China’s Stance on the Korean Issue

Due to issues of national security as well as historical, geopolitical, and economic factors, the Korean Peninsula has always been a priority in China’s strategy. The topical relevance of a historically shaped maxim on the indivisible security of China and Korea has gained importance recently. Beijing and the Democratic People’s Republic of Korea are linked by the Mutual Aid and Cooperation Friendship Treaty of 1961, and its military clause is still in force, however according to China it has recently been adjusted – China’s commitments regarding the provision of direct military assistance only become effective if North Korea is subject to unprovoked aggression.

Due to issues of national security as well as historical, geopolitical, and economic factors, the Korean Peninsula has always been a priority in China’s strategy. The topical relevance of a historically shaped maxim on the indivisible security of China and Korea (the “lips and teeth” analogy) has gained importance recently. Beijing and the Democratic People’s Republic of Korea (North Korea) are linked by the Mutual Aid and Cooperation Friendship Treaty of 1961, and its military clause is still in force, however according to China it has recently been adjusted – China’s commitments regarding the provision of direct military assistance only become effective if North Korea is subject to unprovoked aggression.

Trade Activity of China on the Korean Peninsula

The importance of China’s economic links with the Republic of Korea (South Korea) can be illustrated by the following: in 2012 bilateral trade exceeded 215 billion USD (somewhat lower than the previous year), over 23,000 South Korean companies are active on the Chinese market.

South Korea, an advanced economic power, China’s fifth largest trade partner, and an important member of regional trade and economic blocs that are in the process of being established, is in the focus of Beijing’s prime attention. In May 2012, China and South Korea launched negotiations on a bilateral free trade agreement (FTA).

The plan to establish a China-Japan-South Korea free trade zone is an even greater priority for Beijing. This association is seen as an alternative to the Trans-Pacific Partnership built under U.S. auspices and regarded by the Chinese as an American instrument of deterrence against China. The practice of tripartite summits was launched in 2002: five summits on this issue have already been held (most recently in May 2012 in Beijing). The sixth summit was slated for May 2012 in Seoul, but was postponed due to aggravated disputes (primarily, territorial) between China and Japan over the Senkaku/Diaoyu islands. So far, Seoul’s efforts at mediation, aimed at facilitating the planned summit, have been futile.

China has become the primary trade partner for both North and South Korea. This is why Beijing is striving to maintain balanced, neighborly relations with both states. Objectively, North and South Korea each matter to China, albeit in very different ways in terms of function, parameter but of undoubtedly significant magnitude.

Photo: Guillermo Munro / China Daily

In 2012, the trade volume between China and North Korea reached 5.93 billion USD – a 71.2% increase compared to the figures for 2010. Experts estimate Chinese investment at seven and even ten billion USD. In the same year, the number of Chinese tourists visiting North Korea rose to 40,000. The number of working visas issued by the Chinese authorities to North Korean laborers quickly reached the same level, and soon rose to 120,000. In recent years over 100 joint ventures have been established, and more than 150 Chinese companies were registered in North Korea as investors. These cooperation processes actively involve Chinese citizens of Korean origin who are not subject to international or unilateral sanctions imposed against North Korea by the United States, Japan and South Korea (about one million Koreans live in the Yanbian-Korean Autonomous Prefecture of the Jilin Province alone).

Chinese businesses focus their attention on the North Korean free economic zones, primarily Rason, where the Chinese leased two piers in Rajin port, thus obtaining the much-coveted access to the Sea of Japan. The 50-km dirt-road linking the port with the Chinese border was thoroughly renovated and turned into a high-speed trunk road; the travelling time was slashed from three hours to fifty minutes. Capital investment in both projects amounted to 3.5 billion USD.

Not so very long ago, South Korea was North Korea’s chief economic partner, however, the Lee Myung-bak presidential administration all but halted cooperation with Pyongyang, and China has since become a monopoly player in the North Korean market.

The Great Wall

North Korea protects China’s northeastern border, nearby industrial and political centers and its capital Beijing from the military infrastructure of the U.S.-South Korean and U.S.-Japanese alliances.

Photo: onekorea.ru
Georgy Toloraya:
Inter-Korean Dialogue and Reconciliation
Prospects

Over the last 20 years, the nuclear problem of the Korean Peninsula has become one of the most pressing regional issues, and has added intensity to the already intractable “Korean issue.” Due to these special relations with Pyongyang, Beijing’s significance in the context of international efforts to reach a settlement has substantially grown. Bearing in mind Beijing’s unprecedented role as Pyongyang’s key political ally, sponsor and partner, which plays a decisive role in the future economic survival of North Korea, Washington and its allies (chiefly Seoul) prioritized involving China in their own approaches to the resolution of the Korean problem and its nuclear component. At the same time, the North Korean tune is so dominant in the South Korean agenda of bilateral relations with China, that sometimes Beijing gets the impression that Seoul’s main task is to take advantage of it to resolve its own problems in the North. Naturally, this approach causes disenchantment and, sometimes, even irritation in the Chinese public opinion.

