Accessibility links

Breaking News

Private Lenders Emerge as N. Korea’s New Middle Class

FILE - Visitors cool off at Munsu Water Park east of Pyongyang, North Korea — a project in which wealthy individuals known as Donju are said to have played a key role.

In North Korea's centrally planned economy, a rising class of wealthy individuals — known as “Donju” — is emerging as a new middle class in the communist country.

Donju, meaning “masters of money,” are often used as symbols of market forces in the North that began to emerge after the collapse of state’s food distribution system in the 1990s.

Donju thrived on the North’s unofficial economy by expanding their profit-making enterprises from running small businesses to lending money at high interest rates. Now, they are increasing wealth by pouring money into state construction projects, according to experts who follow the North’s economy closely.

Experts say while these private lenders are not protected under the communist system, the cash-strapped North Korean regime tolerates them.

“The Kim Jong Un regime is utilizing this new class of people to garner its citizens’ money in any way possible in order to brag about its economic achievements and reach its city planning objectives. In this sense, the regime and Donju are forging a form of partnership,” Lim Eul-chul, a professor at Kyungnam University’s Institute for Far Eastern Studies in South Korea, told a conference in Seoul Wednesday.

Lim said Donju played a key role in major state construction projects, including building apartment complexes on Pyongyang’s coveted Changjon Street and the Munsu Water Park near the capital.

Andrei Lankov, a longtime North Korea watcher and professor at South Korea’s Kookmin University, said North Koreans began turning away from the country’s official banking system in the mid-1990s when the planned economy started to break down.

However, Mitsuhiro Mimura, director at Japan’s Economic Research Institute for Northeast Asia, said it is unlikely Pyongyang will allow private enterprises despite the developments.

Jee Abbey Lee contributed to this report.