ability of both businesses and workers, and create a large number of decent jobs.

* Creative flexibility/security model: This consists of three core elements, which are employment security and flexibility in wage, working hours and job allocation on the part of businesses, and active labor market policies on the part of society. * North European employment security model: This consists of three core elements, which are

employment and wage flexibility on the part of businesses, and livelihood stability (generous social welfare) and active labor market policies on the part of society.

It will be more desirable for businesses to guarantee job security (Korean model) than to ask society to ensure livelihood stability (North European model). The Northern European-style â&#x20AC;&#x153;high tax, high welfareâ&#x20AC;? system is essential to guarantee livelihood stability, but Korea`s current welfare level is limited. Unlike North European countries, where consultations between labor, management and government are smoothly conducted, the Korean system largely depends on labor-management relations at individual companies, where employment security and flexibility in wage and working hours can be easily interchanged.

Three main players will need to perform their respective roles in ways to enhance creativity and innovative ability of businesses and workers. Businesses should guarantee employment security and workers make concessions in wage, working hours and job allocation, with the two sides agreeing on fair distribution of benefits later. The government ought to implement more active labor market policies.

* Enhancing job security of workers: Management should consider turning non-regular workers doing regular job into regular workers, and the government should expand employment subsidies.

* Increasing flexibility in wage, working hours and job assignment: Three tasks are needed, that is, 1) increase decent part-time jobs that are not subject to discrimination and can ensure employment security; 2) change wage systems in tandem with the legislation for extending retirement age; and 3) improve flexibility in working hours and job allocation by introducing a working time account system.

* Active labor market policies: The government should augment unemployment insurance by linking compensation with vocational training and job-seeking activities, and assist efforts to escape poverty by raising minimum wages and offering more tax incentives to encourage going to work.

3. Paradigm Shift in State Management

The government, in a paradigm shift that places the attainment of 70 percent employment rate at the center of its state administration, will need to design all of its policies in ways to contribute to job creation.

* Fiscal policy: In forming and implementing budget as well as evaluating various agencies` budget execution, the government needs to make job-creating effect a key criterion, with particular emphasis on enhancing growth potential and finding jobs for vulnerable individuals. The government should conduct employment impact assessment before and after implementing all national projects, and reflect the outcome on the following year`s budget allocation. It should expand fiscal support for

R&D activities that facilitate corporate investments and job creation, and improve the efficiency of state-financed employment projects.

* Tax policy: The government should craft its tax policy in ways to encourage businesses to expand employment, and induce people with ability to work to engage in economic activities. It should provide tax break for corporate investment and R&D activities related with job creation, and strengthen the earned income tax credit (EITC) and other work-encouraging tax incentives.

* Financial policy: The government should instruct lenders to favor industries and businesses that produce greater job-creating effects. It should expand the application of a credit screening system with emphasis on job creation while expanding special loans and payment guarantees for businesses that create jobs.

* Procurement policy: In signing procurement contracts, the government should give favors to firms with a solid record of job creation. In assessing potential suppliers, it should expand the scores for employment history with emphasis on records of hiring the young and elderly.

* Inter-agency cooperation: The presidential office should take the lead in building inter-agency cooperative systems.

- Labor demand: Amid serious job shortages, major economic ministries, such as the Ministry of Planning and Finance, the Ministry of Science, ICT and Future Planning, and the Ministry of Industry, Trade and Resources, should build a collaborative system to help businesses create more jobs.

- Labor supply: The Ministry of Employment and Labor, the Ministry of Gender Equality and Family, and the Ministry of Health and Welfare ought to build a collaborative system to help increase the possibility of landing jobs for socially vulnerable classes.

- Institutions and practices: The presidential office ought to take the initiative in changing the paradigms of employment and state management into an employment-friendly pattern.

4. Custom-tailored Measures for Different Groups

The government should draft a policy package to help facilitate the youth`s entry into the labor market, prevent the departure from workplaces by women aged 30-40, and postpone the retirement of middle-aged workers.

* Youth: To help expedite the entry of young job seekers, the government should ease discrepancy in

youth employment and narrow the gap between college education and corporate demand. What is needed are decent jobs for youth, support for startups by young people, expanded employment of high school graduates, prevention of excessive schooling by narrowing wage gaps due to educational backgrounds, increased hiring by the public sector and large private enterprises, and university restructuring and curricular overhaul to meet market demand and demographic changes.

* Women: To prevent women in their 30s from leaving the labor market, it is necessary to establish a system that allows for balancing work and family. Among measures needed are enhanced childcare services, such as expanded public and corporate childcare facilities; increased regular-type part-time jobs to help women balance career and family life; improved efficiency of flexible working hours, strengthened legislation that prevents gender discrimination in employment and benefits; and enhanced employment impact assessment by gender.

* Middle-aged workers: To prevent the premature retirement of middle-aged workers, it is necessary to create bridge job markets and help them prepare for retirement life.

5. Forging Social Consensus

Korea should form a social consensus at any cost in the course of changing its economic paradigm as well as devising and implementing custom-tailored measures for people who experience difficulties finding jobs.

Korea`s biggest problem with respect to social consensus is its lack of the ability to coordinate conflicting interests among different groups and classes. In the course of shifting paradigms in economy, employment and overall state management, interests of different social sectors and classes can clash, and coordinating such conflicts will prove to be an essential task.

The tripartite consultative committee of labor, management and government should be expanded as a permanent body, by broadening the scope of participants to include civic groups, experts and ordinary citizens so that it can serve as a mediator of conflicting interests of various sectors and classes. Its authority also should be upgraded to implementing agreements it signs and assessing their outcomes.

Through the aforementioned methods to increase its employment rate, Korea will be able to create 2.4 million new jobs â&#x20AC;&#x2022; 1.4 million jobs by enhancing businesses` job creation ability and 1 million

jobs by improving labor supply as well as relevant systems and practices.

It is assumed that some 1.1 million new jobs can be created by attaining 4 percent GDP growth.

According to the government`s â&#x20AC;&#x153;Mid- to Long-term Manpower Supply-Demand Projections 20112020,â&#x20AC;? 1 percent growth of GDP will likely add 73,000 jobs during 2011-2015, and 42,000 jobs during 2016-2020.

Korea will be able to create an additional 200,000 jobs by strengthening the linkage between growth and employment. The other 1 million jobs can be developed through support for the supply side (selfemployed) and overhaul in systems and practices, such as creation of decent part-time jobs that preclude discrimination and guarantee job security; job sharing by reducing working hours; supporting creativity-based startups; encouraging social enterprises and cooperatives; and expanding jobs provided through fiscal spending.

The government may also consider extending the deadline for attaining 70 percent employment rate through a society-wide consensus. As it requires paradigm shifts in the overall economy and social agreements, the current administration will be hard-pressed to accomplish the goal before its term ends in 2017. Not only will it take considerable time to reach social agreements, paradigm shifts will also influence job creation rather slowly.

If the government attempts to offer a large number of low-grade jobs for the sake of achieving its employment target, the quality of employment will aggravate and labor productivity will also drop to erode the economy`s sustainable growth. If the deadline is extended to 2020 through a society-wide consensus, the chances for 70 percent employment rate will increase considerably.

V. Policy Suggestions The government has been pushing forward with its plans in a very desirable direction amid a national consensus on its 70 percent employment goal. By ending the controversy about the direction of its policy implementation, the government has secured a social platform for developing concrete methods and their execution.

At this juncture, what`s urgently needed are active participation and cooperation by businesses, labor and political circles, backed up by the government`s strong leadership. Labor, management and government should reach an agreement on the necessary paradigm shifts in economy, employment

and state management, and jointly implement them, while the political parties should render smooth legislative support.

<References> Ministry of Employment and Labor (2013), “2013 administrative report: a nation working together toward happiness for all”

Geum Jae-ho (2012), “Policy tasks for attaining 70 percent employment rate,” sourcebook for the policy debate on creative economy and employment rate of 70 percent

Ministry of Strategy and Finance (2013), “Mid- to long-term policy tasks for the Republic of Korea”

Kim Cheon-gu (2012), “Changes in industries` job creation ability after financial crisis,” Weekly Economic Review, Hyundai Research Institute

Government of the Republic of Korea (2004), “Policy package for job creation,” joint report of related ministries

Government of the Republic of Korea (2010), “National employment strategy for harmonizing growth, employment and welfare 2020”

Government of the Republic of Korea (2013), “Tasks of the Park Geun-hye administration,” a joint report of related ministries

Bang Ha-nam et al. (2009), “Study on a gradual retirement and partial pension system,” Korea Labor Institute

Yu Gyeong-jun (compiled, 2011, 2012), “Paradigm shift for building a virtuous cycle of growth and employment I, II,” Korea Development Institute

Yu Byeong-gyu (2013), “Meaning of creative economy and the new administration`s implementation strategy,” Weekly Economic Review, Hyundai Research Institute

Lee Geun and Lee Jun-hyup, “How to connect policies for vocational ability development and employment: design of job creation model,” Korea Research Institute for Vocational Education and Training

Lee Jun-hyup (2013), “Employment of the baby boomer generation: characteristics and policy suggestions,” Weekly Economic Review, Hyundai Research Institute

Cheon Byeong-yu et al. (2005), “Study of the strategy to cope with jobless growth I, II,” Korea Labor Institute

Transition Committee for the 18th President (2013), “Park Geun-hye administration`s vision and goal in state management”

Cho Seong-jae and Lee Jun-hyup (2010), “Workplace types and innovation effects,” Korea Labor Institute

Ju Won and Baek Da-mi (2012), “Innovation of economic structure is the source of job creation,” Issues and Tasks, Hyundai Research Institute

Statistics Korea, “Household finance survey,” “Employment Trend” and “Additional surveys by job types” for each year

Korea Labor Institute (2006), “Study on Korea`s formation of employment strategy,” Committee for state construction for people and employment

Korea Productivity Center (2012), “International comparison of total factor productivity”

A. E. Lorenz Arundel, B. A. Lundvall and A. Valeyre (2007), “How Europe`s economies learn: a comparison of work organization and innovation mode for the EU-15,” Industrial and Corporate Change, 16 1175-1210.

European Commission (2007), “Towards Common Principles of Flexicurity: More and Better Jobs through Flexibility and Security”

B. A. Lundvall (1992), National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning, London: Pinter Publishers

B. A. Lundvall (2008), “The Danish model and the globalizing learning economy: Lessons for developing countries,” First draft for the wider project

OECD (2006), “Boosting Jobs and Incomes: Policy Lessons from Reassessing the OECD Jobs Strategy”

OECD, “Labor Force Statistics”

OECD, “OECD Employment Outlook 1995”

OECD, “OECD Economic Surveys: Korea”

Peter Auer (2003), “Employment Stability in an Age of Flexibility: Evidence from Industrialized countries,” ILO

[ Weekly Economic Review, 13-24, No. 541, published by Hyundai Research Institute ]

www.koreafocus.or.kr

Job Performance of Older Workers at SMEs Park Ji-young Senior Consultant Center for Large and Small Business Cooperation Federation of Korean Industries

Most small and medium-sized enterprises (SMEs) that have new employees aged 40 and over are generally satisfied with their work performance, according to a recent survey by the Center for Large and Small Business Cooperation, an affiliate of the Federation of Korean Industries.

The survey was conducted from May 8 to May 28, and involved 461 SMEs that had hired at least one person aged 40 or older between January 2011 and April 2013. Among the 153 companies that responded, 29.1 percent said they are “satisfied” with the performance of their new senior employees, while 53.6 percent said they are “neither satisfied nor unsatisfied” and 17.3 percent said they are “unsatisfied.” Thus, 82.7 percent of the respondent companies were either satisfied or neutral.