Oversimplifying, the allies’ goals (on which they would greatly welcome Beijing’s commitment) can be seen as follows: continuous increase in pressure, including through sanctions, and isolation of North Korea with the minimum program goal of achieving its “surrender” on the nuclear track (denuclearization without granting adequate guarantees of security and compensations), the maximum program goal is collapse, “regime change” and assimilation by South Korea. Various methods have been applied to attain this goal: from direct overtures and flattery like “all keys to the North Korean nuclear problem are to be found in Beijing,” calls to actually display the ability to act as a “responsible shareholder” in global politics, right up to direct pressure and virtually open blackmail, as was particularly evident during the sharp uptick in tensions on the Korean Peninsula in 2010. At the time the United States engaged in what was very nearly an open conflict with Beijing on a wide range of issues, including North Korea. The United States and South Korea hoped to use this unprecedented escalation of pressure on Beijing to convince China that the price it is paying to support North Korea is becoming an unbearable burden – essentially it was an attempt to drive a wedge between China and Pyongyang. It is no secret that joint exercises planned for fall 2010 in the Yellow Sea (involving aircraft carriers) were primarily targeted at China, though officially camouflaged by anti-North Korean rhetoric.

However, China’s leaders are steadily pursuing their own political course with the ultimate priority being to preserve the status quo on the Korean Peninsula or, in Beijing’s wording – stability. Guided by its own national interests, Beijing sent a clear message to the whole world that it is opposed to a North Korean collapse and would never let that happen. Within this framework, Beijing opposes an expanded approach to implementing the tough sanctions imposed by the well-known UN Security Council resolutions, instead interpreting them as measures aimed at blocking North Korea’s military programs (chiefly missile and nuclear programs), and by no means targeted against the civil sector of the country’s economy, emphasizing the inadmissibility of reducing the living standards of the people.

As a result, China’s leadership, while sharply criticizing North Korea’s nuclear tests of 2009 and 2013 and supporting the UN Security Council sanctions, does not implement “suffocating” restrictions with regard to its obstinate ally. Moreover, in recent years China has significantly expanded its trade, economic and investment cooperation with North Korea.

It is important to note that there is a whole variety of opinions in the Chinese expert community on the nature of and prospects for further relations with Pyongyang. Relatively negative assessments of North Korea as a feudal and monarchial regime, and the argument that support for North Korea inhibits China’s integration into the world community are by no means rare. One also meets the following view: Beijing was very helpful in the unification of Vietnam, as a result, it found a strong and disloyal competitor on its borders – should it repeat the same mistakes in Korea? However, at decision-making level, the consensus on the irrefutable priority of security considerations remains unshakeable.

In June 2009, Beijing voiced unprecedentedly strong disapproval of Pyongyang’s actions over its second nuclear test, but normalcy had returned to China-North Korea relations within 2-3 months’ time, including in its military component, and by October China Premier Wen Jiabao had visited Pyongyang, which became a turning point in the development of their bilateral relations.

Beijing’s Interests in North Korea

North Korea is committed to broad cooperation with China for a number of reasons. One is because the zero-option environment was very much in place when, under the conditions of total isolation, China became a “life raft” for the Koreans. Another factor is also worth noting: China’s extensive economic presence is seen by Pyongyang as a lesser evil as compared to that of South Korea (active before 2008), as it is not followed by the export of a “poisonous ideology.” Among the driving motivations of China’s leaders one should highlight the following: among other things, Beijing views its wide economic cooperation as one of the practical instruments fostering market-oriented reforms in North Korea.

Photo: www.nkeconwatch.com
Rajin port (Rason, North Korea): Chinese,
Russian, and North Korean piers

Thus, an enclave of complementary national economic structures is under construction on the China-North Korean border. The other side of acquiring additional levers of influence is an environment in which China has something to lose in North Korea. China is ready to protect its business interests in and “regular trade” with the country. Actual interdependence is being created. This is one reason why China is biased against regime change in North Korea and the application of “suffocating” sanctions. Some American China-watchers suggest that, even with Beijing’s sincere aspirations to achieve the denuclearization of the Korean Peninsula, many Chinese experts recognize the reasons driving Pyongyang further down the nuclear path (“self-defense” against a policy of “double standards” and the threat of “nuclear coercion”), and even almost sympathize with the rationale behind North Korea’s stance on this issue.

Nonetheless, the political elites in South Korea and the United States mostly hopeful that Beijing will eventually tire of its ally’s intractability and come to the conclusion that the negative effects of its support outweigh the positive. However, the most seasoned experts feel that this can only come to pass with the next generation of Chinese leaders.

We believe that the expectations and, quite often certainty, shared by certain political circles in the United States and South Korea that, under certain circumstances, China would be able to let North Korea down, is an illusion. The probability of such a scenario is small. The arguments to substantiate our viewpoint are as follows:

• Accepting the loss of North Korea would mean losing the Korean War, squandering its achievements in this particular diplomatic game over a battlefield 60 years after the fighting ended, and betraying the memory of nearly one million Chinese killed in action in Korea. The loss of Pyongyang and assimilation of North Korea by South Korea would also inflict irreparable damage to China’s international prestige. It would imply that China is unable to defend its core national interests and bends to U.S. will even on its borders or when defending its ally.
• It would be extremely difficult to imagine that Beijing would agree to lose its strategic ally, a buffer protecting vitally important areas of its national territory amid deteriorating relations with Washington, which is a long-term process. Suggestions that China can be reassured that, if South Korea were to assimilate the North, the infrastructure of the U.S.-South Korean armed forces would not move closer to the Chinese borders and their interests and property in North Korea would be secure, seem unconvincing.

