NK-China Relations Going Sour over Yang`s Arrest

As the Chinese Police arrested Yang Bin, the first governor of the Shinuiju special economic zone, sources said China`s move was an unusual step considering the close relations between North Korea and China.

Yang`s arrest is highly likely to throw cold water on Kim Jeong-il`s ambitions plan to reform the economy of North Korea and to develop Shinuiju as a special economic zone. This is why many observers speculate that the relations between the long-time allies is going south.

The Chinese government has yet to announce its official position, but observers analyze China`s hard-line stance as following.

First, the Chinese government has not give much credence to Kim Jong-il`s idea to develop Shineuiju as a special economic zone with Yang Bin as the first governor.

People, who observed the development of Holland Village by Yang, have raised concerns that rather than promoting industry, trade, finances and electronics altogether as stated in the Shineuiju Basic Act, Yang might be focusing solely on casino, hotel and real estate businesses. The Chinese government probably judged that Yang`s focus on these businesses might have a negative impact on the Chinese people.

Second China has been displeased with the `honeymoon` between North Korea and Russia. North Korea has strengthened its ties with Russia to the extent that Kim Jong-il met the Russian ambassador to North Korea 20 times this year alone as well as held the summit talks with Russian President Putin.

There is possibility that the Chinese government is worried that North Korea might resume its equidistant diplomacy it took in the 1960s.

Of course, regardless of the relations between North Korea and China, the local government of Shenyang, northeastern Chinese city, has possibly taken issue with Yang`s tax evasion, illegal transfer of the usage of farming land and the alleged manipulation of stock prices. Yang started the development of Holland Village with 800 million yuan in loans from the Shenyang government and 100 million yuan in his own investment. But he already retrieved the money he invested and sent it to his wife and children living in the Netherlands. So the Shenyang government has concerned that Yang might take the opportunity of the economic development in Shineuiju to sneak away from the Holland Village project.

But other people said that the Chinese government took the surprising move by arresting Yang in an attempt to show Kim Jong-il what kind of person Yang really is.

yshwang@donga.com spear@donga.com