At the beginning of last month, the North Korean authorities ordered local commercial management offices to strengthen oversight to ensure that products were being sold at official state prices, according to a source from Shinuiju on February 6th.
Meeting with Daily NK on a visit to Dandong, China, the source explained, “Friction has started up again between market managers and traders because of orders at the start of the year to make sure that everything is sold at the state-designated price. They do this every year, but this year they are confiscating products and transferring them for sale in state stores.”
Price-related orders are issued annually in North Korea, where the authorities are still reluctant to countenance market price autonomy despite fifteen years of ad hoc marketization. As such, the Ministry of Procurement and Food Policy sets the prices of key goods and posts them at the entrance to markets. These prices are approximately uniform across the country.
Only ‘regional’ items being treated differently; prices for these items are set by pricing bureaus established under provincial People’s Committees. Most obviously, the state price of seafood is cheaper in coastal areas than in inland parts of the country.
However, real price differentials make selling at these state prices untenable; for example, the market price of a kilo of rice in Shinuiju is currently hovering around 3,200 won, while that for corn is 2,200 won, yet the state prices are 1,600 won and 690 won respectively. Therefore, traders traditionally simply pretend to sell at state prices when inspectors turn up, before resuming trade at market prices once they have left.
But the problem this year is that enforcement is stricter than usual, with illegally priced products being confiscated, transferred directly to state stores and sold at state prices. According to the source, “In the past state prices were only symbolic and inspectors didn’t enforce them. Even if they confiscated something you could pay them a little and get it back. But now they are just selling those products directly at state prices, so a lot of people who have ignored the crackdowns are ending up in a real fix.”
Not only that. “People who are caught like this are banned from trading from a stall for a month,” the source added. “Traders are reacting very carefully now as a result.”
However, history has taught traders that the crackdown is unlikely to last too long, and anticipate a return to less strict oversight in due course.