Since 2012, North Korea has been introducing restrained reforms initiated by the new leader Kim Jong-Un himself after his father Kim Jong-Il’s death in December 2011. New industrial business management methods have appeared with the so-called “Taean work system” liquidated, family contracts, and other innovations that have been introduced in agriculture, while cooperative groups have remained intact. The main purpose of reforms in the economic structure and methods of economic management under Kim Jong-Un was to accelerate development and make a transition toward a modern innovative model, including technological renovation of the military-defense complex. The renovation was prompted by sweeping sanctions imposed on the DPRK by the U.S. and its military allies after the launch of the nuclear program and testing of medium-range missiles with nuclear warheads. Aim. The present study aims to examine the anatomy of economic reforms in the context of the new challenges and threats of the Twenty First Century, their possible impact on the DPRK achieving an average annual economic growth rate of 4%, and the impact of economic innovations in the DPRK on the peaceful dialog between North and South Korea, along with maintaining Asian security. Results. The authors show that the DPRK has taken the path of gradual economic reformation in the context of sanctions and lack of democracy, without abandoning its defensive military shield or refusing the support of its traditional allies China and Russia.