Nonetheless, it is important to note that over the recent months these hopes have been significantly substantiated – upon Pyongyang’s third nuclear test. The South Korean media were enthusiastic about the fact that Beijing has finally started to significantly toughen sanctions against Pyongyang. The directive issued by the Chinese Ministry of Transport on April 17, 2013 about implicit compliance with the provisions of UN Security Council Resolution Number 2094 drew particular attention. Indeed, border control was unprecedentedly thorough – every container holding North Korean cargo is subject to inspection at the border railway checkpoint in the city of Dandong and port of Dalian. Identical instructions were issued to the People’s Bank of China, security services, customs and border guards units.

Naturally, not enough time has passed to allow us to draw broader conclusions on possible changes underway in China’s approach to the Korean issue in the light of the events of “hot spring” of 2013. Almost every day brings new reports indicating a shift in direction. On May 7, 2013 a Hong Kong source reported that China had decided to refrain from carrying out operations of the North Korea Foreign Trade Bank, which is included on the list of restricted entities under unilateral U.S. sanctions (not the UN Security Council ones). Naturally, this is far from being the only North Korean financial institution operating in China, and the decision would not be fatal to North Korea’s foreign trade operations. However, a degree of damage in this sphere is inevitable. The key point is that the analysts have yet to understand the scope of financial restrictions that Beijing is ready to authorize against North Korea.

Relations: Development Prospects

Photo: freebeacon.com
PLA troops in Shenyang exercises near
N. Korea

Based on available data we believe that the most likely scenario for the development of China-North Korean relations would be retaining the status quo, albeit slightly modified. One immutable fact is that, despite China’s tougher approach to inspecting North Korean cargo, Beijing has not yet adopted any decision in principle on a reduction of economic cooperation with North Korea. True, over the first months of 2013 the volume of bilateral trade between the two countries fell by 7%, but this not enough to base long-term predictions on. There is a certain feeling of uncertainty or unease among Chinese businessmen in Korea, while a more important factor is (as claimed by competent Chinese representatives in Dandong) as follows: “Trade between China and North Korea is coordinated at government level; we do not cut any ice here. The situation did not change.” Western observers enthusiastically welcomed the news that deliveries of crude oil from China to North Korea were suspended in March, however, in April the volume supplied reached 10,600 tons – nearly a quarter of the total volume delivered in 2012. Exports of Chinese aviation kerosene and coal from Korea, trade items vitally important to Pyongyang, continues at established levels.

The Chinese economic advance was supported by powerful ideological backing. A massive campaign in reappraising history that was launched in 2002 by the Institute of Archeology at China’s Academy of Social Sciences and other research centers as part of the North-Eastern Project was aimed at finding evidence to support the theory that a number of ancient Korean states, such as Kogure, were, in fact, Chinese provinces. Many analysts suggested that these efforts were paving the way for future territorial claims to Korea. Overall, those and other factors fuelled fears among the South Korean public over potential secret Chinese plans “to turn North Korea’s northern provinces into the fourth province of north-eastern China.” Not only that, they also became the reason for an in-depth examination of the issue by the U.S. Congress. In their report on “China’s Impact On Korean Peninsula Unifications and Questions for the Senate” the authors recognized the presence of a serious challenge to future inter-Korean relations posed by China’s massive economic presence in the north of the peninsula and the signs of a nascent economic integration in the areas adjacent to the both sides of the Sino-North Korean border.

Moreover, Beijing reserves the right, and it has informed the U.S. Senate of this, to deploy, in extremis, its troops along the border (on the Korean side) in order to block the inflow of refugees from Korea to China. Beijing’s strongly-worded address to North Korea, the United States, South Korea and Japan at the peak of the crisis in spring 2013 revealed China’s desire to take on the role of peacemaker and intermediary in the peninsula, and also to bring the “brazen bullies” down a peg or two. China’s leadership declared that it would prevent any squabble on its borders, and warned Pyongyang against dangerous underestimation of the potential negative consequences; they also warned South Korea that under any conflict scenario it would be the main victim, and that therefore it must actively work to cool tensions instead of depending on (and responding to) North Korean and U.S. moves; also advising the United States to refrain from “adding fuel to the fire,” and warning Japan against “fishing in troubled waters.”

De facto, this competition between Beijing and Seoul for influence in the north of the Korean Peninsula is unlikely to escalate into a war, instead, it is more likely to continue in the diplomatic and economic spheres. Therefore, the most probable development scenario for Chinese relations with the two Korean states would be a sustained policy aimed at preserving the status quo and stability in the Korean peninsula, and resolving the nuclear issue via negotiations, preferably, within the renewed six-party format.