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Cash-strapped North Korea orders workers in China to pay into ‘loyalty fund’

Inscription stone marking the border of China and North Korea in Jilin (Prince Roy/WikiCommons)
October 31, 2020

This article was originally published by Radio Free Asia and is reprinted with permission.

Authorities in North Korea have ordered trade workers dispatched by the government to China to pay “loyalty funds” to help Pyongyang deal with shortfalls brought on by the prolonged coronavirus pandemic, even as the workers struggle to make ends meet during a year-long downturn in commerce, sources in China told RFA.

In January Beijing and Pyongyang closed their border and suspended all trade, leaving North Korea economically isolated from its largest trading partner and primary source of foreign currency.

Pyongyang, which plans to hold its ruling party congress in January, has ordered each trade worker stationed in China to contribute 12,000 yuan (U.S.  $1,788) – and an equal amount for each spouse — under threat of repatriation if they fail.

“Due to the shutdown of the border, the trade workers are barely making money right now, so they are having a problem fulfilling the loyalty fund assignment,” an official of a trading company in Dandong, China, across the border from North Korea told RFA’s Korean Service Sunday.

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“The workers also have to provide funds for their wife if they are married, so that is 24,000 yuan per household ($3,576). They have to pay into the loyalty fund by the end of this month, so there is only about a week left,” said the source, who requested anonymity to speak freely.

According to the source, companies are responsible for paying the loyalty fund in the event that the worker cannot pay.

“This is why the companies are pressuring the workers not to embarrass them. If they are not confident in their ability to pay the fund, the workers are asked to return to North Korea immediately,” the source said.

Another source, also in Dandong, told RFA how the authorities settled on 12,000 yuan.

“So the trade workers held a fundraising event to support North Korea from the typhoons and flooding damage the country suffered in September,” said the second source, who requested anonymity for security reasons.

North Korea had suffered a period of heavy rain all summer that was punctuated by three consecutive typhoons over 10 days in August and September.

“During that time, the trade workers were required to give a minimum of 2,000 yuan ($300), but many voluntarily gave the maximum suggested donation of 12,000. Because of this, the authorities saw that they had the ability to pay more, so for the party congress loyalty fund, they set the minimum at 12,000,” the second source said.

“Donating 12,000 per person is totally doable under normal circumstances, but it is a huge burden right now because the border is closed due to the coronavirus. It’s also questionable whether the trade workers will be able to carry out the assignment by the end of the month if they have to double the amount for their wives,” said the second source.

A third source, a Chinese citizen of Korean descent, also in Dandong, told RFA that the North Korean government threatened to repatriate workers who failed to pay on time.

“But there is a possibility the deadline will be extended, since the party congress isn’t until the beginning of next year,” said the third source, who declined to be named.

“Even when China tries to repatriate North Korean refugees that they arrest in China, the North Korean government is not accepting them back due to the coronavirus. Considering these circumstances, it is unlikely that the trade workers will be summoned immediately,” the third source said.

According to the third source, the North Korean consulate in Dandong held a meeting for more than six hours Saturday with all trade workers in attendance to discuss the progress of the loyalty fund project.

“The meeting suggests the project is proceeding very sluggishly.”

The Seoul-based Korean International Trade Association, a private economic organization, estimated the number of North Korean workers in China at 70,000 to 80,000 in August 2019. South Korea’s Foreign Ministry put the number of North Korean workers overseas at 70,000-100,000 as of the end of 2017.

The precise number of North Korean trade workers in China is not known.

U.N. sanctions aimed at depriving Pyongyang of cash and resources that could be funneled into its nuclear program mandated that all North Korean workers worldwide were supposed to have been repatriated by the end of 2019, but it remains unclear how many workers remain in the country.

RFA reported in June that many workers that were supposed to have gone home to North Korea remained stranded in China due to the onset of the pandemic.