Contribution to Work Efficiency SME employers said they especially value their new senior employees` contribution to operational efficiency (34.6 percent) and personnel management (32.6 percent), rather than in delivering financial results (24.2 percent).

More than half of the employers, or 51.9 percent, said older employees contributed to the work efficiency of their companies, which is 11.0 percentage points higher than 40.9 percent of the respondents who expressed satisfaction about producing results. More specifically, the survey showed the older employees bolstered work efficiency through “system building” (20.7 percent), “team building and education of juniors to improve organizational culture” (18.1 percent), and “enhancement of customer satisfaction with customer-oriented work process” (13.1 percent).

Delivering financial results involved “revenue increase, cost reduction and higher productivity” (33.3 percent) and “upgrading corporate competitiveness through development of new/hit products” (7.6 percent).”

The survey discovered various cases where older workers substantially contributed to improving the internal process by altering the organizational culture of their companies, or boosting productivity.

# Case 1: Improving Internal Process A former executive for business development at a large conglomerate, Kang, 56, was reemployed two and a half years ago as the CEO of a foreign company manufacturing semiconductor inspection systems. Right after taking office, he decided it was more urgent to improve the company`s organizational culture than try to increase its revenue. Employees were very dissatisfied with performance-based compensation and were passive about work. Kang introduced an innovative performance-based reward system and improved welfare provision. Employees as well as the company`s headquarters supported the moves and their work enthusiasm increased, helping Kang gain permission for new factory equipment.

# Case 2: Boosting Productivity A 57-year-old retiree from a small company, Ahn was employed as a production worker at a PCB manufacturer. At first, his supervisors, who were younger than him, seemed reluctant to give him work assignments, and his young co-workers avoided him. But he gradually gained their trust by faithfully performing his job without complaining and taking care of difficult tasks. Although he worked on a simple line of production, he grasped the overall operations and pinpointed problems, helping reduce the number of defective products with a strong sense of responsibility. As a result, he is now considered the most capable employee, with many of his colleagues saying, â&#x20AC;&#x153;We can`t do without Mr. Ahn.â&#x20AC;?

Rising Employment Rate of Older Workers at SMEs Among the survey respondents, their portion of new employees who are middle-aged or older is gradually rising; in 2013, one out of three of their new employees was in this age bracket. The portion was 19.1 percent (4.3 out of 22.4 new employees) in 2011, 23.9 percent (5.2 out of 21.6) in 2012, and 31.5 percent (3.7 out of 11.6) in 2013.

The respondent companies said that what the older workers need most to successfully adapt themselves is “on-the-job training” (26.4 percent), followed by “being empowered to produce results” (22.1 percent), “improvement of working conditions including contract terms and performancerelated bonus” (18.2 percent) and “human networking in the workplace” (17.1 percent).

Benefit from Expertise of Older Employees “A change of perception is urgently needed so it would be recognized that the professional expertise and ample experience of older employees, including baby boomers, will be very useful for small and medium-sized companies to improve their competitiveness,” said Kim Dong-jun, a senior consultant at the FKI`s Hope Center for Jobs for Seniors (www.fki-rejob.or.kr). “The FKI`s Center for Large and Small Business Cooperation will strengthen the diversity of on-the-job training programs to help

older employees successfully adapt to their new workplaces.â&#x20AC;?

Appendix Tables

[ Survey Research 2013-2, June 2013, published by the Hope Center for Jobs for Seniors, Federation of Korean Industries ]

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Four Korean-speaking Groups in the China-North Korea Border City of Dandong: Their National and Ethnic Identities and How They Interact Kang Ju-won Research Professor Asiatic Research Institute, Korea University

I. Introduction Since the mid-20th century, Korean society has perceived the Demilitarized Zone (DMZ) as a symbolic national border. For the people of both South and North Korea, the barbed wire boundary is a barrier that must not be crossed. Some have even viewed the South as an island instead of a peninsular country.

Still, with the arrival of the 21st century, images of the national border have become more diverse.

The idea of the national border reflected in the truce village Panmunjom and the adjacent Imjingak park, the reunion of divided families from the South and the North, North Koreans defecting to the South, tours to Mt. Kumgang [Geumgang], the Kaesong [Gaeseong] Industrial Complex and crossborder travel, and President Roh Moo-hyun`s efforts to reach out across the overland border have widened the panorama.

In 2010, with the sinking of the Cheonan warship and shelling of Yeonpyeong Island by North Korea, incidents that occurred close to the truce line, South Koreans called for a stronger border and more limited access. Now, another border is drawing attention: it is the border between China and North Korea naturally formed by the Tumen [Tuman] River and the Yalu [Amnok] River. South Korean society regards it as an extension of the closed off DMZ as well as the place where China and North Korea meet. North Koreans who freely pass back and forth across the border can be observed. Less apparent is any interaction between these North Koreans and South Koreans who may be in the area.

In the new millennium, the belief that Korea is a homogenous society whose identity is reflected in the Korean language is being challenged. Ethnic Korean-Chinese, North Korean defectors, and many people from other countries can speak Korean fluently and are living among South Koreans. But despite the common language, encounters that highlight diverse national and ethnic identities occur.

Moreover, in an age when seven million ethnic Koreans live overseas, it is hard to find a region where

Korean is a standard form of communication but national identities are maintained.

But there is one place along the China-North Korea border where four groups of people live together using Korean, sometimes identifying themselves as people of the same race and nation and at other times of different race and nation. The place is Dandong, China`s largest border town, where North Koreans, Chinese-North Koreans, Korean-Chinese and South Koreans live together, with the border playing a big part in their lives. The four groups are significant as subjects for analysis in terms of globalization and national and ethnic identity in relation to national borders. Current research is thus focused on their way of life.

The four groups are categorized not as separate sets of individuals but as people whose lives are intertwined. The North Korean group includes those who maintain North Korean nationality and for economic reasons are long-term residents of Dandong as well as businessmen on short-term visits.

Though they reside in Dandong, they plan to return to North Korea. The ethnic Chinese-North Koreans are those who were born and raised in North Korea but are of Chinese nationality. Though they have left North Korea to pursue economic activity, they travel back and forth across the border while seeking a new life. The ethnic Korean-Chinese are those who were born and raised in Dandong or elsewhere in China and have Chinese nationality. They are people seeking economic benefit by making use of the China-North Korea border or the China-South Korea border. Lastly, the South Koreans are those with South Korean nationality living in Dandong for the purpose of economic gain via the China-North Korea border.

These four groups sometimes overlap and sometimes diverge in terms of national and ethnic identity.

However, they are all in Dandong for similar reasons. Most of them have crossed borders for economic reasons and are perceived to be capable of achieving wealth via border activities.

The North Korean group includes those living in Dandong for one or two or possibly more years after the 1980s, as well as those on short-term business trips and those who can be considered short-term illegal aliens, excluding defectors. In addition, there are some who cross the border on a daily basis for cross-border trade. The Chinese-North Koreans consist of those who moved to Dandong around the 1990s. They can be further divided into two groups: those who go back to visit North Korea once a year, and those who frequently travel back and forth. Some of them have given up their North Korean nationality and live by trade in the border area as Chinese citizens. The Korean-Chinese can be divided into those who are natives of Dandong and those who started to move to the city in the 1990s from other places in China. Some live there after having worked in South Korea. The South

Korean group includes those who moved to Dandong after 1992 and those who moved there after 2000. They frequently travel back and forth between Dandong and their home and therefore have lives in both China and South Korea.

The four groups are divided further in terms of repatriation and permanent residency. While the North Koreans and South Koreans live in Dandong with intent to return to their home countries one day, the Chinese-North Koreans and the Korean-Chinese have settled in Dandong with the intent of making it their permanent home.

The four groups are connected with each other according to their work. However, the South Koreans and North Koreans do not take employment in each other`s companies or cross each other`s borders for business purposes. The Chinese-North Koreans and the Korean-Chinese often have jobs with no connection to the four groups. However, many of them work on the side in trade or tourism, which are ultimately connected to the four groups. Generally, these two groups overlap in many ways in the course of work. For example, people from both groups work as pack merchants, interpreters, local business partners, and employees of shops and restaurants.

Aside from these four groups, there are North Koreans living in Dandong as diplomats and teachers; Chinese-North Koreans who mainly live in North Korea but make frequent trips to Dandong to visit relatives; Korean-Chinese who live with absolutely no connection to the other three groups; and South Koreans whose purpose is to live in China rather than having any connection with the other three groups.

Around 2000, North Koreans and Chinese-North Koreans totaled more than 2,000 in Dandong, along with more than 8,000 Korean-Chinese and around 2,000 South Koreans. These figures have not varied much the next 10 years, aside from an increase in the number of Korean-Chinese. But since 2010, there has been a huge increase in North Koreans. As of October 2012, it was estimated that more than 10,000 North Koreans are living in Dandong.

II. Common Korean Language 1. Background

Since 1998 it has been possible to watch Korean satellite broadcasting in Dandong. In addition, there is a Korean-language weekly edition of the local newspaper, The Liaoning Daily, which is largely

produced by ethnic Korean-Chinese journalists. Newspapers, magazines and other publications are also delivered to the area from North Korea, including a tourism guide titled Choson Kwangwang (North Korean Tourism).

At Liaoning University, the Korean language department has some 800 Chinese students who are learning Korean under Chinese-Korean professors and teachers from both North and South Korea.

Korean language magazines made by Korean-Chinese or South Koreans include Jindallae (Azalea), Meari (Echo), and the magazine put out by the local Dandong Korean Association, which has been published since 2010 under the name Amnokgang Yeonga (Song of the Yalu River) from the former Hangukin Sosik (Korean News). It is in Dandong that a North Korean watching a home shopping program via South Korean satellite broadcasting might ask a South Korean to buy something for him/her.

In contrast, the Korean-Chinese who grew up in Dandong in the 1970s and 1980s lived in an atmosphere that expected assimilation in Han Chinese culture. Indeed, they had fewer and fewer opportunities to speak Korean in Dandong. Consequently, in the 1980s in particular, the KoreanChinese living in Dandong chose to attend Chinese schools rather than their own schools and follow the Chinese way of life. That is, up until the early and mid-1980s, they chose the Chinese language over Korean.

In this regard, Wang Han-seok, who studied the language usage of ethnic Korean-Chinese in this area in 1997, pointed out that “those in their 20s and 30s were comfortable with and accomplished at speaking, comprehending and writing Chinese, and those who were employed in other regions in particular were more familiar with Chinese than Korean. For such reasons, around 2010 there were many Korean-Chinese in the 40-50 age bracket living in Dandong who could understand Korean but could not speak or write it.”

As an ethnic minority group, it would not have been easy for the Korean-Chinese who had lived through the Cultural Revolution to maintain their identity. “In the latter half of the 1980s, the only trace of the Korean language in Dandong was the sign of the old Korean-Chinese School,” said one 60-year-old ethnic Korean. A Korean-Chinese native of Dandong who is now fluent in Korean says, “In my case, I started to learn Korean again from around 2000 [in his 20s].” In the early days, their reasons and motivation for using Korean again was the necessity of economic exchange with North Korea.

Dandong hence has a different context from the three northeastern Chinese provinces with large populations of ethnic Koreans, whose identity is influenced by their Korean ethnic origin or the recent wave of hallyu. If we look at the background to the emergence of signboards written in Korean (Hangeul) in downtown Dandong since the 1990s, it is evident that this is not just a place where the ethnic Koreans in China have lived while maintaining the Korean language. The signs cannot be interpreted to be the result of South Korean influence because it seems North Korean influence came first.

