Former Secretary of Defense Donald Rumsfeld kept a satellite picture of the Korean peninsula in his office that showed South Korea at night lit by millions of lights--and North Korea dark except for a small dot: Pyongyang.

At a 2006 Pentagon briefing he was asked if there could be effective diplomacy with the North Korean regime without a strong military deterrent “in their faces.”

“Probably yes,” he said, but only time would tell. The Bush administration, like the Obama administration that followed, was committed to diplomacy while unwilling to speculate about the use of force when it came to dealing with the Hermit Kingdom.

Years later, there are new signs that diplomacy and sanctions are not only failing to deter Pyongyang from building up its nuclear arsenal, but there is growing evidence the country’s economy is actually improving.

A new report from South Korea’s government-run Korea Development Institute includes satellite imagery showing that North Korea’s nighttime lighting conditions improved from 2002 to 2012.

The images also show there was more light seen in areas surrounding the North Korea capital than in 2002.

"The change in the luminous intensity of North Korea shows that the North Korean economy made a turnaround in mid-2000," the report said.

The institute regards such satellite images as one of the best tools “to demonstrate a region’s urbanization, population density and economic activity,” South Korea’s Yonhap News Agency reported.

As it happens, 2016 was a banner year for the North Korean economy, according to the Bank of Korea in Seoul. The North’s economy grew 3.9 percent last year, according to bank researchers. That was the fastest pace in 17 years.

Exports to China of coal and other minerals fueled the faster rate of growth. But those exports have reportedly taken a hit this year with Beijing apparently making good on a promise to President Trump to reduce those exports amid the North Korean nuclear crisis.

But Chinese goods are still making their way into North Korea, according to analysts. Despite indicating it would help enforce international sanctions on its neighbor, China’s exports grew nearly 20 percent in the first half of this year, according to a report by the Korea International Trade Association (KITA).

Even though jet fuel was one of five items banned by the United Nations, Beijing’s export of jet fuel to Pyongyang increased 18.3 percent in the first half of 2017.

“China’s exports to North Korea were augmented in spite of the sanctions,” said the KITA report, “Shipments of made-in-China mobile phones spiked 92.8 percent one year to total $54 million in the first six months and textile exports also expanded at a sizable rate.”

The Korea Information Society Development Institute reported last month there were 3.24 million mobile phone users in North Korea in 2015, the latest data available, up from 69,261 in 2009, when the North first allowed ordinary citizens to use mobile phones.

It’s not just China that may be lending a helping hand.

The United Nations Security Council is investigating a New Zealand aerospace company whose plane was spotted at North Korea’s first-ever air show in September 2016.

Pacific Aerospace CEO Damian Camp said at the time the 10-seater plane was sold to a Chinese company and he was as mystified as anyone as to how it ended up in North Korea.

But newly released emails from the United Nations Security Council investigation include an email chain suggesting that Pacific Aerospace knew the plane was in North Korea, and that the firm was ready to cooperate with the Chinese for training and parts.

One email from Pacific Aerospace to its Chinese counterpart reads “[Name redacted] departs for China tomorrow and will co-ordinate with you to deliver the training in how to replace the flat motor.”

The supply of aircraft, related parts or training to North Korea is a violation of UN Security Council Resolution 1718. The New Zealand customs department is also investigating whether rules were broken.

Pacific Aerospace did not respond immediately to a request for comment from Fox News.

Complicating efforts to exert economic pressure on North Korean leader Kim Jong Un are recent economic reforms his regime has implemented.

Some North Korean farmers are now allowed to a keep a percentage of what they produce rather than give it all over to inefficient state-run enterprises for redistribution. Experts believe the policy change could mitigate the effects of North Korea’s frequent drought-induced food crises, which have forced Pyongyang to turn to the international community for help in the past.

The number of government-approved markets in North Korea has doubled to 440 since 2010. According to a study by the Korea Institute for National Unification in Seoul, these markets employ about 1 million people as salesmen or managers, out of a population of 25 million.

The former head of South Korea’s intelligence service told lawmakers earlier this year that about 40 percent of North Korea’s population now works in some form of private enterprise. At the same time, wages have apparently risen, along with living standards.

More cars are said to be clogging Pyongyang streets, and diplomats report a denser skyline from just a few years ago. The elites are reportedly shopping on Amazon.com and enjoying a new ski resort and luxury hotel near the capital.

“North Korea has gone from a very tightly controlled state socialist economy to basically a marketizing economy,” Sokeel Park of Liberty in North Korea told the Financial Times last month.

With the North’s economy showing signs of resilient growth helped along by persistent Chinese trade, President Trump tweeted his frustration over the weekend after the latest North Korean missile test.

"I am very disappointed in China," Trump wrote, "...they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!"

That tweet came as US Air Force B-1B bombers flew over the peninsula, in the latest Trump administration effort to show that the sanctions are indeed backed up by a potential military deterrent.