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Pyongyang’s Construction Boom: Is North Korea Beating Sanctions?

The construction boom in Pyongyang, along with other indicators of improved economic performance such as food production and foreign trade, provide further evidence of the ineffectiveness of current economic sanctions. The North Korean economy appears to be beating sanctions thanks to Chinese aid and trade, as well as the reallocation of conventional defense spending to the civilian economy.

The 105-story shell of the Ryugyong Hotel has loomed for decades in the middle of Pyongyang as a reminder of North Korea’s post-Soviet economic woes.[1] Today this narrative of destitution seems belied by the breakneck speed of architectural developments in the rest of the city, such as the prestigious Ryomyong Street. There are so many glistening new buildings in Pyongyang that the city is unrecognizable from what it was ten years ago.[2] This construction boom seems to contradict the assumption that sanctions against North Korea would weaken its economy to the breaking point of denuclearization. But are Pyongyang’s new high-rise buildings mere facades hiding the last spasms of a dying republic, as critics claim? Or are they the symbols of a new “dawn” and of triumph over economic siege, as the government contends? Has Kim Jong Un’s byungjin policy of simultaneous nuclear and economic development succeeded in its aim to free up conventional defense funds for reallocation to people’s livelihoods? Or is this all just elaborate propaganda?

When 18 towers standing up to 48 stories tall appeared in the heart of the city in 2012, foreign diplomats gave it the nickname “Pyonghattan” but generally assumed it would be a one-off publicity stunt. As it turns out, Kim Jong Un has inaugurated a grand, new apartment complex nearly every year since he assumed power. In 2013 and 2014, he saw the completion of housing projects dedicated to the developers of the Unha space launch vehicles (Unha Scientists Street) and the Kwangmyongsong satellites (Wisong Scientists Street). In 2015, he honored the “scientists of the future” with 2,500 new apartments on Mirae Scientists Street, on the occasion of the 65th anniversary of the Workers’ Party of Korea (WPK). Finally, in 2017, he celebrated the 105th birthday of national founder Kim Il Sung with more than 3,000 units in the new Ryomyong Street complex. Functional buildings have been springing up as well, such as the Mansudae People’s Theater (2012), Munsu Water Park (2013), Sunan Airport (2015) and the Science and Technology Center (2015), to name a few. Even the big residential projects are purportedly finished in less than a year, and propaganda slogans boast of “Mallima speed” (10,000-mile horse speed), harking back to the “Chollima” (1,000-mile horse) campaigns that spurred Pyongyang’s reconstruction after the Korean War.

North Korea observers have been perplexed by how the state can bear such construction costs given the breadth of economic sanctions imposed against the state. Of course, the notion of cost in the country’s planned economy differs considerably from that in market economies. What real labor costs are there if most of the work is done by the Korean People’s Army? And what real material costs are there if the building materials are mostly supplied by state-owned companies? For instance, North Korea appears to be essentially self-sufficient in cement thanks to abundant limestone reserves and state factories such as the Sunchon Cement Complex, which reportedly produces between six and seven million tons annually.

Yet however much the notion of cost differs in a planned economy, the state cannot simply create something out of nothing. There must be a cost borne somewhere, beyond the opportunity cost of directing resources and manpower to the architectural rejuvenation of Pyongyang. At the very least, one must account for the wear and tear of construction equipment, for the human and mechanical energy expended and for imported building materials.

Read more at 38 North

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