As of 2012, Korean language signs mostly targeted the North Koreans, listing the goods they specifically sought. Stores dealing in South Korean products, for trade with North Koreans, ChineseNorth Koreans and Korean-Chinese, emphasized the South Korean origin of the goods. In contrast, there are few stores, except for those dealing in agricultural produce, that openly advertise North Korean goods. This is because North Korean products are distributed directly to South Korea in the form of bonded goods without going through Dandong.

It is said that the only Korean language signs not connected with North Koreans are those of the Dandong Korean Association, the Korean Culture Center, Korean language schools and Korean churches. As such, the method of economic exchange among the four groups, which underlies the revival of Korean language usage in Dandong, has changed little even going into the 2000s.

2. Tool for Living and Motivation for Connections

Generally, Koreans living in other countries are happy to meet other Korean-speaking people. Such encounters, they say, give them a feeling of kinship and love for the nation. But in Dandong, such encounters work in a somewhat different fashion. First, the ability to use Chinese and Korean leads to diversity in connections and ways of living among the four groups. The South Koreans and North Koreans, who, in many cases, cannot speak Chinese, tend to rely somewhat on the Korean-Chinese and Chinese-North Koreans for matters related to Chinese language. Because they all speak Korean, meeting and communicating present no real problems. As for South Koreans and North Koreans interacting, there is a mood of caution. Although they are able to meet in Dandong, such encounters are apparently restricted.

Officially, people from the two Koreas must meet through the Dandong office of North Korea`s National Economic Cooperation Federation. But considering the differing circumstances of each of the four groups, exchange is not possible in many cases between just two of the four groups. From

the perspective of South Koreans, Dandong may be located in China, but to pursue trade with North Korea they will use the Korean language as a tool for economic activity. In Dandong, aside from the official route of submitting a request to meet a North Korean to the Ministry of Unification, there are many unofficial ways for South Koreans to meet North Koreans and many people who will make the introductions. But to be on the safe side, a Korean-Chinese, who is a Chinese citizen, would better be included.

What happens when this Korean-Chinese acting as interpreter is less proficient in Korean than desired and does not really know about the situation in North Korea? Then, the next step is to get an introduction to a Chinese-North Korean who is a Chinese citizen but fluent in Korean and knows North Korea well. In the process, the South Korean is filled with worries. The South Korean, having been swindled before by Korean-Chinese and therefore prejudiced against them, believes that the Chinese-North Korean makes a better business partner and interpreter, but the fact he is in the end Chinese makes the South Korean uneasy.

To meet North Koreans without an intermediary, however, the South Koreans have spent too little time in Dandong and have too little experience. South Koreans cannot ignore the Korean-Chinese and the Chinese-North Koreans who play the role of the Chinese; they must make use of them. By placing them in the middle, the South Koreans may present the appearance of engaging in trade with the Chinese-North Koreans or Korean-Chinese, rather than the North Koreans.

At such times, one of the useful language-related strategies employed is to use the North Korean writing style, deliberately make mistakes in spelling, and use the seal of a Chinese company. Although they draw up the documents, the South Koreans, in order to appear less fluent in Korean, deliberately use the writing style and vocabulary of the North Koreans and Korean-Chinese.

Likewise, North Koreans in Dandong can officially meet South Koreans for business purposes through the National Economic Cooperation Federation. But as this entails a lot of money, it is not a preferred method for them or their South Korean partners. To unofficially meet South Koreans, they need the help of Chinese-North Koreans or Korean-Chinese. But while they find it easy to communicate with the Chinese-North Koreans and indeed come from the same country, North Koreans have their own prejudices about the Chinese-North Koreans.

On the other hand, while being of the same race and finding communication easy, North Koreans have the notion that the Korean-Chinese are more capitalistic. In any case, even when not dealing

with South Koreans, to purchase goods from China North Koreans need to use both the KoreanChinese and Chinese-North Koreans as they are both fluent in Chinese and well-versed in the Chinese situation.

The four groups all watch South Korean satellite broadcasting. While the Chinese-North Koreans and Korean-Chinese may not be completely fluent in Korean, they have no trouble with communication.

When the four groups meet, vocabulary and accent are not a big issue. But in conversation, South Koreans need to refrain from the use of English words and become accustomed to the North Korean way of speaking.

The problems lie elsewhere. When the Korean-Chinese is not fluent in Chinese or the Chinese-North Korean is fluent in Korean but does not appear to know the North Korean situation, their identities come into question. When a South Korean meets a North Korean, if he is careful with his word choices it is possible to give a good impression and appear as a competent businessman and reliable partner.

The words that must be avoided if possible are country names such as Hanguk and Namhan for South Korea, and Buk Joseon [Choson] and Bukhan for North Korea. South Koreans must also be careful not to use lower forms of speech in reference to North Korean leaders (i.e. honorifics must be used).

North Korea does not officially recognize the name Hanguk, and as Nam Joseon is a term they use when belittling or criticizing the South, the name Buk Joseon would carry the same negative nuances.

Namhan and Bukhan are also avoided for the same reasons as Hanguk. So when referring to the two countries, all four groups use the terms “the South side” or the “the North side.” Among close acquaintances, “the upper neighborhood” and “the lower neighborhood” may be used. As mentioned, South Koreans need to be especially careful when talking about North Korean leaders. Mention of the political situation is mutually avoided.

So, when speaking Korean, the four groups adopt the strategy of avoidance, that is, they avoid using country names. However, “Joseon,” the name North Koreans use for their own country, is avoided only by the South Koreans, while the Chinese-North Koreans and Korean-Chinese make very deliberate use of the name as a way to increase their credibility with the North Koreans and to give South Koreans the impression that they are the best partner for doing trade with North Korea. South Koreans consciously use the expression “that side” when they mention North Koreans on their cell phones.

In this regard, all four groups are careful not to use the wrong terms for South Korea and North Korea

when speaking on the phone because of possible tapping. South Koreans in particular are wary of doing anything that might cause a problem when they go back home.

III. The Places of Everyday Exchange 1. Residence

In July 2011, when this author was conducting on-site research in Dandong, Kim moon-su, governor of Gyeonggi Province, South Korea, visited the city. In a meeting with South Korean businessmen in Dandong, he said, “Dandong is the site of unification and security. I will make every effort to ensure that more people can come here to learn about the situation in North Korea and China.” He added that it was his dream to see “South Koreans, North Koreans and Chinese travel back and forth and associate with each other.” Such sentiments are similar to those expressed by South Korean tourists to Dandong.

However, there is another side to Dandong. The Yalu River, a major tourist destination for South Koreans, is where North Korean workers from the companies located nearby can be seen strolling about on their lunch breaks. They use the large supermarket in the area as a meeting place. On summer nights, it is easy to see North Koreans, Chinese-North Koreans, Korean-Chinese and South Koreans all sitting at separate tables at the lamb kebob restaurants lining the streets. Even those who know each other and work with each other first check to see who is drinking at the tables nearby before making or not making any greeting. Their decisions are based not on their relationship with each other but rather each other`s national and ethnic identities.

For example, when I was eating lamb kebobs with other South Koreans, a Korean-Chinese acquaintance was drinking at the next table with a Chinese-North Korean. When I moved to introduce the two tables to each other, the Korean-Chinese acquaintance, seeing that I was with a group of South Koreans, stopped me. Quietly, he said to me, “At the next table a high-level North Korean official is having dinner with his family. It would be better to greet each other when they are gone.”

Another South Korean acquaintance at a different table simply acknowledged a North Korean acquaintance with his eyes, not making any attempt to shake hands or share a drink with him. That was the pattern for the four groups as they drank and ate lamb kebobs that night. There was no going back and forth between tables. But each table`s bill carried the account of the beer bottles that they had shouted for each other.

This is one of the most typical drinking scenes in Dandong, but one that may only be recognizable in the eyes of Dandong residents. This is the moment where national and ethnic identities are confirmed or broken down. At the same time, it reflects how economic relations in Dandong operate. That is, the scene implies the characteristics of encounters between the four groups. The people who were drinking at the same restaurant that night were engaged in economic exchange, but their connections with each other were hard to grasp on the surface.

Dandong is a city that forms a long stretch beside the Yalu River. From around 2000, under the name of development change has been most apparent in the 2-3 km area near the “Broken Bridge” (Dangyo), which is also the heart of the city. Because of such changes in the face of the city, when walking inwards from the river it seems Dandong is growing older as one moves from one district to the next. Among these different parts of the city, the area in which the four groups lived in the 1990s was the so-called Joseonjok (ethnic Korean) district, which abutted the river.

This area that comes under this name covers the streets Yimalu, Ermalu and Sanmalu (literally “one horse road,” “two horse road” and “three horse road”). Right beside this area is the Dandong Maritime Customs office and the train station, which in the narrow sense are crucial sites of cross-border trade, and in the wider sense China-North Korea trade and trade between China, North Korea and South Korea.

A school for ethnic Koreans operated by the river in this district before it moved to another area in 2003. Around 2000, the shops and offices concentrated around Yimalu in the center of the district mainly catered to North Koreans. A grocery store that only sold South Korean foodstuffs also was in the area. The apartments, which were less than eight stories high, and other lodgings built there after the 1980s served as the major residences for the four groups settling there around 2000.

Hence the Joseonjok district and its vicinity was a place for both work and residence, and provided conditions that led the four groups to congregate there. While living in the apartments in the area or staying long-term in one of the hotels, motels or other accommodations, they met in restaurants operated by people of the four groups, and did business in their offices or shops. Then at night, they discussed business over drinks in one of the places run by the Chinese-North Koreans or ChineseKoreans. As of 2011, there were more than 10 such bars.

The Joseonjok district was where the majority of some 3,000 Korean-Chinese natives of Dandong

lived in the 1990s. This was the first part of the city to see eight-story apartment blocks go up. For these reasons, Dandong residents and tourist brochures also call this area the Joseonjok district. But around 2006, some local magazines and guidebooks as well as those published in South Korea called this area “Dandong Korea Town.” In reality there is no place officially named Dandong Korea Town.

While it is true that South Koreans were living and doing business there, the name was not appropriate in that Chinese-North Koreans and Korean-Chinese were living there as well and that they had greater influence on shaping the nature of the area than the South Koreans. Aside from the restaurants run by North Koreans, it was hard to tell which of the four groups were operating which businesses just by the names on the signs. But from 2004-2005, this area`s role as a residential area for the four groups began to diminish. When a construction boom hit in 2003-2004 and 20-30 story high-rise apartment blocks went up along the Yalu River, a skyline began to form in the middle of the city.

Some who were financially well off left the Joseonjok district and moved into apartments that looked out across the border to Sinuiju in North Korea. Consequently, of the four groups who lived and worked in a cluster around Sanmalu, three groups, aside from the North Koreans, began moving to different places, especially the vicinity of the Hangukseong (literally “Korean City”) apartments near the river. Around 2010, the people of Dandong no longer called the Joseonjok district by that name but the “Joseon district.” This change in name implies much more than the diminishing role of the district as a residential area for the four groups. The changes as of July 2011 are outlined in the following.

In February 2009, the Korean Association of Dandong moved out of the Joseon district and into Hangukseong. The Korean restaurant that had occupied the floor below became a popular haunt with North Koreans fond of bibimbap. In addition, restaurants specializing in samgyetang (spring chicken with ginseng in broth), also a popular dish with North Korean customers, keep appearing. South Korean tourists generally follow itineraries that take them to North Korean or Chinese restaurants located by the Yalu River.

