Assessment and Implication of North Korea’s Domestic and Foreign Policy Trends in the First Half of 2025

Eun-ju Choi

ej0717@sejong.org

Research Fellow

Sejong Institute

This report analyzes North Korea’s domestic and foreign policy trends in the first half of 2025 and presents assessments and policy implications for the South Korean government. Ahead of the upcoming 80th anniversary of the founding of the Workers’ Party of Korea (WPK) in October and the convening of the 9th Party Congress (hereafter “9th Congress”) expected in early 2026, North Korea concentrated on fulfilling the goals set at the 8th Party Congress of the WPK and achieving visible results. Despite the complex external environment, North Korea pursued both stable domestic policies and strategic foreign cooperation.

In the first half of 2025, North Korea’s intention to combine “performance-driven governance” with sophisticated implementation mechanisms was particularly clear. As 2025 marked the year of the WPK’s 80th founding anniversary and the deadline for completing the economic and defense tasks presented at the 8th Party Congress, North Korea concentrated the capacities of the Party, the state, and the military on producing tangible achievements. This effort not only aimed at completing the annual tasks but also carried the dual objective of finalizing the five-year mid-term plan so that, by the end of 2025 or early 2026, the regime could declare at the 9th Congress that it had successfully executed the previous five-year plan.

The most notable change in the political sector was the “simultaneous promotion of regional development and social infrastructure expansion.” Kim Jong Un’s field guidance visits, excluding those in the military sector, focused on core Party-led projects such as local industrial factories, housing (apartments) in Pyongyang, and the Wonsan-Kalma Coastal Tourist Zone. He also emphasized the importance of construction projects related to people’s livelihood, such as hospitals, greenhouses, and fish farming facilities. In particular, he defined the healthcare sector as “the most backward sector” and announced plans to construct hospitals nationwide. Accordingly, beginning in 2025, the hospital construction initiative was officially included in the Regional Development 20×10 Policy, with groundbreaking launched in some areas. Meanwhile, the Pyongyang General Hospital, which began construction in 2020, was completed after five years, and authorities encouraged opening and operating the hospital in time for the WPK’s 80th founding anniversary in October. This signaled an intent to showcase both “political timetables” and “livelihood achievements” as major successes going forward. To support hospital construction and operation, parallel measures were introduced, including reviewing the establishment of medical equipment assembly plants, strengthening the capabilities of healthcare personnel, and improving the pharmaceutical industry and medicine supply system. Such developments reflected both the expansion of “livelihood-oriented infrastructure” as pursued by the county-strengthening line and the Regional Development 20×10 Policy, and the leadership’s intention to restore and reinforce administrative credibility through the “institutionalization of achievements.”

Alongside these efforts, campaigns to reinforce discipline among officials continued intensively throughout the first half of the year. At the enlarged meeting of the WPK Secretariat held at the end of January, abuses of power and corruption by local officials were labeled as “extremely serious crimes,” and the Party publicly announced investigations and follow-up measures. Reports by South Korean media also suggested that officials at the county guidance officer level and above were ordered to submit self-criticism statements disclosing corrupt practices over the past three years. These crackdowns on officials served not only the internal motivation of strengthening governance enforcement but also the symbolic political function of securing legitimacy for bureaucratic reorganization and restructuring ahead of the 9th Congress. The “showcase” effect of public crackdowns sent a dual message: to the public, it demonstrated the “will of the regime”; to the officialdom, it delivered a “signal of norms.”

In economic management, the completion of the Five-Year Plan was emphasized, with key tasks raised such as the refurbishment and reinforcement of basic industries and normalization of production; securing irrigation and agricultural inputs for farming; improving the quality of consumer goods through the development of light and local industries; expanding fishery and aquaculture capacity; and implementing priority projects in science and technology. In addition, construction projects for housing, greenhouse farms, factories, and hospitals were actively pursued throughout the first half of the year. Personnel reshuffles of the premier and deputy premiers reflected efforts to reinforce an executive system aligned with science, technology, and construction capacities.

What stood out in the field was a focus on the “speed campaign.” Authorities widely publicized that framework construction was completed within three months at many local industrial factory sites, and the Rakwon County Marine Aquaculture Enterprise was reportedly completed by late August. However, unless material and human resources for various construction projects are stably secured, the “achievements of the speed campaign” risk being reversed into “limitations of sustainability.” In particular, the procurement of raw materials, parts, and equipment, the securing of skilled labor, and the introduction of systems for operating costs and maintenance constitute essential preconditions for production normalization.

