China's North Korean Double Bind

The perennial tensions on the Korean Peninsula spiked again in late November, this time following an artillery barrage launched by the North Koreans on the island of Yeonpyeong, just south of the disputed sea border between the two Koreas.  The attacks were serious, killing at least two civilians in addition to two military personnel, and mark the highest tensions on the divided peninsula for years.  They followed on from the sinking of the Cheonan corvette in March, and revelations in early November about North Korean uranium enrichment facilities near its Yongbyon plutonium processing centre. 

The North Korean leadership appears to have agreed to the attack. Shortly beforehand Kim Jong-il and his son Jong-eun visited the region.  They probably looked at plans for the attack and signed off on them.  Some responses have been predictable.  The US has been quick to adhere to its security guarantee, and sent a nuclear powered aircraft carrier, the USS George Washington, to the Yellow Sea in order to deter North Korea.  This action prompted anger from China, which has warned the US to stay out its Exclusive Economic Area.  China has also thus far failed to condemn North Korean aggression, although it has called for a meeting of the six key participants in regional security: China, Japan, North Korea, Russia, South Korea and the US. Hopes that Beijing would take a more moderate stance in order to calm the situation have faded.

For his part, President Lee Myung-bak of South Korea has acted resolutely but sought to play down the risk of conflict, taking actions such as replacing his defence minister and bolstering forces on Yeonpyeong and other similar islands on the disputed sea border.  His military options are actually quite limited.  Even a small-scale retaliatory attack on the artillery that shelled Yeonpyeong is difficult, since in James Bond style it trundles out of caves, fires, and trundles back in.  Only special forces with guidance systems would facilitate a direct strike.  Notwithstanding the superiority of the 680,000 South Korean and 28,500 US forces (many in Seoul itself), other measures such as new rules of engagement with North Korean forces along the disputed sea border, risk escalation into a new Korean conflict. They must be carefully managed.  This fear of reigniting the conflict is especially pertinent given that Seoul, where about 60% of South Korean’s population live, is within easy range of North Korean artillery capabilities.  Any escalation could also risk a direct conflict between the two external sponsors, China and the US, as occurred in 1950 to 1953. Indeed, South Korean forces actually come under US command in the event of a major crisis, under the Combined Forces Command, a joint structure established in 1978.

Other forms of bilateral leverage are also weak. Since coming to power in February 2008, President Lee has reined in the Sunshine policy of engagement through trade and aid.  Prior to the Cheonan incident, bilateral trade consisted primarily of North Korean exports of seafood and zinc in exchange for South Korean finished goods, and rested at about US$1.7 billion, of which US$940 million derived from the Kaesong industrial facility.  Yet centrepieces of inter-Korean engagement, including the Mount Kumgang resort and Kaesong, had been falling into abeyance prior to even the Choenan incident.  Mount Kumgang received a severe blow in July 2008 when a South Korean tourist was shot dead by a border guard, while a decision in April 2010 by Pyongyang to expropriate about US$340 million in assets further harmed the resort.  The Kaesong industrial complex also suffered a range of unilateral wage increases by the North Koreans in mid-2009, thereby dashing South Korean hopes that it would provide labour cheap enough to ensure competitiveness against Chinese manufacturing.  The South Korean government has made clear its intention to maintain the facility, but its scaling back remains at risk.  Kaesong is worth watching since analysts often cite any closure of Kaesong as the next step to war. 

Any diplomatic initiative may also founder, as did efforts to enhance United Nations (UN) sanctions against North Korea in April and May.  China is the closest ally of the Kim regime – the two states were described by Mao Zedong as close as "lips and teeth", and Beijing continues to see the maintenance of the North Korean regime as a prerequisite of its regional security policy.  Its commercial influence is significant, if not all encompassing; prior to the Cheonan crisis, China already dominated the North Korean economy, accounting for 53% of North Korea’s trade of about US$5 billion, and 78% of all trade other than that with South Korea.  Its banks are amongst the few foreign financial institutions operating in the North, and Seoul’s decision to suspend economic links essentially assures complete Chinese dominance of the North Korean economy.  China, though, is unwilling to wield this influence to restrain the North and may veto sanctions.  China’s aims in North Korea relate primarily to maintaining the status quo, so as: first, to ensure that the North Korean regime does not collapse and that the political succession is smooth, thereby maintaining a key buffer state; and second, to limit the influx of North Korean migrants, numbers of whom would increase in the event of economic collapse or political instability.  Proliferation of nuclear and other destructive weapons is not a major concern for Chinese policymakers. 

Yet China also wants strong ties with South Korea.  The two countries have moved from the non-recognition of the 1980s to a close diplomatic and commercial relationship.  South Korea is now China’s fourth largest trading partner, accounting for about 5% of Chinese exports and 9% of Chinese imports.  Total trade was valued at about US$156 billion in 2009, compared to trade values of US$228 billion with Japan and US$298 billion with the US.  South Korea is also a major investor in the Bohai rim, particularly in the high technology and ship building sectors.  Commercial exchange with South Korea, then, has become a significant national interest for China.  In strategic terms, Beijng has also sought in recent years to wean South Korea away from its close strategic ties to the US, in part by supporting Seoul in its nationalist opposition to Japan (for instance over the history books issue or the disputed Tokdo islands).

China, then, finds itself caught between two important allies, one strategic in nature, the other commercial.  The debate in Beijing suggests that China would like to avoid making a choice between the two at all costs. A sharp debate about North Korea emerged in mid to late 2009 amongst policymakers, who appear to fall into two main camps on the question of policy towards North Korea.  The "strategists" wanted Beijing to increase pressure on North Korea, so as to alleviate frictions with the US or South Korea and ease tensions in North East Asia, while the "traditionalists" backed the Pyongyang regime on the basis that North Korea is a key buffer between China and the US and a useful means to tie up American resources. At the risk of simplification, Ministry of Foreign Affairs interlocutors tend to be "strategists" while People’s Liberation Army (PLA) planners tend to be "traditionalists".  Recent events suggest that the latter are currently dominant, but the debate continues. 

Events may have forced China’s hand, though, since the consequences of this stance have been a reduction in China’s policy options.  On the one hand, Beijing has ensured the continued faith of its North Korean client, but perhaps at the cost of control; Pyongyang’s reliance on Chinese aid to keep the derelict regime upright probably gives the North Koreans great autonomy.  China just cannot afford a collapse.  On the other hand, China’s stubborn support for the North has also had the effect of pushing South Korea, Japan and the US closer together in terms of their positions on the Six Party Talks, hardening all positions to bring them more into accord with Japan (traditionally the most intractable in negotiations owing to the kidnapped Japanese citizens issue).  Its position is also pushing South Korea away, thereby reversing South Korea’s slow movement away from US tutelage.  Indeed, a reversion of control of South Korean troops under the Combined Forces Command had been agreed in 2007 between Presidents Bush of the US and Roh of South Korea, with Seoul taking full control in 2012.  However, Presidents Obama and Lee deferred this date until December 2015 at the November 2010 G20 conference, in the light of rising tensions.

As such, China’s position increasingly risks jeopardizing its influence amongst its North East Asian neighbours, and further adds to external perceptions of a China threat.  It may even help strengthen a George Kennan-type US-led coalition aimed at containment, a development China greatly fears.  In the interim, the situation on the Korean peninsula has become increasingly dangerous as a range of variables are emerging.  The next generation of North Korean leadership is taking power, a new leadership under Xi Jingping is starting to find its feet in Zhongnanhai, and other issues (such as maritime disputes) are adding to unease amongst China’s neighbours.  The scope for miscalculation is significant, and the stakes are high.