As such, it is rare to see South Korean tourists dining in the Joseon district. On the other hand, when North Koreans visit Dandong, the first place they seek out is the Joseon district and its restaurants.

The four groups often say, “While living in Dandong our everyday lives rarely overlap but we all have a common love for bulgogi [marinated beef dish] and kimchi.”

The stores in Yimalu mostly specialize in machinery, but an increasing number of these stores carry

signs in the window that say, “Purchasing North Korean masterpieces,” “Sale and export of all kinds of rice, flour, bean oil and etc.,” “Jackets, skirts, shirts, and underwear,” “Joseon trade” and “computers.” Compared to some three to five years ago (around 2007), a larger variety of goods are sold and are actually displayed in the windows. In the vicinity of the customs office, stores still carry signs full of technical terminology. Phrases that North Koreans are fond of are posted in large letters on the store sides, part of a new wave of stores in the city catering to North Korean customers.

There are also more stores than before advertising retail and wholesale sales of South Korean food items. By the same token, the number of stores selling North Korean goods, targeting South Korean customers, has decreased. Stores selling South Korean groceries and North Korean trade offices can be found in the same building. Stores specializing in South Korean kitchenware, frequented by North Korean customers, are still thriving.

When I visited Dandong in 2011, I noticed on the streets of the Joseon district words such as “exports,” “Joseon” (for North Korea) and “retail and wholesale,” and the kinds of goods traded.

They were not there in 2007 when I visited the city for my doctoral dissertation research. The operations of the Joseon district and the kinds of goods sold remained the same, but there were changes in the way the people behaved and the strategies they used. They were related to the change in the name and perception of the area.

Korean-language signs began to appear in the Joseonjok district in late 2007 to deal with the North Koreans who had been major customers since the 1990s. When the four groups began to congregate in the area, such signs continued to appear one by one for the same reason. There were only two or three stores each selling South Korean food and kitchenware wholesale. They appeared to sell the kinds of goods that the four groups would need in their everyday lives.

The South Korean groceries and kitchenware wholesale stores were operated by South Koreans and while all of the four groups used the stores, the largest customer group was the North Koreans buying goods to take back to the North, and the Chinese-North Korean pack merchants who went back and forth across the China-North Korea border. The employees were mostly young Korean-Chinese and Chinese-North Koreans, but the owners were in many cases Korean-Chinese or South Koreans.

Coffee shops served as places to conduct trade between the three countries. The North Koreans were not concerned about who owned the establishments.

South Korean goods remained a major part of the district although its focus had changed to doing

trade with North Korea. That this situation had continued for some 20 years from the Roh Tae-woo government to the fifth year of the Lee Myung-bak government in South Korea holds several implications for Korean society. That is, political considerations involving South and North Korea aside, the four groups of people and their capital carry out economic activity in this district, mingling and competing with each other. In general, the streets are in the Korean-Chinese style while the signs have been changed to promotional signs with a traditional Korean feel.

Meanwhile, the Korean-Chinese who had bought apartments with money earned working in South Korea, led the rush to buy apartments in the complex known as Hangukseong, which was completed in 2006. By 2011, this complex was inhabited mainly by the more affluent among the Chinese-North Koreans, Korean-Chinese and South Koreans who were engaged in economic activity in the Joseonjok district. Moreover, they also began to move into new high-rise apartments going up along the riverside in other districts.

In contrast, the North Koreans showed a preference for apartments mainly inhabited by the Chinese.

They live in apartments provided for them by their trade partners, their choice is in fact limited, and they tend to live together in the same apartment complex. In some cases they live together in one factory building on the outskirts of the city.

The Joseokjok district had become a place where the four groups lived and worked in the 2000s. By 2011, however, this was no longer the case, as the four groups no longer gathered in one part of the city. Although many Korean-Chinese and South Koreans live in the Hangukseong apartments, the majority of residents are local Chinese. This area hence has the nature of a kind of new town development.

2. Meeting of South and North Koreans

In order to meet North Koreans, South Koreans must gain official permission from the South-North Exchange and Cooperation Center, an office under the Ministry of Unification. In Dandong, however, aside from meetings between business people, South Koreans and North Koreans in reality meet each other in the course of everyday life. Opportunities to naturally greet each other come when walking along the streets, eating in a restaurant or shopping, because North Koreans also frequent the same places.

Under this situation, the only place closed to all groups except one is the South Korean church, where

all must go through an official passport inspection that reveals one`s identity. But the North Korean restaurants are very popular with the South Koreans and the South Korean restaurants are frequented by the North Koreans. Encounters between South and North Korean students happen when they are in the same class at a Chinese language institute and go out with their Chinese teacher after class.

In meeting North Koreans at a restaurant, for example, the South Koreans speaking to North Koreans for the first time may learn about the real situation of North Koreans living in Dandong. And although they were aware of the fact before coming to Dandong, they realize that it is indeed possible to do business with North Koreans in the city. At night, at the introduction of a South Korean resident, the South Korean businessman meets a Korean-Chinese at a coffee shop run by a Chinese-North Korean, and over drinks listens to the man`s experiences in doing business with North Koreans and gains tips on how to deal with them. The next day, with his Chinese-North Korean or Korean-Chinese interpreter, he visits Sanmalu, the maritime customs office, Xinliu and the large supermarkets, which are the sites of cross-border trade.

A few days later, on the boat returning to South Korea, he meets a South Korean already engaged in business with North Korea and, after talking to him, makes the decision to start business with North Korea in Dandong. In this process, considering the education and other issues back home, some South Koreans move their whole family to Dandong. So it is common that children of the four groups become classmates at local Chinese schools. Such encounters among children with common Koreanlanguage identity learning Chinese at school are even more complex when taking into account the children of multicultural marriages between South Koreans and Chinese or Korean-Chinese.

When they first come to Dandong, South Koreans often reside in private lodgings (minbakjip) mostly operated by Korean-Chinese or South Koreans. While there are a number of tourists, most of the residents of such lodgings are long-term guests staying for several months at a time to do cross-border trade. These South Koreans may gain business know-how from their host, who is often also engaged in trade on the side, and from other guests, and build up a network of contacts.

They realize that those already in trade in the border area not only engage in Chinese-North Korean trade but also South-North trade and even trade between the three countries. The ads for lodgings in magazines in Dandong often carry the message â&#x20AC;&#x153;North Korean trade consultation available.â&#x20AC;? In this sense, it is evident that such lodgings are more than just places to stay. Through people connected with these lodgings, information on doing trade in the border area is exchanged.

There are more than 10 such lodgings in Dandong, consisting of single rooms equipped with South Korean satellite broadcasting. For food preparation and cleaning, North Koreans and Chinese-North Koreans are often employed as they are cheaper than the Korean-Chinese. These workers often engage in conversation with the guests. Under such conditions, meetings with people in such lodgings are not always related to trade. Staying in such a place is an opportunity for South Koreans to meet North Koreans and learn about their lives and the way they think.

In 2006, for on-site research, I also stayed in such a place facing Sinuiju and the Yalu River. At the time the housekeeper was a North Korean woman. She prepared meals taught to her by the owner of the house, a Korean-Chinese who had previously worked in a restaurant in South Korea. From the guests` perspective, the meals were a mixture of North Korean, Chinese and South Korean cooking.

When she had time, she watched South Korean TV dramas with the owner of the house, or with this author, and when dinner was over she would often visit an inn on Sanmalu where many North Koreans lived. Though she seemed wary of saying much about South Korea, she expressed interest in the historical dramas we watched on TV. On weekends we sometimes went to the supermarket or walked in the park by the river. At the supermarket she often greeted people whom she described as friends from back home in North Korea.

When I moved onto another lodging house for research, I ate meals prepared by a Chinese-North Korean woman for a month. While I was accumulating experiences of this kind, another South Korean who had just moved to Dandong began to realize that the China-North Korea border that cut off Sinuiju, which could be seen across the Yalu River from the 13th floor of his lodging house, from the city of Dandong was a border that could be crossed by all groups but the South Koreans. In his mind, he drew the topographical map of relations formed between the four groups with the common factor of the China-North Korea border.

Meanwhile, the North Koreans learn about the way meeting people works through Korean-Chinese relatives and other North Koreans who came to China before them. They develop connections with people from the three other groups while working at the restaurants or firms in Dandong. For example, a North Korean arriving in Dandong for the first time visits the office of a South Korean company to which he has been introduced by a fellow North Korean. The South Korean and this North Korean, who has never been to Dandong before, may maintain a business relationship across the border solely by telephone for years.

The Chinese-North Koreans have the opportunity to meet Korean-Chinese and South Koreans through their relatives across the border in North Korea. The Korean-Chinese, who already have an established network in China, have the advantage of being able to cross two borders, and lean to one side in the relations that they form, either North Koreans or South Koreans. These four groups often say that people whom they have not seen for a long time in their busy lives can be met by chance â&#x20AC;&#x153;at the train station or at the customs office.â&#x20AC;? Here many shops sell gift sets that people heading for North Korea buy to bring back. The sets priced at 50, 100 or 500 North Korean won consist of fruit, biscuits, liquor, beverages, and candy packed in a cardboard box.

In Dandong, it is also possible to go to the train station or customs office and ask a complete stranger to deliver something to someone in Pyongyang, North Korea, for a fee. Therefore, all four groups gather in front of the station or the customs office to give and receive goods going back and forth across the border. The station and customs office hence serve as places for meeting and exchange between North Koreans coming into China and South Koreas meeting or seeing them off there, and Chinese-North Koreans and Korean-Chinese going back and forth between China and North Korea.

After meeting at the station or customs office, these four groups may move on to a restaurant, coffee shop, office, or karaoke to talk about their respective roles in the three-country trade carried out across two borders. The main topic of conversation is the products going from China to North Korea and vice versa, and between South Korea and North Korea, directly or indirectly via China. They also talk about using official routes for border area trade and South-North economic cooperation, and sometimes they discuss not so official routes.

Aside from meetings of this kind, the four groups meet each other in the course of their working lives.

There are companies that involve all four groups, and the many China-North Korea and South KoreaNorth Korea joint venture companies are often compared to the Kaesong Industrial Complex. In both kinds of joint ventures, the North Koreans generally provide the labor, and the goods produced are mostly consumed in China or South Korea. Companies that are officially Chinese but owned by a South Korean, with middle management consisting of Chinese-North Koreans or Korean-Chinese who are responsible for interpretation and dealing with the North Koreans, are visited by North Korean buyers or employees sent out from North Korea. They meet for economic purposes and work together to generate economic profits.

In such companies, it is common to see people of the three countries associating with each other.

These companies match their schedules to the situation in South and North Korea. Production

schedules must take into consideration North Korean holidays and national days. On South Korean holidays there are no phone calls coming from the country and the employees are not busy. On the walls of the office hang the schedules of the boats between Dandong and Incheon, and the trains between Dandong and Pyongyang. On the employees` desks are charts showing North Korean factory schedules and South Korean home shopping advertising schedules. In the office next door are piles of clothing samples from both South and North Korea.

The South Korean president of the company is busy meeting with employees of large companies from South Korea. The North Korean employees of the company call the factory in North Korea throughout the day and are often dispatched to the factory. There are also Chinese employees in charge of Chinese customs procedures. South Korean employees explain apparel-related terminology to KoreanChinese, who then draw up documents to be sent to Chinese customs and the factory in North Korea.

When goods from North Korea are scheduled to arrive, all employees, including the Chinese, are put to work.

