On 26 December 2018, North and South Korea held ‘a groundbreaking ceremony’ to start a project to re-connect their railways and roads and to modernize North Korea’s old railway line. The two have also agreed to carry out a joint survey. 

These developments are considered meaningful in North-East Asia as South Korea plans to extend its railway line to China and Russia, which will potentially have huge geopolitical impact in the region.

The blueprint for the ‘New Economic Initiative’ prepared by South Korea’s Ministry of Unification was shared with a group of international journalists in the last week of October. 

It clearly mentions South Korea’s plan to connect with China’s Belt and Road Initiative (BRI) through North Korea. “We are seeking a new engine for economic growth and North Korea is focusing all its efforts on its construction industry, so we have given top priority to railway connectivity,” said officials at South Korea’s Ministry of Unification. 

“The launch of the railway and road project also had symbolic meaning because it marked a starting point for [South Korean President] Moon’s proposal for the establishment of an East Asian rail network linking the Koreas with China, Russia and Mongolia,” wrote The Korea Times in its editorial published on 27 December 2018, a day after the ceremony. Since then, there have been several rounds of talks between the two Koreas about the railway line. 

Officials say the ambitious railway line will be costly, although exact figures are not available yet.  The Chinese province of Liaoning, which shares a border with North Korea, has already proposed a railway line connecting it with the North Korean capital Pyongyang and to extend it to Seoul under the BRI. 

“This railway line will be costly, but it will be worth it,” said an official at South Korea’s Ministry of Foreign Affairs. The railway lines of the two Koreas remain largely broken since the Korean War (1950-1953). China and North Korea have also signed an agreement to link Dandong, a city in Liaoning Province, with Pyongyang with a high-speed rail line. 

Experts say such developments will bring about significant changes in North-East Asia’s geopolitics. South Korean President Moon Jae-in has emphasized enhancing cooperation between the two Koreas since he assumed office in 2017. He has embraced a policy of greater engagement with North Korea amid lack of progress on denuclearization talks between Washington and Pyongyang. 

Moon also came up with the ‘New Economic Initiative’, whose core and long-term objective is to connect with China’s BRI, Russia’s New Eastern Policy, and Mongolia’s Prairie Road Initiative. More than that, South Korea, which has a military alliance with the US, is willing to enhance cooperation with China in order to boost its economy, which is currently stagnant. Therefore, South Korea’s policy right now is to join the BRI by reconnecting its railway line with North Korea’s.

Chinese companies’ direct investment in South Korea surged 240 percent in 2018, according to the Ministry of Trade, Industry and Energy. China invested $2.74 billion in South Korea in 2018, up 238.9 percent from 2017 when China cut its investment by 60 percent. Chinese nationals also account for 31 percent of foreign visitors to South Korea, and South Korean officials say the railway line would help bring more tourists from China and increase other economic activities. 

The main obstacle to implementing the ‘New Economic Initiative’ is the slow progress on denuclearization. Said another South Korean official, “Denuclearization can lead to huge economic cooperation between the two Koreas.”