McClatchy Washington Bureau

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DANDONG, China - North Korea’s fragile, backward economy is on display here for gawkers on Chinese tour boats that traverse the Yalu river. The barren riverbanks, the absence of lights after dark and armed North Korean soldiers who prevent escapes suggest a country whose economy could hardly get worse. But in fact it did this year as a result of U.S.-led trade and financial sanctions, which followed North Korea’s test late last year of an atomic bomb, according to merchants and missionaries who deal with the reclusive, repressive nation.

And then the slowdown reversed.

The Bush administration’s efforts at isolation were apparently undercut when China, which has both geo-political and economic interests in neighboring North Korea, stepped in with more fuel and food deliveries, according to residents of Dandong.

Now the Bush administration itself has reversed course, raising hopes for relief for the suffering 23 million North Korean citizens on the other side of the Yalu.

After months of delay, approximately $25 million in frozen North Korean assets has been returned to Pyongyang, and international inspectors who will monitor the shutdown of its nuclear reactor are slated to return and try to account for its fissionable material.

The American chief negotiator, Christopher Hill, paid a surprise visit last week. And soon, if all goes to plan, aid will begin flowing again across the Yalu.

The Yalu is known to Americans as the river where China sent “volunteers” to fight U.S. forces during the Korean war. Today, however, it illustrates as stark a difference as exists between any two countries on the planet.

And that’s why Dandong residents feel that engaging North Korea is much more logical than the hard-line approach adopted by the United States in 2001 to isolate Korean dictator Kim Jong Il.

“Just after the nuclear bomb, many Koreans and Chinese around here were afraid of an economic freeze,” said a Christian missionary with contacts on both sides of the river border. The missionary insisted on not using his name or nationality because Chinese authorities annually renew his right to minister to Christians.

“It didn’t happen, just a bit really. I think for the Chinese government the North Koreans are a good customer.”

Merchants and missionaries here in Dandong said trade ties with North Korea have returned to normal.

“We expected there would be a freeze, but we didn’t expect it would end so soon,” said a Chinese merchant from Dandong who frequently travels to North Korea to barter clothing and food products in exchange for minerals.

The merchant, who spoke on the condition of anonymity because he feared he could jeopardize his contacts in the repressive regime, said China’s economic reforms and opening to the outside world would sooner or later bring North Korea down the same path.

Members of the North Korean regime come to Dandong, a city of 800,000, for a smattering of legal trade. Just down river in Tungan, there’s an informal trading system that bustles, said the missionary.

Dandong’s strongest argument for more trade and aid is its skyline. Like so much of China, Dandong is dotted by construction cranes and high-rise buildings that seem to sprout up faster than ears of corn.

The North Korean side of the Yalu goes dark at nightfall due to chronic electricity shortages. Residents of Sinuiju (pronounced Shin-OO-joo) can only stare at the neon lights of Dandong, which blink invitingly.

During the day, tour boats leave Dandong hourly, taking mostly Chinese and South Koreans past the twisted remains of a bridge bombed by the United States during the Korean war. The Chinese boats run close to the opposing shoreline to let tourists photograph and ponder.

North Korean soldiers in their olive-colored uniforms abound in Sinuiju, ensuring that no one swims to the boats to seek refuge or even waves back. This isn’t Cuba, where a break for freedom is commonplace. In late afternoon, a soldier pokes around a tower of used plastic bags imported from China that will be recycled in North Korea, presumably looking for anyone trying to hide for a nighttime flight to freedom.

Sinuiju locals squat by the riverside, staring blankly past the tourists. The rickety and rusty trucks, cranes and tractors along the shoreline appear decades old. Sailors and shipyard workers cast saucer-shaped nets hoping to catch a meager dinner.

The few North Koreans who do get out don’t hang around Dandong for long, said locals. They head for interior cities, such as Shenyang, or faraway places, such as Mongolia. The North Korean dictatorship is said to have spies living in China who keep tabs on emigres, allowing the regime to strike at their families in revenge.

There are numerous South Korean missionaries in Dandong and its environs, but they dare not cross into North Korea to spread the gospel. The regime keeps lists of men in each town and outsiders are quickly noticed. The North Korean government is already getting a taste of Chinese-style capitalism, however. It operates more than a dozen restaurants in Dandong, earning much needed foreign currency. It also operates restaurants in many neighboring countries.

College business students from North Korea staff the restaurants in three-year postings, and most are attractive young women from professional families in North Korea. They’ll engage in small talk providing it doesn’t involve politics.

When a new worker spoke briefly with a McClatchy Newspapers reporter, a more senior “mentor” quickly ushered her away from the rare foreigner. Later, another of the young ladies talked to a Chinese translator working for McClatchy and shared details of what their overseas postings involve.

After cleaning and opening the restaurants for lunch and dinner, the handful of ladies, in their early 20s, performs an hour-long show, complete with bass guitar and keyboards. The girl group tackles Korean folk songs and Chinese pop. When the show is over and restaurant closed, they often must practice new material until 2 a.m. or later. They also do the bookkeeping.

The women cannot travel alone anywhere, always traveling in groups, and a North Korean minder watches over them like a hawk. Their true function here: to help North Korea earn hard currency for its strapped economy.

(Hall visited China as part of a fellowship with the National Press Foundation. He was assisted by translator Linjun Fan.)