China invests heavily in North Korea’

PYONGYANG, North Korea — In an effort to secure a role on the world stage, China is making the most of an often overlooked investment: private railroads.

Beijing has invested more than $7 billion in high-speed rail networks in many emerging markets, from Zimbabwe to Pakistan, and now, in North Korea. Since early 2012, China has spent $260 million modernizing tracks on two railroads in the North Korean capital and is now unveiling two trains capable of carrying 600 passengers at speeds of up to 620 kph, or 380 mph.

The trains, built by U.S. aerospace company Bombardier, will be used primarily for transporting workers and diplomatic delegations. The hope is that with such impressive passenger numbers — it takes about 60 years for a train to get a million miles — the so-called Hanjin rail lines will attract increasing numbers of Chinese companies and entrepreneurs, particularly when the Korean peninsula thaws and Pyongyang hopes to become an important, modern, thriving economic hub.

“The development of railroads can lead to the development of entire economies,” said Wang Liming, a Beijing-based economist who advises Chinese firms on North Korea. “If you have a railway, that generates income. If you have a railway, it boosts international trade.”

China’s rail diplomacy has gained some attention abroad, but has been largely overlooked in China itself, where the word “railway” is virtually unheard of. “People here don’t know what a railroad is. Chinese people don’t even know what a bullet train is,” Wang said.

Beijing also views railroads as a way to help rehabilitate and strengthen the Chinese economy — railway construction in Africa and Latin America is a major export initiative for the Chinese government. China is currently working to bring mining interests to Mauritania, Uganda and Zambia, and has a majority stake in a railroad between Zambia and Botswana.

One of the trains in the Hanjin line is a cross-country express service from Pyongyang, which travels on the existing track between the Chinese border city of Dandong and one of China’s largest ports, Dalian.

Under a joint venture between Dandong Tarun Railway, a subsidiary of the state-owned China Railway Corporation, and the North Korean company Korea Railway Corp., passengers and cargo are ferried on special trains. The other train uses the long-distance tracks between Beijing and Wuhan and is a more modest, government-only service.

Pax for the last few decades of engagement with North Korea has been defined in part by economic cooperation. The Chinese have financed and built significant parts of the North Korean rail network, and, for a time, many Chinese companies participated in North Korean construction projects.

But following the conclusion of a groundbreaking summit between the leaders of the two Koreas and the signing of an agreement to form a joint economic zone on the North Korean side of the demilitarized zone, China had announced last fall that it was pulling out of high-level economic and commercial exchanges with North Korea.

Despite the demilitarized zone, the railroads between Beijing and Wuhan and Dandong do not have the same high security measures as that between Pyongyang and the Chinese border. (But Korean-speaking Chinese soldiers still routinely cross the border to inspect freight before it is unloaded). When a train carrying Chinese coal reached North Korea last September, Chinese railway officials used a radio scanner to make sure the train did not carry evidence of North Korean corruption.

Chinese investors have not been burned as badly as many were anticipating when they began investing in North Korea in the late 1990s. “China has a slightly different policy toward North Korea,” said Dr. Ding Xueliang, a senior scholar at the Institute of North Korean Studies in Yanbian, China. “We have had our money involved, but not as much as we could have had.”

Some Chinese companies have complained of problems or theft on their North Korean railroads. In 2013, South Korean media reported that a Chinese car hire company had run afoul of Pyongyang and was taken hostage by North Korean soldiers.

The people investing in North Korea are also changing. Wang says he is receiving calls from some investors who are considering moving from their traditional businesses of rubber factories and seafood processing to rail projects in North Korea. In order to keep spending on the rail system, the Chinese government needs to keep investing. And North Korea may need more foreign investment, too.

Wang said he expects the demand for rail tourism, including major Chinese events such as the World Expo, to greatly increase. On some of the Chinese rail network routes, only a single or two people travel by rail each day, he said. In North Korea, that number can reach hundreds of thousands or more per day

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