In particular, the Wonsan-Kalma Coastal Tourist Zone, with its strong symbolic significance, became a representative case of the “fruits” of the first half of the year. A completion ceremony was held on June 24, and operations for domestic visitors began on July 1. The zone is equipped with large-scale accommodation facilities such as hotels and inns capable of hosting over 20,000 people per day. Prior to the completion, institutional and infrastructural preparations were prioritized with the adoption of the “Wonsan-Kalma Coastal Tourist Special Zone Law” in late May and the modernization of Kalma Station. Afterward, Rodong Sinmun spearheaded intensified domestic and external publicity efforts, densely highlighting the “visualization of achievements.” Reports also suggested that the zone had been pilot-operated for Russian tourists; however, North Korea’s official tourism website “DPRK Tourism” announced a temporary suspension of accepting foreign tourists, indicating that external opening is likely to be pursued gradually at a controllable level. Nonetheless, inviting staff from the Russian Embassy to the completion ceremony, and subsequently unveiling the facilities in July in connection with Russian Foreign Minister Sergey Lavrov’s visit to Wonsan, revealed an intention to strengthen external messaging by combining symbolic diplomacy toward Russia with the achievements of the tourism project.

By contrast, market indicators remained unstable throughout the first half of the year. Rice prices turned sharply upward from the spring, surging to 12,000 and then 13,000 won per kilogram in June and July respectively, reaching their highest level since the 2009 currency reform. Exchange rates also continued the sharp rise that began at the end of 2024, surpassing 30,000 won per U.S. dollar in the first half of 2025. Structurally, this situation stemmed from North Korea’s wage increases around October 2023, which expanded overall demand, while strengthened controls centered on state-run shops and grain management simultaneously restricted market supply. At the same time, the implementation of the Five-Year Economic Development Plan launched in 2021, along with large-scale construction projects, required increased imports of intermediate goods and equipment. Wage hikes and currency issuance further expanded liquidity, intensifying upward pressure on exchange rates. Such simultaneous surges in prices and exchange rates reduce the real purchasing power of residents who rely heavily on markets and risk exacerbating social inequality by widening gaps based on the possession and level of foreign currency. In short, for “performance-driven governance” to translate into public stability, bottlenecks in supply chains must be alleviated and mechanisms for distribution and price stabilization must be reinforced in combination.

In external relations, North Korea’s growing alignment with Russia emerged as the most significant variable of the first half. At the end of April, both Russia and North Korea officially acknowledged North Korean troop activity in Russia’s Kursk region, and in this context, the two countries justified the troop deployment within the framework of the “Treaty on Comprehensive Strategic Partnership” signed in 2024. Furthermore, they discussed practical implementation measures and long-term exchange plans across a wide range of fields including diplomacy, healthcare, education, and the economy. In particular, the two sides launched the construction of a road bridge across the Tumen River and worked to restore railway and air routes, thereby concretizing the expansion of bilateral transportation infrastructure. This both reinforced the trend toward institutionalization of North Korea–Russia cooperation and revealed the economic motivation of meeting North Korea’s needs for foreign currency, equipment, and technology. In terms of human exchanges, developments are expected in the tourism sector and in the dispatch of North Korean laborers to Russia. While the scale of Russian tourist inflows is unlikely to expand rapidly in the short term and therefore will not yield significant foreign currency earnings, the dispatch of North Korean workers to Russia continues steadily despite being prohibited under UN sanctions, since it aligns with the shared interests of both parties.

Relations with China are undergoing a process of “managed normalization.” To commemorate the 64th anniversary of the signing of the “Treaty of Friendship, Cooperation, and Mutual Assistance between China and North Korea” in July, higher-level officials than last year attended ceremonies held in both countries. Chinese Ambassador to North Korea Wang Yajun’s visits to border regions and the expression of intent to expand working-level cooperation served as additional signals of “relationship maintenance.” Moreover, bilateral trade between North Korea and China from January to April was assessed to have increased by more than 30 percent compared to the same period of the previous year. Import categories clearly expanded to include food, textiles, chemicals, and construction materials—raw and intermediate goods essential for internal policy execution. By contrast, tourism by Chinese nationals to North Korea has not resumed, so exchanges in the first half of the year were centered more on material trade than human exchange. Pyongyang is leveraging its ties with Russia and China in a complementary fashion to maximize security and economic gains, with the potential to present a clearer external roadmap at the 9th Congress. This strategy aims simultaneously to diversify risks from sanctions and elevate foreign policy achievements in a significant manner.

Relations with the United States and South Korea can be described as in a state of “strategic reserve.” North Korea’s messaging toward the United States retained a hardline stance while keeping the option for negotiations open if necessary, reflecting a “dual-track” approach. Toward South Korea, Pyongyang continued to adhere to the “two-state” frame, setting the threshold for dialogue high. Although South Korea’s new government (the Lee Jae-myung administration) took initial measures to shift the current hostile relationship into one of peace under its North Korea policy line of “a Korean Peninsula of Peaceful Coexistence and Prosperity,” North Korea dismissed these efforts. While acknowledging them as “sincere attempts,” Pyongyang downplayed them as merely undoing problems “caused by South Korea itself,” and highlighted structurally contentious issues—such as absorption-based unification and ROK-U.S. joint military exercises—as preconditions to be resolved first. Taking these factors into account, it appears unlikely that momentum for a rapid transformation in inter-Korean relations will be secured in the short term. As a result, in the second half of 2025, the current phase of strained relations is likely to persist, though there remains a possibility of occasional limited contacts and symbolic events taking place irregularly between the two Koreas.

