The Market Always Wins: Inside North Korea's Underground Economy That Kim Jong-un Can't Kill

Dandong, China — February 2023

It's minus fourteen degrees on the riverbank and a man I'll call Jae-won is describing, in a near-whisper, how he used to bribe his way through three separate military checkpoints every single Tuesday morning with a bag of Chinese-made socks. Not food. Not medicine. Socks. Because the guards' wives needed them, and everyone — everyone — in that system understood that the transaction was happening, and no one said a word out loud about it. That's the North Korean economy in one image. It operates on a frequency that the state pretends it cannot hear.

North Korea Untold

I've been reporting on North Korea for eleven years now. I've sat in cramped apartments in Seoul's Nowon district with women who crossed the Tumen River on plywood boards. I've drunk bad coffee in Yanji with brokers who move money in and out of the country using methods I still find genuinely hard to believe. And if there is one thing — one thing — that every single source has told me, it's this: the market cannot be killed. Kim Jong-un has tried. His father tried. His grandfather built the whole ideological architecture specifically to prevent it from existing. And yet.

What the Jangmadang Actually Is

Western journalists tend to romanticize the jangmadang — the informal markets that spread across North Korea like capillaries after the famine years of the 1990s. They photograph the stalls in Pyongyang's Tongil Market, the relative abundance, and file pieces about "surprising capitalism." That framing misses everything that matters.

The jangmadang isn't a quirky market. It's a survival infrastructure. It emerged because the Public Distribution System — the state's food rationing mechanism — effectively collapsed in provinces outside Pyongyang between 1994 and 1998. People were starving. And so they did what people do: they traded. A woman in Hamhung would sell her furniture to buy corn. A former factory worker in Chongjin would smuggle Chinese goods across the border and resell them at a 200% markup. The state looked away, then grudgingly tolerated it, then tried to co-opt it, then periodically cracked down on it — and the market absorbed every blow and kept going.

By the time Kim Jong-un took power in late 2011, there were an estimated 440 officially registered markets operating in the country. That number is almost certainly an undercount. According to one defector who asked not to be named — she left Ryanggang Province in the summer of 2019 and now lives in Incheon — unofficial trading happens in places the state doesn't even bother to register. Back alleys. Private homes. The parking areas behind work units on weekends. "The market is everywhere," she told me. "The market is just... life."

The Donju: North Korea's Invisible Merchant Class

Here's where it gets genuinely complicated. And interesting.

The people who really run the underground economy aren't desperate housewives scraping by — though they exist too, and their story matters. The engine is driven by a class that researchers at the Korea Development Institute started calling donju — roughly translated as "money masters." These are people who accumulated capital during the famine years, often through connections to state enterprises or military supply chains, and who have spent the last two decades quietly building something that looks, functionally, like a private business sector.

I spoke at length last October with a man I'll call Mr. Pak, 51, originally from Sinuiju — right on the Chinese border. He left in 2020, after what he describes as a dispute with a local Party official that went sideways. Before that, for roughly twelve years, he ran what was officially described as a "state transport cooperative." In practice, it was a trucking business. His trucks moved goods — electronics, textiles, food, construction materials — between cities. He paid a flat fee to the state enterprise that nominally owned his license. Everything above that fee was his. He employed seventeen people. He owned two apartments. He had, as he put it, "a very good understanding" with the local security apparatus, meaning he paid them regularly and they ensured his operations weren't disrupted.

"I was not a criminal," he said, and I believed him — not because he was obviously honest, but because what he described is so normalized that the word criminal has lost its meaning in that context. The entire system runs on this kind of arrangement.

The donju don't just trade goods. They've moved into real estate — buying and selling apartments in a country where private property technically doesn't exist, through a system of informal title transfers that everyone understands and no law acknowledges. They lend money at interest rates that would make a payday lender blush — sometimes 30% monthly. They fund small-scale manufacturing. According to research compiled by the Seoul-based Database Center for North Korean Human Rights, interviews with defectors consistently describe a financial ecosystem with recognizable features: investment, credit, risk, return. The vocabulary of capitalism, operating entirely in the shadows of a state that officially despises capitalism.

Kim's War on the Markets — And Why He Keeps Losing

Kim Jong-un has made several serious attempts to reassert state control over the economy. The most dramatic was the currency redenomination of November 2009 — technically his father Kim Jong-il's policy, but one the younger Kim inherited and has had to live with the consequences of ever since. The regime essentially wiped out private savings overnight by reissuing the currency at a 100:1 ratio while capping how much old currency could be exchanged. The explicit goal was to destroy the merchant class's accumulated wealth and push people back toward state dependency.

It didn't work. The policy triggered something close to open protests in several cities — extremely rare in North Korea — and had to be partially reversed within months. The official responsible, Finance Minister Pak Nam-gi, was reportedly executed. And the donju? They'd already moved significant wealth into Chinese yuan and goods. The ones who got hurt were ordinary people. The market absorbed the shock and continued.

