President Donald Trump met North Korean leader Kim Jong Un in Singapore on Tuesday at a historic summit that the United States hopes will lead to North Korean nuclear disarmament.
US Secretary of State Mike Pompeo raised the possibility last month that US companies could invest in the isolated country if it gets rid of its nuclear weapons.
It's still very unclear whether it will. Trump and Kim signed a document agreeing to vague pledges of nuclear disarmament and continued talks between the two countries.
Even if the process leads to an eventual breakthrough, experts say investors should view North Korea with extreme caution. And if any country moves fast to take advantage, it's likely to be China.
'Potentially lucrative'
On paper, North Korea has some appealing traits for foreign companies. It is located in the middle of a major Asian supply chain that includes China, South Korea and Japan. Its economy also has a lot of catching up to do.
"There's a lot of potentially lucrative and very exciting investments in North Korea to be made," said Peter Ward, a researcher at Seoul National University who studies North Korea.
Related: Can Kim Jong Un reform North Korea's economy?
North Korea's population is impoverished but reasonably well educated, while labor costs are far lower than those of its neighbors, according to experts on the country. That makes it a potential hub for electronics and textile manufacturing, some analysts say.
But those advantages are outweighed by some extremely large obstacles for foreign investors, particularly the heavy hand of the Kim regime.
"The prospect of major investment being allowed into North Korea by the regime is unlikely," said Go Myong-hyun, a research fellow at the Asan Institute for Policy Studies, a Seoul-based think tank. "The regime is deeply suspicious of the international market."
China would lead
As North Korea's largest trading partner and the regime's primary backer, China could take the lead in investing in the country.
Ward said that North Korea looks like a natural candidate for China's Belt and Road initiative — a grand plan to invest hundreds of billions developing roads, ports and railways from Asia to Africa. Infrastructure in most of North Korea is in a dilapidated state, according to experts.
Related: How North Korea makes its money
But Chinese money can bring complications. In one case, China took control of a port it developed in Sri Lanka after the South Asian country fell behind on payments.
Such incidents are unlikely to have escaped the notice of Pyongyang, which will want to avoid any perception of ceding sovereignty to its northern neighbor.
"North Korea may be highly reluctant to potentially allow China to forcibly take possession of future 'distressed assets,'" Ward said.
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