Kaesong Death Watch

Alternate title: Of fools and their money.

North Korea has led a delegation of Chinese investors on a tour of the Kaesong Industrial Complex. Would the North Koreans really confiscate Kaesong as they did Kumgang and hand it over to the Chinese? I sure as hell wish they would. Nothing would please me more than such an ineradicable deterrent to foreign investment, such a thorough repudiation of the Sunshine Policy, and the closure of Kaesong’s money pipe to Pyongyang.

Alas, we can dream, but this is a completely empty threat. First, given Kaesong’s geography and North Korea’s horrible infrastructure, Kaesong only makes business sense with the full cooperation of both Koreas. South Korea had to invest millions in building roads, railroads, and power lines across the short distance from their side of the DMZ to Kaesong. Does anyone think the Chinese will (a) rebuild the infrastructure links from Kaesong all the way to Dandong, or (b) rely on North Korea’s existing infrastructure? My banner tells you about all you need to know about the North Korean electricity grid. If any Chinese investment project in North Korea makes any sense at all, it’s Rajin, and for all its potential promise and favorable geography, Rajin has gone no where. Furthermore, without the illogical gravity of ethnic appeal, the Chinese will apply simple logic to the Kaesong model, and the wisest among them will conclude that it will never work without a fundamental change in the North Korean government’s view of foreign investment. Finally, at a time when China’s real growth rates have flattened out, its economy is running on stimulus money, and unemployment is uncomfortably high, does China really have to go abroad in search of cheap foreign labor?

You can surround a tar pit with tea candles and incense and tell the customers it’s really a spa, but how many countries are really going to dip more than one toe into a tar pit like North Korea these days?