North Korean House of Cards

fund for the Supreme Leader is estimated by some sources to be approximately $100
million per year. 470 There are rumors that the Supreme Leader also receives a tax on the
underground economy, which results from trade in the markets, but information on
this source of funding is extremely opaque.
• North Korean official trade is estimated at approximately $6 billion,
almost exclusively with China. 471, 472 Each transaction is accompanied by
a kickback to the Supreme Leader’s office.
• Foreign currency of $10,000 or more coming across the border into
North Korea is monitored by the regime and is subject to a tax that goes
into the coffers of the Supreme Leader. 473
• There are some 50,000-100,000 North Koreans working overseas.
They send approximately $300 million a year back to the home country,
some of which is siphoned off by the state. 474 In addition, thes projects
generate between $2-3 billion in hard currency for the regime (much of
it presumably going into the coffers of the Royal Economy).
regime also requested that the General Association of Korean Residents in Japan, also known as Chongryon,
to attend a ceremony marking the 70th anniversary of the Party’s founding. Each official would be
required to pay about $2,500 (300,000 yen) in participation fee and other expenses, such as transit fees.
As a result, Ho Chong-man, the head of Chongryon, decided not to attend the ceremony.
470 The governing budget for the Cabinet is approximately $200 million per year. Author discussions
in Seoul with sources familiar with the North Korean budget, 2013 and 2014.
471 Scott Snyder, “China-North Korea Trade in 2013: Business as Usual,” Forbes Asia, March
27, 2014. China’s 2013 trade with North Korea grew by over ten percent from that recorded in 2012 to
$6.5 billion. This steady growth in Sino-North Korean trade relations occurred despite rising political
risks resulting from North Korea’s political succession in 2011 and 2012, and Pyongyang’s nuclear and
long-range missile tests in 2012 and 2013. It also weathered the shock of Jang Song-taek’s execution, but
the long-term implications of this incident remain to be seen. In 2012, trade with South Korea, which
the Bank of Korea excludes from North Korea’s trade statistics, was worth $1.97 billion dollars, up fifteen
percent from 2011. Almost all of that trade came from the Kaesong Industrial Complex, which was shut
down during the 2013 crisis.
472 Alastair Gale, “Cash Crunch Hits North Korea’s Elite,” Wall Street Journal, October 8, 2015.
China absorbs as much as 90 percent of North Korea’s exports, compared to around 50 percent in the
early 2000s. According to Chinese customs data, North Korean exports to China in 2014 totalled $2.9
billion. This is compared to $10 million in North Korean exports to Russia (in 2014). Over the last year
(mid-2014 to mid-2015), according to Chinese data, the value of North Korean exports to China has fallen
by 9.8 percent. In addition, Beijing’s attempts to scale back its bloated steel industry, as well as the steep
decline in coal prices, is having a dramatic impact on North Korea’s ability to generate foreign currency.
473 According to data from the Korea Trade Investment Promotion Agency [KOTRA], North
Korea brings in about $230 million in foreign currency per year. The Korea Development Institute [KDI]
puts that number at $440 million per year.
474 “After Three Years of Kim Jong-un, Skyscrapers Popping Up on Pyongyang’s Skyline,” Hankyoreh,
December 29, 2014, http://english.hani.co.kr/arti/english_edition/e_northkorea/671159.html.
Ken E. Gause
213