In the late 1990s, after a devastating famine shattered North Korea’s central planning, the border city of Hyesan quietly began to thrive. Located just across a narrow river from China, Hyesan became an unlikely symbol of market activity. Trade flowed across the Yalu River, Chinese goods flooded its markets, and residents learned to depend more on entrepreneurial grit than the state. For a moment, it almost resembled capitalism.
That window has slammed shut
Under Kim Jong Un, and especially since the pandemic, the regime has clamped down with extraordinary force. Trade routes have been severed, informal market activity stifled, and border controls fortified to levels unseen in decades. As one longtime Hyesan trader put it, "The market system is dead," the Washington Post reported.
The border closes, and a city suffocates
Hyesan's lifeblood was unofficial cross-border trade with China. Residents smuggled secondhand clothes, electronics, and DVDs back from China and sold them in the local markets. Traders like Lee Suk-jeong, who left North Korea in 2019, built entire livelihoods on this flow of goods. "If not for the Yalu River, there’s no other option to make money," she said.
But the pandemic provided the Kim regime with a pretext to seal the border and crush this entrepreneurial spirit. New fences, watchtowers, and triple-layer barriers now line the riverbanks. Phone calls via Chinese networks—once a lifeline for families—are now severely policed. Information and remittances have slowed to a trickle.
Economic autonomy dismantled
Kim initially tolerated markets, even encouraging wealthy donju ("masters of money") to invest and expand them. But after his regime faced global sanctions over missile tests and nuclear provocations, he began consolidating control. As Peter Ward of the Sejong Institute noted, "The government is not just going to be making more money, it's also going to be able to control people's lives much more directly."
Now, cross-border trade must go through rigid state checkpoints, customs, and inspections. Only pre-approved items are allowed in. Chinese clothes, a mainstay of Hyesan markets, are mostly blocked. Even brokers who once facilitated escape and remittance transfers are charging exorbitant fees—up to 70% commissions—reflecting the dangers they now face.
A city cut off from the world
Hyesan’s isolation is emblematic of North Korea’s broader retreat. Before the pandemic, more than 1,000 North Koreans fled to the South annually. In 2023, fewer than 200 made it—most of whom were already living outside the country. Satellite images confirm the construction of hundreds of miles of new border fencing.
Escapees report being unable to find anyone who can guarantee a route out. Even phone contact has become rare and risky. "He tells me life has gotten hard, that it’s just so hard... It breaks my heart," said one woman who last spoke to her uncle in Hyesan a year ago.
Hopes for reform fade
When Kim Jong Un assumed power in 2011, some hoped the young leader would follow China's path of economic liberalization. His early years hinted at pragmatism. But today, the regime’s strategy is clear: reduce citizen autonomy, eliminate outside influence, and reinforce reliance on the state.
In 2024, Hyesan stands as a cautionary tale—a once-vibrant trade hub transformed into a controlled zone where surveillance reigns and independence is punished. For its 200,000 residents, the fences are taller, the markets are quieter, and the future is more uncertain than ever.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