When the South Korean company president receives a phone call from an arriving employee of a North Korean factory with which he has previously done business, the term “unification insurance” comes to mind. In the chance that he might work with the same North Koreans in the future, he treats North Koreans well. The closed images and preconceptions of the China-North Korea border are not apparent. The national identities of the South and North Koreans do not affect their interpersonal relationship.

IV. Strategies Regarding National and Ethnic Identities The four groups form relations with each other in accordance with national borders. These borders clarify the national identity of each group. But going one step further, the life stories of the people around the China-North Korea border reveal different aspects of the national and ethnic identities of the four groups. Michael Kearney argues that the U.S.-Mexico border is an undefined and changing area where the two nations overlap despite being clearly divided. The same could be said for Dandong of some 30-60 years ago. The following passage shows one person`s changing national and ethnic identity in relation to the China-North Korea border:

When the [Korean] War broke out in 1950, Song Deok-yeong`s elder brother joined the Chinese People`s Liberation Army···Crossing the Yalu River, he was taken into the [North] Korean People`s Army. After the war, he remained in the Korean People`s Army doing reconstruction

work until the spring of 1956. Because his parents were living in China he was given a holiday and received a permit to cross the river. But when he returned home his parents would not let him go back to North Korea. Since he had lived in North Korea as a member of the army, the Chinese authorities treated him as a North Korean citizen. Then after the Cultural Revolution, he became a Chinese citizen. (From Yu Cheol-in`s â&#x20AC;&#x153;History of Migration and Settlement,â&#x20AC;? The Life of Koreans in Liaoning Province, China, Seoul: National Folk Museum of Korea, 1997)

This pre-1980s situation has been apparent once again since the 1990s. One person who was a Korean-Chinese with Chinese citizenship crossed the border into North Korea during the Cultural Revolution in the 1970s and became a North Korean citizen. Another Korean-Chinese became a South Korean citizen but continues to live in Dandong. Korean-Chinese who have gained South Korean citizenship must naturally live as foreigners in Dandong. When they apply for a visa extension, the Chinese authorities check their place of birth. If their Chinese census registration remains, they must cancel it before they are granted an extension of stay.

However, those who have dual citizenship cannot extend their visas but travel back to South Korea when their time expires. Elderly Korean-Chinese who have gained South Korean citizenship because of their children tend to give it up and live as Chinese citizens.

There are other cases. In 2012, on the Dandong ferry I met a Korean-Chinese woman who was working at a Chinese restaurant in South Korea and making a brief visit to her hometown of Dandong.

As we talked, I realized the diversity of national and ethnic identities that could exist in one family.

This woman`s mother is a teaching assistant who is living in Dandong with a North Korean identity.

For herself, she chose to follow her father and became a Korean-Chinese. She married a Chinese man, so her son lives not as a Korean-Chinese but as a Chinese person. As her mother is a teaching assistant, she is able to visit her hometown in North Korea from time to time. On the other hand, as a KoreanChinese, she is able to work in South Korea.

Moreover, since 2010 the number of multicultural families in Dandong has been rising as more South Koreans marry Korean-Chinese or Chinese. Their children are now entering kindergarten and primary school. The Chinese-North Koreans, although they cannot obtain a Chinese identification card or driver`s license despite their Chinese nationality, tend to maintain their status as Chinese-North Korean. Some of course give up North Korean citizenship and live as Chinese people. South Koreans and North Koreans basically live as citizens of their respective countries.

The circumstances being such, a student who was born in South Korea in 1997 and has been living in Dandong since 2006, had attended a Chinese school for more than one year when she asked the following question in her Korean language class: “Teacher, adults say our school has a lot of students who are North Korean, Chinese-North Korean and Korean-Chinese. To me it seems everyone is the same. I don`t understand what the difference is. I thought one of my friends was Korean-Chinese but my parents say she is North Korean.”

Likewise, for the adults, rather than worrying about their own identity, asking “Who am I?” in the process of choosing their business partners, they face the problem of figuring out the identity of the Korean-speaking people they have to deal with.

The national identities of the four groups are revealed in their flags. At the firms and shops operated

by North Koreans and South Koreans, the North Korean flag and South Korean flag (Taegeukgi) respectively are prominently displayed. Chinese-North Koreans and Korean-Chinese keep the flags of all three countries handy. In some of their offices, framed photographs of Kim Il-sung and his son Kim Jong-il can be seen on the wall. Through such devices they reveal their national identities and their own ideas of their ethnic identities.

In addition to flags, national identity is confirmed by passports, particularly in the case of the North Koreans. There are places where North Korean art works are displayed and sold. At one of these galleries located at what is claimed to be part of the Great Wall of China (Hushan Great Wall), the North Korean woman selling North Korean art works, handicrafts and souvenirs wore a traditional hanbok adorned with a badge of Kim Il-sung, in this way revealing her identity.

In the display cabinet was another proof of her identity — her North Korean passport. Three years ago, she did not display her passport in this way. But since July 2011, the passport has served as a means for her to reveal her identity and a tool for business. During the 30 minutes I spent in the shop, the woman complied with the many requests to see her passport and at the same time promoted the authenticity of the North Korean products in the shop.

The four groups who have lived a long time in Dandong can tell a person`s national and ethnic identity from small differences in appearance, dress and Korean language speech. For example, those dressed in hiking gear are South Koreans, while briefcases, black pants, and short hair or a perm are the signs of a North Korean man. People also check the use of country names such as “Joseon” or “Bukhan”

on signs, thereby confirming the national identity of the owner of the shop or restaurant or the people who appear to be customers.

Stores that use regional names of North Korea and South Korea likewise serve to reveal national identity. In addition, the four groups judge other people`s national identity and profession from the names they use to refer to their own respective countries. In reference to their own countries the North Koreans use the names “Joguk” (meaning “fatherland”) or “Joseon,” while South Koreans use “Hanguk” or “Namhan.” In contrast, the Chinese-North Koreans and Korean-Chinese use whatever name the other party uses for their own country. However, they are more familiar with Joguk and Joseon, used by the North, than Bukhan, used by the South. Therefore, it is not easy to tell the three groups apart, excluding South Koreans, from the use of the name Joseon alone.

In this regard, the three groups shift between national and ethnic identities when it is deemed to be effective for their purposes. That is, they sometimes hide and sometimes switch identities. A simple example is North Koreans who don`t want to reveal their national identity when doing business with South Koreans sometimes pretend to be Chinese-North Koreans who don`t speak perfect Chinese.

Some Chinese-North Koreans emphasize that they are North Koreans when dealing with South Koreans doing business with the North, and hence the right person for doing business with the North.

When doing business with South Koreans, Korean-Chinese who have to travel back and forth across the border as Chinese citizens, also pass themselves off as North Koreans if this is more effective for their purposes.

Strategies regarding identity differ because of their way of living and scope of economic activity differs according to the status of their identity in Dandong. This is possible because of the South Koreans, who are unable to cross the China-North Korea border and cannot speak Chinese fluently.

It also puts some limitations on the ability of South Koreans, who need the help of the three groups to do business with North Korea and to live in Dandong, to confirm their identities. For example, many Chinese-North Koreans are more fluent in Korean than Chinese so it is not easy to tell them apart from North Koreans. By the same token, because many Chinese-North Koreans speak no Chinese at all, it is easy for North Koreans to pass themselves off as Chinese-North Koreans.

Such being the situation, there are many rumors of people being swindled by North Koreans in Dandong. And of course, it does happen. But sometimes Chinese-North Koreans and KoreanChinese, to protect themselves in case a financial problem arises, pretend to be North Koreans when doing business with South Koreans, who cannot cross the China-North Korea border. In addition,

some South Koreans blame their business failures on imaginary North Koreans across the border.

Under such conditions, the North Koreans most often appear as the culprits of economic failures, and this sheds a different light on the rumors about them. For example, in addition to the restaurants run

by North Koreans along the Yalu River, there are many run by Chinese-North Koreans. These establishments are generally cheaper, and they also display the North Korean flag by the cash register.

South Korean tourists eat there thinking it is a North Korean restaurant, as they have been informed by their guides. The owner often comes out and greets the tourists, introducing himself as a North Korean, for he knows this is better for business than identifying himself as a Chinese-North Korean.

There are also cases of Korean-Chinese and Chinese-North Koreans switching national identities.

The travel agencies in Dandong that deal with South Korean tourists generally employ as guides members of these two groups who are fluent in Korean. Chinese-North Koreans are especially popular as guides for having lived in North Korea. But in many cases they are not familiar with the Chinese language or the Chinese situation, which sometimes leads to complaints. Contrary to the expectations of the South Korean tourists, they also speak positively about North Korea, where they were born and raised. In the end conflict may arise, and Chinese-North Korean guides who often come across such problems begin to call themselves Korean-Chinese.

In contrast, the Korean-Chinese, who were born in China, exaggerate the situation in North Korea to cater to the expectations of the South Korean tourists. While this makes them popular with the tourists, some begin to think that South Korean tourists prefer Chinese-North Koreans, whose stories of North Korea can be perceived to have greater credibility. The more experienced guides therefore adopt the strategy of identifying themselves as Chinese-North Koreans when dealing with South Korean tourists.

The Chinese-North Koreans make the most dramatic transformations or shifts in national identity.

Some who work in positions available to Chinese-North Koreans give up North Korean citizenship and live as Chinese, planning to live permanently in China. Such a switch can be attempted because the lack of North Korean citizenship does not stop them from engaging in cross-border trade if they have relatives living in North Korea.

Over the course of living in Dandong for about a year, a Chinese-North Korean woman in her twenties learned a few things about the way identity works for young people like herself. This woman shifts between nationalities when it suits her. When this author first met Ju Gwang-ok (pseudonym) for

research, she was working as a telephone receptionist at a massage parlor frequented by South Koreans. At the time she introduced herself as a Korean-Chinese. But she was not fluent in Chinese, and in the end she confessed that she was Chinese-North Korean. A few months later, she left the massage parlor and began to work as an assistant for a South Korean man doing business with the North and sometimes visited Pyongyang in that capacity.

When I met her by chance a year later, she confided that she was planning to give up her North Korean citizenship and illegally obtain a Chinese identification card. Remaining in Dandong as a ChineseNorth Korean means she has to tolerate the inconvenience of extending her visa every three months or making a yearly return visit to North Korea. But since her parents are still in North Korea, she could freely engage in cross-border trade even without a North Korean identity.

As citizens of South Korea, North Korean defectors in the South can be more limited in the scope of their economic activities than the Korean-Chinese. Therefore, defectors sometimes try to get jobs as Korean-Chinese, despite the low pay offered. In Dandong, however, Chinese-North Koreans generally are paid less than Korean-Chinese. The group that gets the lowest pay of all is the North Koreans. In order to get higher pay, North Koreans often attempt shifts in national identity. Employers therefore need to know exactly who they are employing.

When it comes to South Koreans and North Koreans, another kind of identity concealment is at work.

When I first met people of the four groups and asked them some simple questions, the reply I often heard was â&#x20AC;&#x153;Are you with the National Intelligence Service?â&#x20AC;? The background to this reaction is the fact that Dandong is perceived to be seething with spies from all three countries. This is naturally connected to the objectives of certain groups and the limitations placed on them according to their identities.

Those in Dandong for evangelism, business or intelligence may choose to conceal their national and ethnic identities. For example, up until 2003, when South Koreans met North Koreans for business purposes, in the daytime they often carried Hong Kong business cards and spoke only English, while most of the really important matters were taken care of in a hotel room at night. On the other hand, North Koreans who get off the boat at Dandong and head for a nearby restaurant naturally believe that the Chinese company representative who has come out to meet them is Chinese, when in fact that person may turn out to be South Korean.

