North Korea’s rogue state development

North Korea summons many well-worn clichés. One immediately thinks of military parades, famine, prison camps, and nuclear sabre-rattling. It is, as we understand it, a hyper-Stalinist relic preserved in amber while the rest of East Asia charged into the 21st century. 

That picture is true enough. The country remains brutal, closed, and frequently grotesque, with the country’s ideological centre of gravity a straightforward personality cult around the ruling Kim family. What this picture no longer quite captures, however, is the apparently stranger possibility now taking shape: that North Korea is modernising.

The signs of that change have become impossible to ignore for analysts focused on the country, as well as for the first few foreign tourists who have visited since its timid, and much-belated, post-Covid opening-up in recent months. Pyongyang, at least, no longer feels like the capital of an inert state. The familiar monumental architecture is still there, but it is now increasingly accompanied by something new at street level: an urban consumer society. 

The car boom is perhaps the most visible manifestation. Pyongyang’s boulevards were famously empty and eerie. But now, traffic has thickened. Private vehicles, once the preserve of the elite, are spreading among the moneyed entrepreneurial class. EV charging points have begun to appear, and limited parking space in the city is beginning to become an issue. Even traffic jams — previously unheard-of — are reported to have recently been sighted. Ordinary citizens still walk, cycle, or take the city metro system, but the capital now possesses an increasingly visible urban stratum of automobile owners.

The housing programme tells much the same story. Kim Jong Un’s pledge to build tens of thousands of new apartments has produced whole districts on what was recently farmland. Housing in North Korea is formally allocated by the state, and depends heavily on rank, connections, institutional affiliation, and money. In Pyongyang especially, new flats tend to go to the politically trusted and socially useful: party officials, scientists, military personnel, model workers, and more recently members of an increasingly prosperous class of new entrepreneurs. Pyongyang’s new towers serve to proclaim that the system can still provide, build and modernise.

Even more striking is the digital turn. North Korea now possesses a genuine domestic mobile ecosystem: multiple smartphone brands, expanding 4G coverage, and a growing suite of domestic apps. The devices themselves appear, in many cases, to come through Chinese supply chains — manufactured by Chinese OEMs or assembled from Chinese hardware, then rebadged for the North Korean market, loaded with domestic software and kept tightly censored. Yet they are smartphones all the same. They permit messaging, approved media, maps, payments, and delivery services. The regime has chosen to domesticate, rather than reject, digital life.

Local apps now list restaurants, shops, hotels, and pharmacies in Pyongyang. Taxi-hailing functions, route planners, and location-sharing features mimic, in miniature and under strict control, the conveniences of Seoul or Shanghai. An e-commerce platform called Manmulsang operates entirely on the domestic network, while streaming services deliver state-approved content.

The emerging state model which appears to have emerged in the last five years or so is neither pure Stalinism nor recognisable capitalism. It is an authoritarian hybrid

Electronic payments are also revealing. E-wallets, card readers, and QR-style systems similar to those in China are spreading through Pyongyang and the larger cities. They handle retail, transport, tickets, and even some foreign-currency transactions. This brings with it a certain convergence of interests which favour the regime: digital payments mean that the state can see and control the economy much better than it could a cash economy, and the convenience is welcomed by citizens who are willing to forgo cash entirely.

The emerging state model which appears to have emerged in the last five years or so is neither pure Stalinism nor recognisable capitalism. It is an authoritarian hybrid. Informal markets and the donju — the new moneyed class behind much of the aforementioned development — have grown too powerful to eradicate. Yet Kim Jong Un has no intention of letting markets run society. Modernity is permitted to the extent that it can be rendered politically harmless.

What has allowed this astonishing economic development is, to a considerable extent, a set of favourable international conditions which have converged to North Korea’s benefit. 

China remains the indispensable partner. Its importance is not only that it is richer and more technologically advanced, but that it supplies the everyday material basis of North Korean modernisation: smartphones and the cars, for example, rely at the very least on underlying Chinese supply chains. Bilateral trade has now substantially recovered from the pandemic freeze: China-North Korea trade rose by 25 per cent in 2025 to $2.73 billion, close to the $2.79 billion recorded in 2019 before Covid shut the border. North Korea’s limited consumer revival depends heavily on Chinese supply chains, Chinese tolerance and Chinese-controlled access to the outside world.

Russia, however, has become the accelerant. The war in Ukraine has handed Pyongyang a patron that suddenly prizes assets it has in abundance. Shells, rockets, missiles, artillery, labour and troops are exactly what Moscow needs. In return North Korea receives oil, food, cash, military technology, diplomatic cover and battlefield data. Estimates vary, but the scale is plainly substantial. South Korean intelligence has put the value of North Korean weapons and personnel supplied to Russia through 2025 at between roughly $7 billion and $13.8 billion.

The Russian bargain is especially useful because it pays North Korea in what it most needs. Oil keeps transport, agriculture, construction and the military running. Food helps stabilise the home front. Cash and barter ease the hard-currency shortage, with overseas North Korean labour far away from the front line probably also part of the same arrangement, with increasing reports of North Korean workers in Siberia.

International crime fills out the picture. It is not the whole explanation for North Korea’s development, but it is now a critically important part of the regime’s external economy. Cyber theft, cryptocurrency laundering, and fraudulent IT-worker schemes generate hard currency that can be directed straight to strategic priorities. The sums are large enough to matter nationally. Chainalysis has estimated that the cryptocurrency industry suffered more than $3.4 billion in theft in 2025, with North Korean hackers responsible for about $2.02 billion of that total. US sanctions material has also described DPRK IT-worker networks as generating very substantial revenue for weapons programmes, including nearly $800 million in 2024 through such schemes.

Taken together, this should all change how we think about the Korean peninsula. South Korea remains vastly richer, freer, and more sophisticated. There is no prospect of North Korea becoming its economic equal any time soon. But strategic competition does not require equality. A North Korea that grows twenty or thirty per cent more capable over the next decade would be a different proposition. It could sustain a larger missile force, tighten domestic surveillance, improve military production, and make regime collapse far less likely. 

The old assumption was that time favoured the South, and that wealth, culture, technology, and generational change would slowly erode the North’s foundations. But authoritarian regimes can learn too. They import what is useful, exclude what is dangerous, punish what slips the leash, and turn convenience into surveillance. North Korea appears to be doing precisely that, and it has the benefit of a relatively young, worldly ruler in the form of Kim Jong Un who is seemingly well positioned to continue this project for years to come.

This is not modernisation in any liberal or South Korean sense. There will be no elections, Samsung billboards, or cosmetically perfect pop stars; nor is North Korea simply copying China, whose scale, coastal manufacturing base and geopolitical good fortune Pyongyang plainly lacks. Yet the family resemblance is hard to miss. North Korea is forging its own, narrower model of authoritarian development. 

This shift matters. Much of the outside world has long comforted itself with the belief that the North is dangerous only because it is weak — irrational, destitute, and perpetually on the edge of collapse. In reality, it may simply be becoming a richer, more technologically fluent, and less brittle version of itself.