North Korea has secretly resumed production at the Kaesong Industrial Complex, manufacturing high-end apparel in facilities paid for and owned by South Korean companies.
Japan's Asia Press on Sunday reported that the clothes made in the industrial park are being sold to the wealthy in North Korea or exported to China.
After dollar revenues dried up following the closure of the joint-Korean complex in 2016, North Korea impounded the equipment, though it later let some of the South Korean owners in to inspect it.
The South Korean government in September resumed limited supplies of water and electricity to the complex in order to set up a liaison office there, but the latest report has raised suspicions that the North is diverting some of the power to run the factories.
The eider down and other winter clothes made in Kaesong Industrial Complex are in huge demand in the North this winter. One North Korean source told Radio Free Asia that clothes made there are cheaper than Chinese products but better quality, making them very popular among senior apparatchiks and other members of the North Korean elite.
The clothes are being sold without labels to disguise their origin, according to sources.
In October, RFA said North Korea was secretly running 19 textile factories in the Kaesong complex. North Korean propaganda website Uriminzokkiri defended the move, saying, "We announced to the world when the traitor [President] Park Geun-hye shut down the Kaesong Industrial Complex that all of the South's assets there would be frozen and that we will operate them."
"The Kaesong Industrial Complex clearly falls under our sovereign jurisdiction and the puppet government should not have any say in what we do there," it added.
The Unification Ministry here at the time said any remaining equipment in the industrial park belong to South Korean firms and any violation of property rights "must stop immediately."
But on Sunday, a Unification Ministry official here denied the reports. "We have a liaison office in the Kaesong Industrial Complex now, so how can it be possible to secretly operate factories there?"
South Korea could get into trouble if it is unwittingly providing power to the factories. One researcher at a state-run think tank said, "The government said resuming supplies of power and water to the complex to operate the liaison office has nothing to do with the resumption of production there, but there are concerns that North Korea may be abusing this."
Meanwhile, North Korea's state-run Rodong Sinmun daily claimed Saturday that the North "has never once considered developing our economy using outside support. We have created miracles through a principle of self-sufficiency and by resolving everything with our own strength."
South Korean officials go through the immigration checkpoint in Goseong, Gangwon Province on Saturday for an inter-Korean railway survey. /Yonhap