Identity related to nation does not only apply to people. In Dandong, to cross national borders, North

Korean products and South Korean products may become Chinese products. When it is more advantageous for goods to cross the China-North Korea border as Chinese rather than South Korean products, and when North Korean products bring greater profit than Chinese products, the national identities of the products of the four groups are often switched. Hence the economic position of the people of the four groups is embedded in the products of each of the three countries made in or transported through the border area of Dandong.

However, the preconception that South-North conflict leads to economic rupture and the statistics that only reflect China-North Korea trade result in limited interpretation of the Dandong border area and its culture as the manifestation of only China-North Korea relations, rather than that of China, North Korea and South Korea.

V. Conclusion The Korean language plays the medium for economic exchange among the four groups. That is, they communicate in Korean, rather than Chinese, as they carry out economic activity. The Korean language serves as a tool for living and the basis of their lives. In other words, it is the foundation for their economic and social capital. The four groups are in Dandong because of its position on the China-North Korea border, where economic gains can be generated, and it is this border that defines their respective identities.

On the other hand, vague standards apply when it comes to forming or interfering with relations between nations and peoples. The China-North Korea border, which allows some people to cross and forbids others, can be a means to confirm or reestablish national and ethnic identities. The means of living and strategies of the four groups in taking advantage of the border reflect different ways of using these identities. At times they cling to their national and ethnic roots, and at other times do not rely totally on either.

In this process, their actions of revealing, concealing, switching and confirming national and ethnic identities are exposed. Although the four groups may point to a trans-border community in the discourse of globalization, they are living in a time when ethnic categorization and regional boundaries are being redefined. Therefore, the strategies used by the four groups in regard to their national and ethnic identities can be approached as a kind of politics of identity under which perceptions of nation and race are transformed and the related culture is turned into a resource.

Among the four groups, two or even three of them meet each other naturally in the course of their daily lives. But the dynamics change with the addition of the South Koreans. Participant observation of the everyday lives of the four groups, including both South and North Koreans, was limited by the fact that Dandong is a sensitive border area and my own South Korean nationality. In reality, it was difficult to be a participant observer with North Koreans in any other context than trade and tourism.

Considering South-North relations, mention of special cases outside the context of everyday life was generally avoided. Although economic damage and conflict arising through trade is not exposed in this paper, it is a reality of trade in the border city of Dandong.

The way of life of the four groups gives a microscopic view of the way the Chinese, North Koreans and South Koreans are connected, which is being overlooked in the macroscopic discourse of a Northeast Asian community. The formation of a community culture by different nations and peoples in a place beyond national borders while seeking mutual prosperity helps to ripen the political, economic and social mood for peaceful unification on the Korean peninsula, which is artificially divided. Therefore, further research should focus on in-depth discussion of how the lives of the four groups who form an economic community will develop into a Northeast Asian cultural community.

[ Korean Journal of Unification Affairs, Vol. 25, No. 1, First Half of 2013, published by the Institute for Peace Affairs ]

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- Living in the DMZ for Six Decades - Monk Paints to Practice Meditation Everyday for 30 Years

Living in the DMZ for Six Decades

Kim Shin-young Staff Reporter The Chosun Ilbo

The history of the Demilitarized Zone, the inhospitable corridor that runs across the waist of the Korean peninsula, started with the Armistice Agreement that halted the Korean War on July 27, 1953.

The agreement signed between the commander-in-chief of the U.N. Command on one side and the supreme commanders of the North Korean People`s Army and Chinese People`s Volunteers created a military demarcation line and a buffer zone. Over the following 60 years, the DMZ has become a fossilized symbol dividing the Korea nation.

While the Republic of Korea in the south became a dynamic member of the world community, ranked 16th in economic scale, over this period, a group of people have lived quietly in a little patch of the DMZ, called Daeseong-dong Village, tilling small chunks of land. Under an addendum to the Armistice Agreement concerning civilian access to the DMZ, Daeseong-dong`s residents who used to be the tenant farmers for rich landowners in the nearby city of Kaesong [Gaeseong, now in North Korea] were allowed to remain in their village.

The population in this isolated village, about 160 people in 30 families six decades ago, has grown to 214 people in 47 households now. They are all engaged in farming, earning an annual income of 60 million won on average and exempted from military service and taxes. On the opposite side of Daeseong-dong is North Korea`s demonstration village called Kijong-dong [Gijeong-dong].

On June 10, this reporter headed to Daeseong-dong, which foreign tourists call “one of the strangest villages in the world,” to meet three senior residents who have lived there the past 60 years. Outsiders need a special permission from the U.N. Command to enter the village and because that permission is hard to get these days “due to the fluid inter-Korean situation,” as a UNC official explained, I had to ask the three interviewees to come to a place outside the village boundaries.

First, I called Mrs. Kim Dong-ye, 76, with the help of the village chief. “We farmers like to go out on a rainy day like this. I`ll come to you with two gentlemen who have lived 60 years in this village. We all are relatives,” she said over the phone. Thus, I met Mrs. Kim, Mr. Kim Gyeong-rae, 79, and Mr. Park Pil-seon, 80, in a restaurant opposite the bus terminal in the town of Munsan, Paju County, about 20 minutes` drive from Daeseong-dong.

‘We Believed Dulles Saying the 38th Parallel was Impenetrable’

“You said you all are relatives?” I asked Mrs. Kim. “I meant we are almost relatives. Daeseong-dong is originally a village of the Kim clan originating from Gangneung. This Mr. Park`s mother comes from our Kim clan. So we may be considered relatives although we don`t know how far apart we are in the family tree. And we really are as close as any relatives because we have lived together in the same village for 60 years,” she explained.

Their story about the village began with the start of the Korean War on the early morning of June 25, 1950. They were living in this village only 4 kilometers from the 38th parallel, the line that was drawn arbitrarily by the United States and the Soviet Union to divide the Korean peninsula at the end of World War II. Kijong-dong was also on the southern side of the line and the people of the two villages were good neighbors, tilling paddy fields. They never imagined there could be a war. Even when they heard gunfire at the dawn of the invasion day, they did not think it was going to be a big war.

Mr. Kim recalled: “Sometime before the war, an American named Dulles (John Foster Dulles, then consultant to the U.S. secretary of state) came to inspect the 38th parallel and said the line was ‘impenetrable.’ How could we know they had so many tanks in the North? When we heard the sound of gunfire at dawn, people said something about war. But we were too close to the fighting to think of escaping from it.”

The “big war” lasted for over three years. After passing the early months of the war in the village, the

residents of Daeseong-dong evacuated in the heart of winter as the Chinese forces pushed the U.N. forces to the south. But the Chinese troops were faster than the refugees. “When we barely reached Suwon, we found they had already arrived there. We had to return to our village,” Kim said.

Then one day, Mr. Park recalled, North Koreans came in South Korean Army uniforms, holding South Korean flags, to recruit young villagers. “The young ones followed them,” Mrs. Kim added. “It was the spring of 1951. We did not know who they really were. They were holding our Taegeukgi flags.

They looked the same and spoke the same language as us. Bong-rae, Jung-rae and Un-hak`s father, they were cheated to follow the North Koreans and they have not returned. Only Deog-i escaped and came back.” Deog-i was about 15 years old at that time. He went to Seoul after the war.

‘We Defended Ourselves with Guns’

In October 1951, Panmunjom was set up to start ceasefire talks. The two sides agreed not to engage in fighting within a 2 kilometer radius of the conference site. Daeseong-dong, located just 1.5 km from Panmunjom, was therefore officially out of danger.

However, the memory of the three old villagers was a little different. They remembered that there were battles near Daeseong-dong even after the ceasefire talks started. There were incessant firefights around the village and the South Korean Army gave men of the village rifles to defend themselves.

The U.N. Command raised a large balloon in daytime and pierced the night sky with searchlights to prevent aerial bombing on Panmunjom. Negotiations continued for one year and nine months until the Armistice Agreement was finally signed.

“We were in fact soldiers without serial numbers,” Mr. Park said. “Young people these days simply think we were lucky to keep our village safe throughout the war. No way. We fought with guns.

Chinese troops approached the round hill at the center of our village.” Mr. Park and Mr. Kim were awarded official recognition as “patriotic citizens” last year.

The ceasefire came suddenly, just like the war had started. “There were exchanges of fire until about 10 o`clock at night on the 27th. Then there was silence, all of a sudden. The next morning, soldiers came and told us that the fighting stopped. They collected all the guns from us. This village became ‘demilitarized,’ literally, but we didn`t know what ceasefire really meant. We thought fighting might start again after some rest. We really didn`t know we would live like this for 60 long years···.”

‘Once Out, You Could Never Come Home within a Week’

Park Pil-seon, as a young man, joined the Republic of Korea Army after the war ended. “Soon after I made residence registration with the Paju County office, I received the draft notice,” he said. “I had fought with a gun throughout the war and then was recruited to the Army when the war stopped. I was with the first batch to enter the 30th Regiment of the Nonsan Army Recruit Training Center, so I was probably the first man to serve in the Army twice, ha ha.”

Following the ceasefire, prisoners of war were exchanged between the North and the South, and the Military Demarcation Line was drawn with a buffer zone 2 kilometers wide on both sides forming the DMZ. The villagers of Daeseong-dong did not know exactly what it meant to live inside the DMZ ― an island in no man`s land.

For some time after the war, no bus transportation was available for the villagers of Daeseong-dong.

Once a week, a U.S. Army truck made a trip to and from the village. It hauled those who needed a trip to Geumchon-ri outside the DMZ and brought home those who had gone out a week before.

Because there was no other means of transportation, everyone had to wait a full week for the next run of the U.S. Army truck, or sometimes two weeks when heavy snow prevented the weekly shuttle.

While staying away from home, many had to spend the money they earned from selling their produce.

“When somebody died in the village, if his son was on a trip outside, there was no way for him to come home immediately. So other villagers would arrange a funeral for the family,” Mr. Kim said.

“When there was a wedding, if the bride was from the outside, she had to use the UNC truck to come to the village. We lived like that for so long.” Regular bus service ― three runs a week ― started in 1972 when Yook Young-soo, wife of President Park Chung-hee, donated a bus to the village. Daily bus service began toward the end of the 1970s, and now there are three daily bus runs between Daeseong-dong and the bus terminal in the town of Munsan 12 kilometers to the southeast.

North Korea at Arm’s Length

One day in 1997, after decades of no major incident in the village, the “acorn picker abduction” occurred. Mrs. Hong Seung-sun, then 68 years old, and her son were taken away by North Korean soldiers while they were gathering acorns near the demarcation line. They were released five days later.

The old villagers recounted the incident: “There was an acorn tree on an embankment that stands alongside the Military Demarcation Line. Acorns falling from the tree were scattered around and some bounced to the north of the line. The woman and her son stretched their arms to pick up some of the nuts that landed in the northern side, being careful not to step into the north. North Korean guards watched this and the following day they gathered the villagers from the field and accused them of violating the demarcation line. Just an arm`s length, that`s where North Korea is.”

Earlier in 1975, a man in his twenties with the family name of Kim was taken to the North but he did not return. He was staying at the village to help farming. Mr. Kim Gyeong-rae said that a North Korean leaflet flown into Daeseong-dong afterwards claimed the man, who did not even go to primary school in the South, was attending a college in the North. Asked if they were afraid that similar abductions could happen when inter-Korean relations worsened, all the three interviewees said they weren`t. “What would they need us for? They would only be wasting their food if they carry us away.