Thus, North Korea’s “performance-driven governance” has produced effects of short-term stability, internal cohesion, and external demonstration of its will to survive and develop. However, structural constraints remain unresolved. First, the more large-scale construction and development projects continue, the greater the resources required, raising the risk of chronic fiscal shortages becoming institutionalized. Second, the concurrent instability of prices and exchange rates weakens the public’s perception of livelihood improvements, thereby hindering the social dissemination of political achievements. Third, if resource procurement from abroad is constrained by sanctions or changes in international circumstances, it may be difficult for current achievements to be sustained. In sum, North Korea in the first half of 2025 simultaneously bears the dual aspects of “showcasing tangible achievements” and “structural burdens of governance.”

What then are the policy implications of this situation for the South Korean government? Above all, in order to propose appropriate approaches to North Korea policy, one must begin with an accurate understanding of reality. Constraints on policy include North Korea’s altered policy toward the South, the possibility of divided domestic opinion surrounding North Korea policy, and the complexity of the external environment shaped by multiple variables involving the United States, China, and Russia. On the other hand, opportunities include the potential resumption of U.S.–North Korea summit diplomacy, the possibility of pursuing pragmatic diplomacy with neighboring countries, and North Korea’s continuing demand for external cooperation in areas such as healthcare, education, disaster response, and the environment.

North Korea policy should be based on pragmatism that “reduces the grounds for conflict and expands the room for trust.” To this end: first, low-risk, high mutual-benefit non-political agendas—such as infectious disease response, training of healthcare personnel, hospital operation standards, disaster response drills, and food safety/inspection—should be utilized to design multilateral cooperation projects that combine small pilot programs with multilateral and indirect channels. Second, South Korea should strengthen diplomacy with China and Russia so that the expansion of North Korea–Russia and North Korea–China cooperation can be linked to the shared interest of “stability on the Korean Peninsula.” Third, domestically, in order to build trust and consensus that determine the sustainability of policy, “policy explanatory power” must be enhanced, and priorities and evaluation criteria between policies should be presented transparently. Fourth, external messaging should be designed not as “unconditional comprehensive engagement,” but as a “conditional phased approach,” with a strategy of quickly accumulating small successes to create path dependence. Such a direction would broaden the opportunities for South Korea to wedge in with pragmatic cooperation once North Korea creates small openings for external engagement.

Specifically, the healthcare sector is an area where North Korea is currently driving policy efforts and where the two Koreas could attempt practical cooperation with relatively less political burden. Since North Korea is including hospital construction in the Regional Development 20×10 Policy while simultaneously working to improve operating systems, South Korea could prepare “technical and operational support” in cooperation with international organizations and NGO networks. This may include equipment standardization, parts compatibility and basic maintenance, training for capacity-building of medical personnel, and the improvement of pharmaceutical procurement and management systems. At the same time, sanctions compliance and the design of monitoring (verification) mechanisms must be ensured, along with keeping distance from political events and adherence to humanitarian principles.

In the tourism and regional development domain, attention should be paid to the Wonsan-Kalma Coastal Tourist Zone’s pathway of “establishing operational systems through domestic pilot projects—gradual external opening.” For now, foreign tourism remains temporarily suspended, but the “pilot hosting” linked to symbolic diplomacy toward Russia serves simultaneously as a channel for expanding foreign currency earnings and as a testing ground for service, safety, and control systems. In this regard, even if direct exchanges remain difficult, it would be desirable for South Korea to prepare a “readiness policy package” that includes safety, insurance, consumer protection, and environmental management guidelines in accordance with international standards. Such a package would later enable South Korea to position itself as a “partner that provides norms and standards and supports capacity-building” when conditions allow for discussions on tourism and related infrastructure cooperation.

From a trade and supply chain perspective, the recovery of North Korea–China trade and the expansion of imports centered on raw and intermediate goods may partially alleviate North Korea’s domestic supply-demand problems. However, resolving instability in prices and exchange rates requires combined measures at both macro and micro levels. For South Korea, within the framework of sanctions compliance, it is necessary to explore research and policy responses related to “price information and market indicator monitoring—food and daily necessities distribution and price stabilization mechanisms.” These can serve as a starting point for working-level consultations when a phase of conditional, limited exchanges arises in the future. At the same time, an approach that packages the three pillars of “price stabilization, supply stabilization, and protection of vulnerable groups” is required.

Finally, on the domestic front, the sustainability of North Korea policy depends on trust and consensus. Policy must present a predictable trajectory even amid uncertainty and break free from the vicious cycle of “overambitious promises—failure—deterioration of inter-Korean relations.” Therefore, phased goals should be clearly articulated in advance, and small achievements should be quickly institutionalized through an “accumulative approach.” Just as North Korea’s “performance showcase” must be followed by operation, maintenance, and institutionalization to avoid being reduced to one-off events, South Korea’s North Korea policy should be designed as a process of “declaration—implementation—institutionalization” to secure policy durability resilient to internal and external changes. When strategic patience is combined with pragmatic detail design, South Korea can proactively create a balance point of “reducing grounds for conflict and expanding room for trust” in the Korean Peninsula situation beyond the second half of 2025.