More recently, Kim has oscillated between crackdown and accommodation in ways that suggest real strategic confusion. In 2020, using COVID border closures as cover, the regime dramatically tightened restrictions on private trade — particularly the cross-border smuggling networks that feed a huge percentage of the consumer goods market. Sources I spoke to who have connections inside the country described serious shortages and price spikes during 2020 and 2021. Real suffering. And yet — the networks didn't disappear. They went further underground, prices adjusted, and people adapted. One broker I spoke with in Yanji, a Korean-Chinese man who asked me to use only his surname, Choi, told me that during the height of the COVID closures he was still moving money into North Korea via a hawala-style system involving USB drives, voice messages, and a network of middlemen on both sides of the border. "Slower," he said. "More expensive. But never stopped."

What People Actually Sell

Let me be specific about this, because the abstraction of "informal markets" hides the texture of what's actually happening on the ground.

Chinese consumer electronics are everywhere — Samsung and Apple products mostly, ironically, filtering through China. A second-hand smartphone with the right USB port can carry thousands of files of South Korean and Chinese drama, music, films. The market for external media is enormous and has, according to multiple defectors, fundamentally altered what young North Koreans know about the outside world. This is the part that should terrify Pyongyang more than anything. It's not just an economic threat. It's an information threat. A 23-year-old in Wonsan who's watched six seasons of a Korean drama has a completely different mental map of the world than her parents did at the same age.

Food markets remain the backbone — rice, corn, vegetables, pork. But alongside them: cooking oil, imported instant noodles, soap, clothing, cosmetics (Chinese knockoffs of South Korean brands, wildly popular), building materials, motorcycle parts, medicine. The pharmaceutical black market deserves its own investigation, frankly — state hospitals have essentially nothing to offer, and the entire population outside Pyongyang has come to depend on medicines sourced through private channels, often of uncertain origin and quality.

And then there's the service economy. Private tutors — technically illegal — preparing students for university entrance exams. Private restaurants operating out of apartments. Transportation brokers. Money changers. Fixers who know how to navigate bureaucratic obstacles for a fee. A woman I interviewed in Seoul — I'll call her Minji, she left North Hamgyong Province in 2017 — ran a small private lending operation from her apartment for four years before she left. She had, at her peak, about fifteen borrowers. She kept her records in a coded notebook. She never, in four years, had a borrower default. "If you didn't pay," she said, almost cheerfully, "everyone in your neighborhood would know. That was enough."

The Corruption Web That Makes It All Possible

None of this works without the complicity of the state apparatus. This is the part that most outside analyses underplay, and it matters enormously for understanding why Kim can't simply shut it down.

The corruption is structural. Provincial party officials, security service officers, customs agents, military commanders — they all take cuts. Not as an aberration, but as the normal operating assumption of the system. A market trader in a jangmadang pays fees to the market management office, which is technically state-run, and also pays separate informal fees to the police, to the inminban (neighborhood watch leader), and periodically to whoever shows up demanding payment. Everyone up the chain is taking a percentage.

This means that cracking down on the market means cutting off revenue streams for the very people you're depending on to enforce the crackdown. I was told by a researcher at a Seoul think-tank who's spent years analyzing defector testimony that one of the persistent findings is the sheer comedy — and tragedy — of enforcement actions where the officers conducting the raid have been tipped off by someone taking market money, or where confiscated goods quietly reappear on sale a week later. The system is eating itself, slowly, and the markets are the nutrition.

Kim Jong-un knows this. He's not stupid. And I think — this is my read, for what it's worth — that the policy oscillation we've seen reflects a genuine dilemma that has no clean solution. Let the markets run freely and you accelerate the erosion of ideological control. Shut them down and you starve your population, lose the cooperation of your security apparatus, and probably trigger the kind of instability that ends regimes. So you harass. You tax. You periodically make examples. You try to ensure the benefits flow upward to loyal elites. And the market keeps going.

What Comes Next

The COVID border closure did something that may turn out to be significant: it cut the donju off from Chinese supply chains for years and accelerated the development of domestic production networks. Some of what's now circulating inside North Korea is made inside North Korea — small-scale manufacturing that the state neither fully controls nor fully acknowledges. Whether that represents a long-term structural shift or just adaptation to temporary constraint, I genuinely don't know. Nobody does.

What I do know is what Jae-won told me on that freezing riverbank in February, as he described his weekly sock transactions and the elaborate theater of pretending they weren't happening. He said the regime understands, at some level, that the economy it built can't feed its people. And the people understand that survival requires pretending to believe in a system they've quietly abandoned. It's a mutual performance. It's been going on for thirty years. And the market — patient, adaptive, unkillable — just keeps running underneath it all, like water finding its level, like it always does, like it always will.

Until something breaks. And one day, something will.