We are just farm hands.”

Living under UNC Regulations, Not ROK Laws

In Daeseong-dong, U.N. Command regulations precede Korean laws. If a crime occurs, Korean police cannot enter the village to arrest the criminal. A criminal may be prosecuted by the Korean authorities only after the UNC expels him from the village. When a male villager marries a woman from the outside, she automatically becomes a resident of the village; when a female villager marries an outsider, she is removed from the village`s registry. One should live in the village for eight months or longer each year to maintain his or her status as a resident. These and other detailed rules are based on the UNC regulations and a civil contract between the UNC and the villagers of Daeseong-dong.

In case of an arranged marriage, the resident of Daeseong-dong should first request an official background checkup for the spouse candidate before he has a face-to-face meeting with her. “Of course, we are much freer now than at the time when brides and even the deceased had to use the U.N. vehicle for a trip to and from the village,” Mr. Park said.

For a while, Daeseong-dong residents were offered the privilege of hunting in the DMZ. Wearing “TSD HUNTING” armbands given by the UNC, a team of 10 men or so, taking dogs along, went to nearby hills to engage in wild boar hunting. “It was a great fun to hunt the animal with home-made spears and hold a barbecue party,” Mr. Park recalled.

‘Unification is Desirable, but Would Our Life be Different?’

During the interview, Mrs. Kim Dong-ye was nervous saying that she needed to buy some pesticide for hot pepper plants. Mr. Kim Gyeong-rae, having difficulty in walking with discomfort in the waist, wanted to go to a clinic before returning home. Mrs. Kim said, “There`s no clinic, no shop, no restaurant in our village. When we buy even a cake of soap or a simple farming tool, it costs a lot because we have to pay for transportation and things like that. The biggest problem is our homes, which the government built for us in the 1980s. They are too old, and the piped water is not running well and rooms are too cold in winter.”

On an election day, all of the Daeseong-dong residents travel together to the polling booth that is outside their village. “The voting rate is always 100 percent at our village,” Mr. Park said. “Why are we so eager to vote? Oh, I haven`t thought about why. Isn`t it that everyone with a resident card should vote without fail?” Mrs. Kim chimed in, smiling, “I also have believed we just have to vote.”

Daeseong-dong residents had had no specific address until the Home Ministry included the village in the administrative jurisdiction of Paju County, Gyeonggi Province, in the 1960s. “Before that, some outsiders even suspected we were buying goods in Kaesong at night. We were sad. We have lived as citizens of the Republic of Korea and we have safeguarded our village with our own hands. So, I don`t understand why it`s strange that we never fail to vote,” Mr. Kim said.

The three senior residents of Daeseong-dong said in unison that they wanted to see the nation reunified but they expected no great change in their life after unification. While the war was raging and while “the country`s landscape changed six times” [as the old saying goes that “10 years are long enough to change rivers and mountains”], they have lived tilling the same patches of land. So, they ask, what change would unification bring to their village?

They all said they are hardly annoyed by the North Korean verbal attacks, such as “turning Seoul into a sea of fire.” They said, “Before making Seoul a sea of fire, the North would be devastated first.

They are just trying to intimidate us. They can`t do that as long as they are human beings. We believe so.”

[ June 15, 2013 ]

www.koreafocus.or.kr

Monk Paints to Practice Meditation Everyday for 30 Years

Kim Seok-jong Staff Reporter The Kyunghyang Shinmun

Zen brush art, comprising calligraphy and painting, expresses the awakened mind as taught in Buddhism. It is a genre of Buddhist art executed with brush and ink. Venerable Seonggak, 63, has long been known as one of the most outstanding Zen brush artists in Korea. In recognition of his achievements, he was bestowed with the title of Intangible Cultural Property No. 19 by the city of Busan on May 3.

I met Venerable Seonggak on June 9, at Mangun Temple, where he resides as head monk. Overlooking the beautiful scenery of Hallyeo Waterway off the south coast, the temple lies in Namhae, South Gyeongsang Province.

“This is a method of meditation. You should calm your mind and concentrate completely to become one with your brush. Then you can draw a vibrant stroke. This is an art to express a tranquil state of mind free from all illusions, transcending secular concerns and breaking away from conventions.

Ultimately, you should reach the state of non-self,” said Venerable Seonggak. “Your brushwork can contain pure and bright wisdom only when your mind and body has become one through diligent practice of asceticism.”

Venerable Seonggak was born in Namhae, and became a monk in his mid-thirties in 1985. Before

renouncing the world, he had been a professional cartoonist, who published popular comic books, such as Geompung (“Sword of Wind”) on martial arts and Cheonsang Dongja (“Fairy Boy in Heaven”) on science fiction. His father, who was a scholar, did not accept his son`s profession as a comic artist. One day his father brought him to Venerable Hwaeom at Yeonggu Hermitage in Gimhae.

Enchanted by the monk`s paintings, he studied the style for years, and eventually renounced.

Venerable Seonggak was ordained as a disciple of Venerable Gosan, who was chief abbot at Ssanggye Temple. After spending several years at Hwabang Temple at the foot of Mt. Mangun, he moved to Mangun Hermitage in 1985. The hermitage was said to have been founded by National Preceptor Jingak (1178-1234) during the Goryeo Dynasty. Several renowned monks, including Hyobong, Gyeongbong, Seoam and Wolha, are known to have stayed at the hermitage during the latter part of the 20th century. Despite its historical reputation, Venerable Seonggak found the small hermitage severely dilapidated when he arrived. It took him 20 years to rebuild and establish its current status as an independent temple.

His mother, who is 88 years old now, helped him rebuild the temple, carrying construction materials on her back along with her son. She lives at the temple with her monk son, scolding him when he is not meditating diligently. “I regard her as a reincarnation of Avalokitesvara Bodhisattva, who is here to encourage me to practice incessantly.”

Venerable Seonggak says during the past three decades not a single day has passed without him working with his brush. His daily routine begins at 3:30 a.m., with chanting sutras and practicing meditation, to prepare his body and mind for painting. He most often draws the image of Bodhidharma, child monks, mountains and white lotus flowers. He is especially famed for his drawings of mountains based on the Chinese character shan, meaning “mountain,” characterized by dense, energetic brush strokes. His portraits of Bodhidharma are comical, and the smiling faces of young child monks exude purity and joy. Sometimes, lines of these faces suggest the monk`s past career as a comic strip artist.

“Zen painting and cartoon drawing have common features in that both dwell on blank space and often employ methods of ellipsis and emphasis,” said Seonggak. “The essence of Zen painting is in its beauty of freedom from convention. In comparison to temple paintings that are the objects of worship, Zen paintings are meant to be the objects of appreciation. The free flow of brush strokes demonstrates the enchantment of meditation, as well as the depth of spirituality. Now that I have been named an intangible cultural asset, it means I must work harder to propagate the Buddha`s teachings through

cultural activities, including painting.”

His designation as an intangible cultural asset is not only due to his artistic excellence as a Zen painter.

Members of the Busan municipal cultural heritage committee were moved by his religious dedication as well as his artistic accomplishment, especially systematic theorization of Zen painting. Professor Emeritus Hong Yun-sik at Dongguk University, a leading scholar of Korean Buddhist folklore, says, “Venerable Seonggak has effectively expanded the thematic horizon of Zen painting beyond portraits of Bodhidharma to include more diverse objects, and has also successfully brought to light the fundamental nature of Zen painting based on intuition.”

Seonggak took the initiative in organizing an academic conference on “Revisiting the Zen Art of Korea, China and Japan” in 2002, in collaboration with the Korean Society of Traditional Arts. In 2005 he published “Understanding Zen Arts” (Gyeongin Cultural Publishers), in which he explains how to approach Zen arts for general readers through interpretation of the nature of Zen arts and techniques of expression in Zen thought. He is also a poet, who has published a poetry collection titled “Finding Myself Resembling Mountains.”

Since 1995, Seonggak has held dozens of exhibitions and donated all proceedings for welfare of prison inmates, children of jobless parents and patients suffering from incurable diseases. In recognition of these charitable activities, he was awarded the Okgwan Order of Cultural Merit by the government in 2008, and the Evangelism Award given by the Jogye Order of Korean Buddhism in 2010.

Venerable Seonggak defined the overarching theme of his art as wonyung muae, which means a state of perfect confluence devoid of any distinction and confrontation. He acknowledged that he was profoundly influenced by the late Zen Mater Seongcheol`s famous sermon on “mountain is mountain and water is water” in shaping his religious and artistic perspectives.

“I try to express the joy that comes from shedding all false notions as well as the five greedy desires for wealth, sex, eating, fame, and sleeping,” Seonggak said. “In the place of illusive desires, we must try to put no mind, no obstacles, and absolute consistency. Our minds, all earthly beings and the universe are connected in a circular relationship. Every dot is connected to each other, and these dots make a line and then a grand circle. This is the universal truth and the quintessence of the mandala of the Buddha that I aim to portray in my paintings.”

Seonggak is actively engaged in activities to raise public awareness of Zen painting. He is offering weekly lectures and workshops at the Zen center in Mangun Temple, as well as at the Wongak Zen Center in Busan. More than 30 people attend his lectures at Mangun Temple, and another dozen in Busan.

“Not only monks but all people in the world are in need of Zen spirituality. You don`t necessarily have to use brush and ink; you can draw mountains, the Bodhidharma and lotus flowers in your own mind. When you try to discover your true self and reflect on what you should pursue to make your life valuable, your troubled mind will calm down and be freed from illusive desires and conflicts.”

He added, laughing heartily, “When you draw or gaze at a Zen painting, all your greedy desires will vanish and you will see no reason for fight. So the future will be brighter for your family, society and country.”

[ June 14, 2013 ]

www.koreafocus.or.kr

- Lee Kun-hee as a CEO, Lee Kun-hee as a Man - Complete Works of Ko Yu-seop, Pioneer of Korean Aesthetics

Lee Kun-hee as a CEO, Lee Kun-hee as a Man

Song Geum-han Staff Reporter The Dong-a Ilbo

“SAMSUNG WAY”

By Song Jae-yong and Lee Kyeong-muk, 21st Century Books, 408 pages, 25,000 won

“Young Man Lee Kun-hee”

By Meong Jin-gyu, Fandom Books, 480 pages, 16,000 won

“20 Years after Lee Kun-hee’s Reform, Yet Another Challenge”

By Cho Il-hun, Kimyoungsa, 311 pages, 15,000 won

Samsung has a dual image. A Korean would feel proud to see Samsung`s electronic signboard at Times Square in New York and its logo on jerseys of the London-based Chelsea Football Club.

However, when considering its ill-advised behavior such as hard-handedness of the so-called “Republic of Samsung” as a chaebol that acts like a “master” of smaller companies, management ban against labor unions and slush funds controversy, one naturally feels bitterness.

Although Samsung has risen to ninth in Fortune magazine`s global brand value rankings, it has remained stuck at 30th in the roster of the world`s most admired companies. This is a testament to the image of Samsung, which engenders pride without fondness or endearment.

Three books about Samsung have been released in succession to mark the 20th anniversary of Chairman Lee`s declaration of “New Management,” which is widely known for the slogan “Change everything but your wife and children.”

“SAMSUNG WAY,” co-authored by two business management professors at Seoul National University, offers an in-depth analysis of management strategy since Lee`s declaration. The other two books ― “Young Man Lee Kun-hee” and “20 Years after Lee Kun-he`s Reform, Yet Another Challenge” ― written by reporters of business newspapers, highlight changes of Lee Kun-hee as man.

These books contain ample interviews with Samsung executives and staff members. But the books hardly touch on Samsung`s no-union policy or slush funds

“SAMSUNG WAY” is based on a dissertation published in Harvard Business Review in 2011. The last chapter, which analyzes the sustainability of the “Samsung Way,” is an attention grabber.

The authors say that Samsung should not remain merely a “strong company.” They scrutinize countless challenges facing Samsung, including the need to overcome gaps in competitiveness between electronics and non-electronics affiliates and to develop core source technologies. Apple applied a profit sharing ratio of 3:7 between the company and its suppliers. Google has followed Apple through a business model of co-prosperity based on a similar ratio. With the “master-servant” relationship emerging as a buzzword in Korean society in recent months, this is an issue that Samsung is advised to consider.

The authors also highlight Samsung`s merits such as “paradox management,” the simultaneous pursuit of factors that initially appear incompatible. Samsung`s three major paradoxes are: speed and giant size; diversification and specialization; and Japanese-style and U.S.-style management.

The other two books serve up favorable portraits of the Samsung chairman, rather than critical and analytical approaches. “Young Man Lee Kun-hee” finds the driving force of his New Management in episodes from his adolescence. Except for the description of his character as a “loner,” the book overflows with accounts of a hero`s adolescence. They include stories about Lee disassembling and assembling a bicycle and an automobile to learn their structures while staying in Japan to study for three years from the fifth grade. The last paragraph in the book, which briefly says that Chairman Lee`s remaining challenge is “how to cultivate creative human resources,” makes readers wonder, “Is that all?”

“20 Years after Lee Kun-hee`s Reform, Yet Another Challenge” is a compilation of his speeches at workshops and verbatim records of unofficial remarks. But with no hint of critical views, this book makes readers wonder whether it has been somehow pre-screened and edited. The chapter headings like “Magic Changes Pessimism into Optimism” and “Burning Defective Products” sound as if they are tributes to Samsung. The tributes culminate with the last scene of Chairman Lee bursting into tears when Pyeongchang was named the host to the 2018 Winter Olympics.

[ June 23, 2013 ]

www.koreafocus.or.kr

Complete Works of Ko Yu-seop, Pioneer of Korean Aesthetics

Han Seung-dong Staff Reporter The Hankyoreh

“Complete Works of Uhyeon Ko Yu-seop”

By Ko Yu-seop, Youlhwadang Publishers, 2,300 pages, 320,000 won

Ko Yu-seop (1905-1944), also known by his pen name Uhyeon, was the first Korean to establish a modern academic framework for Korean art and aesthetics during the Japanese colonial occupation.

This 10-volume collection contains published writings and books, which were based on examination of traditional Korean art works and literature written about them. Unpublished works, drawings, sketches, and photographs of relics relevant to art history also are included.

The publishing plan was first conceived in 2005 for the centennial celebration of the author`s birth, and in December 2007, the first and second volumes on “Korean Art History” came out. This is the first collection of his lifetime work ever published. Each volume includes photographs, an index to illustrations, Chinese glossary, bibliography, a timeline of Ko Yu-seop`s life and career, and annotations by art critic Choe Yeol and others for integrity of content and ease of use.

Uhyeon, who served as a research assistant at the aesthetics research laboratory of Keijo Imperial University (predecessor of Seoul National University) and director of the Kaesong Municipal Museum, was a great art historian and aesthetician. He traveled throughout Korea writing about

ancient stone pagodas and celadon works. He coined the term “buncheong sagi,” referring to the bluish-green stoneware decorated with white slip produced during the early years of the Joseon Dynasty (1392-1910).

True to his own saying, “The harder you hit the bell, the louder the sound,” he devoted his life to Korean art and humanities, and his influence carries itself far and wide. Starting with his best pupil Hwang Su-yeong, a mainstream circle of Korean art historians was formed including Jin Hong-seop and Choi Sun-woo.

“Korean Art History,” consisting of Volumes 1 and 2, is a compilation of research papers. They are chronologically organized into an overview of Korean fine art history through different historical periods and discussions on individual genres including architecture, sculpture, painting and handicrafts.

Volumes 3 and 4, on “Study of Korean Pagodas,” also contain an overview and discussions on various concerned subjects. They include writings about famous pagodas of each historical period. Some of them were written to be published but the author died without publishing them; some are unfinished drafts written with no clear plans for publishing

Volume 5 on “Goryeo Celadon” is an edited version of Uhyeon`s only book that had come out while he was alive. It had been published in Japanese under the title “Celadon of Joseon.” Volume 6, titled “Draft on History of Korean Architectural Art,” contains a ground plan of Manwoldae, the old royal palace of the Goryeo Dynasty (918-1392), based on the author`s on-site measurements of the palace ruins in Kaesong. Also included in this volume are unpublished writings written in the 1930s, after he took office as director of the Kaesong Municipal Museum.

Volume 7 on “Historical Remains in Songdo” contains writings also produced while Uhyeon was serving as director of the museum. Songdo is an ancient name of Kaesong. The author conducted extensive surveys of historical remains around the city and studied relevant literature. Hence he was able to produce valuable writings on the culture of Goryeo. Volume 8 is titled “Art and Art Criticism,” Volume 9 is “Essays, Travel Accounts, Journal, and Poetry” and Volume 10, “Draft on Korean Epigraphy,” is a collection of unfinished writings.

[ June 3, 2012 ]

www.koreafocus.or.kr

- Lee Eung-jun: “The Guardian asked me why Korean writers don’t write about unification. I wonder why, too.”

Lee Eung-jun: “The Guardian asked me why Korean writers don’t write about unification. I wonder why, too.”

Uh Soo-woong Staff Reporter The Chosun Ilbo

The reason for interviewing Lee Eung-jun was not necessarily due to recent attention by the British newspaper The Guardian on his novel “The Private Life of a Nation,” published in 2009. His fictional story has a unique value in the sense that there are few literary writings delving into post-unification Korea. The Guardian`s interest in the 43-year-old novelist could be partly due to the general indifference of South Korean society toward unification.

Imagining the Korean Peninsula after Unification Q. Why did the Guardian reporters want to interview you?

A. Well, first of all, they asked me if I know any other Korean literary works that deal with issues such as North Korea or Korean unification. (Lee`s “The Private Life of a Nation” is so far the only Korean novel introduced to English-speaking readers on these topics.)

Q. Then why do you think there is such a lack of interest among Korean authors?

A. That was exactly what I was curious about while writing this novel. Perhaps the decades of rule

by authoritarian military regimes, which combine the 18 years under Park Chung-hee and another seven years under Chun Doo-hwan, effectively froze the imaginative capacity of South Korean writers in the face of these politically sensitive topics.

Lee debuted at age 20 with his poems published by the magazine Literature and Critics. A novel published by another magazine, Imagination, four years later, sparked widespread attention from the literary circles. Lee had ups and downs in the following years before returning to the mainstream literary scene. He is an outspoken critic of the lethargic themes that prevail in contemporary Korean literature as most writers are glued to their inner world of self-consciousness. So, I probed again for an explanation.

Q. That is the story before democratization. Let me ask you again. Why do you think other Korean writers still do not write about North Korea and unification?

A. (Raising his voice) Young writers these days lack imagination. Peeping at the chances of winning literary awards and reading the minds of publishers, how can they have any imagination? Writers shouldn`t be anxious to appease anyone. This is the foremost principle. You should be able to say, “I will shake up this society; I will throw a question that will take this society by storm.” This strong will drives you to write. You cannot write when you are anxious to know what other people think of you. What do I mean by “others”? Let me stop here.

A vacuum of some sort lurks in contemporary Korean literature. Some blame the naivety of young writers who have had little social experience after studying creative writing in college, while others lament the marginalization of literature in the increasingly commercialized environment. Yet others find the cause in the ideological rigidity of Korean society. Lee`s fictional narrative, an ostensibly succinct and charming thriller, in fact criticizes both Koreas. This means the novel can be subject to condemnation from both sides of the ideological demarcation. As the novel is set on a Korea unified through the South`s absorption of the North, it can potentially leave the so-called “advocates of patriotic nationalism” disgruntled. A desperate dystopia ravaged by police tyranny and organized crime by former North Korean soldiers, the “unified fatherland” depicted by the novel can also make others wonder how such a unification can be justified.

Q. Some say that your novel opposes unification.

A. Well, for example, I know a school teacher with whom I exchanged correspondence. When I had a new book published, I sent him a copy, and he would send me a postcard in response. But I have not heard from him since I sent him a copy of this novel. I would not say he is exactly a left-winger, but I assume he is displeased by my imagination of the South`s absorption of the North. But, how can you imagine a federal system is possible, given the circumstances in our society? What hope do you see in those forces like the Democratic Labor Party led by Lee Jung-hee? As for conservatives, I don`t harbor much hope, either. We need to seek a proper balance between right and left based on common sense.

Our conversation moved on to North Korean issues, including the North`s nuclear adventurism.

Literary writers often prefer symbolism and metaphor rather than straightforwardness. I was curious about how he views the North Korean issues as a writer. Summing up our long conversation, he thinks that the North`s nuclear ambition is an incarnation of Kim Il-sung, the regime founder, and that North Korea today is in the final days of the Old Testament, awaiting the New Testament era.

Q. What makes you think the Northâ&#x20AC;&#x2122;s nuclear program is an incarnation of Kim Il-sung?

A. North Koreans` obsession with nuclear weapons cannot be explained with Western rationality. I see it as an incarnation of Kim Il-Sung.

Q. Could you further elaborate on that?

A. Some interpret North Korea`s fanatic fascism as a trinity of Kim Il-Sung (the holy father), Kim Jong-il (the holy son) and the juche ideology (the holy spirit). This, of course, is a sarcastic metaphor.

To write “The Private Life of a Nation,” I read more than 100 books on related subjects. My conclusion was that North Korea has only the father, and has neither the son nor the spirit. The latter two are no more than footnotes attached to the only extant symbolic entity named Kim Il-sung. Please remember Kim Young-hwan, a former pro-North Korean activist and the author of “Steel Correspondence” (Gangcheol seosin), who said he found Kim Il-sung himself didn’t have much of an idea about what juche ideology meant.

Q. What do you mean by saying that the North would soon enter the era of the New Testament?

A. After the monistic Judaism went astray, the era of reform followed, the testimony of which is the New Testament. Similarly, India`s religious reform was carried out by Gautama Siddhartha to salvage people suffering under the caste system. North Korea is currently under a monistic system ruled by the only god called Kim Il-sung. Jesus Christ opened up a new epoch. Then, who would be the Jesus Christ for North Korea? I think it must be the North Korean people.

Q. Your interpretation that the North Korean people would be the masters of their New Testament era sounds a bit cliché.

A. Jesus Christ was a carpenter. We must not forget the fact that Jesus made the cross on which he would be crucified. Do you think it is a cliché? All truths are simple. It is crucial how to make the simple truths feasible and accessible. What is important is the creativity and validity of the process of interpretation. In this regard, I think the story of North Korean teenagers who escaped their country but were forcefully repatriated a few days ago is highly suggestive. They are Jesus Christ, aren`t they?

Literature has contributed to humanity through the ages by providing a fresh interpretative framework to view society and the world and questioning their problems. The Guardian`s coverage of “The Private Life of a Nation” was probably a warning to today`s Korean literature, which appears to have been bound by inertia and narrow-viewed introspection. I wonder what would be the next question of this “hot-blooded” writer to shake up society and the world.

[ June 5, 2013 ]

www.koreafocus.or.kr

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