In the aftermath of North Korea’s artillery shelling of Yeonpyeong Island on Nov. 23, 2010, Chinese officials showed great concern about the possibility of escalation, focusing special concern on the possibility that South Korean military exercises might lead to military escalation.  The January summit between Presidents Hu and Obama served to reduce tensions to some degree, especially through a call for resumption of inter-Korean talks in the US-China Joint Statement released at the summit.  Following the apparent stabilization of inter-Korean relations, China has stepped up calls for “creating conditions” for the resumption of Six-Party Talks, engaging in diplomatic exchanges with both Koreas, including meetings between Special Representative for Korean Peninsula Affairs Wu Dawei and ROK nuclear envoy Wi Sung-lac on Feb. 10-11 in Beijing and again on April 26 in Seoul, and through DPRK Vice Minister Kim Kye Gwan’s meetings in Beijing with Wu Dawei, Foreign Minister Yang Jiechi, and Vice Foreign Minister Zhang Zhijun respectively in mid-April in China.  Although South Korea in April agreed to China’s proposed “three-step” process toward restarting Six Party Talks – (1) Inter-Korean, (2) US-DPRK, and (3) Six-Party Talks – this plan makes the resumption of multilateral talks depend most critically on reaching consensus on the preconditions for inter-Korean talks, which remain stalled since a preparatory meeting for inter-Korean defense ministers’ talks broke down in February.

Despite the regional stalemate on DPRK denuclearization, China and South Korea have attempted to stabilize and consolidate cooperation on other issues. Foreign Minister Yang met President Lee Myung-bak in Seoul on Feb. 23. ROK Foreign Minister Kim Sung-hwan returned the visit on March 28-30 and met Premier Wen Jiabao and Wang Jiarui, head of the party’s international department.  ROK Prime Minister Kim Hwang-sik visited China in April, holding talks with President Hu Jintao in Sanya, Hainan Province on April 14, and with Wen Jiabao and China’s top legislator Wu Bangguo in Beijing on April 13.  Chinese and ROK leaders also held a series of three-way talks with Japanese counterparts, including a ministerial conference on culture on Jan. 11 in Nara, a foreign ministers meeting on March 19 in Kyoto, trade ministers talks on April 24 in Tokyo, and an environment ministers meeting on April 29 in Busan.

Chinese diplomacy and the inter-Korean standoff

On Jan. 1, 2011, China’s Xinhua featured an article quoting foreign experts crediting China for eased tensions on the Korean Peninsula; this article appeared to be an effort to counter widespread international – and rising domestic elite – criticism of China’s handling of policy toward North Korea following the Yeonpyeong and Cheonan incidents in 2010.  The Jan. 19 US-China Joint Statement called for “sincere and constructive inter-Korean dialogue,” and joint opposition to “all activities inconsistent with the 2005 Joint Statement and relevant international obligations and commitments.”  Although the joint statement included a direct reference to concerns about North Korea’s uranium enrichment program, China continued to block ROK and US efforts at the UN Security Council (UNSC) to explicitly condemn North Korea’s enriched uranium program as a violation of international obligations. Disagreements over how and whether to address this issue at the UN or through the Six-Party Talks emerged as a point of difference between China and the US and South Korea, respectively.

The combined US and Chinese call for a resumption of inter-Korean dialogue served as a buffer against renewed escalation of inter-Korean tension and prodded the two Koreas to reengage in talks.  South Korea accepted the North’s offer for dialogue and proposed talks for Feb. 8-9 to prepare for an inter-Korean defense ministerial dialogue, but those talks broke down over North Korea’s refusal to apologize and take responsibility for the Cheonan and Yeonpyeong provocations. The breakdown underscored fundamental differences over the prerequisites to reengagement and reduced the likelihood of an early resumption of Six-Party Talks.

Foreign Minister Yang Jiechi reiterated China’s support for inter-Korean dialogue and early resumption of Six-Party Talks during his meeting with President Lee in Seoul on Feb. 23.  Yang stressed peninsular and regional stability as “fundamental starting points” to dealing with Korean Peninsula affairs, based on the principles of denuclearization, long-term stability in Northeast Asia, and common regional interests.  But Yang’s visit to Seoul came amid reports that China blocked the release of a UN expert panel report on the North Korean nuclear issue and has refused to publicly acknowledge or join with South Korea in expressions of concern regarding North Korea’s uranium enrichment program.

In response to South Korean criticisms, the PRC Foreign Ministry spokesman on Feb. 24 reaffirmed China’s “constructive” role in Korean denuclearization, stating, “As a permanent member of the UN Security Council and a responsible player in the international community, China always supports denuclearization on the peninsula as well as peace and stability in northeast Asia.”  On the sidelines of China’s annual session of the National People’s Congress in early March, Foreign Minister Yang acknowledged that “how and when [Six-Party Talks] can be resumed demands further exchange of views,” while noting the importance of the September 2005 Joint Statement for maintaining regional exchanges and stability.

China’s diplomatic exchanges with DPRK counterparts waned during the first few months of 2011 after having surpassed the number of high-level exchanges with the ROK for the first time in over two decades in late 2010. This year marks the 50^th anniversary of the signing of the Treaty of Friendship, Cooperation and Mutual Assistance, for which the two countries have pledged to engage in a series of commemorative activities. Chinese State Councilor and Minister of Public Security Meng Jianzhu met DPRK leaders in Pyongyang on Feb. 13-14, including Kim Jong Il; Kim Yong Nam, president of the Presidium of the Supreme People’s Assembly; Ri Yong Ho, chief of the Korean People’s Army General Staff and member of the Presidium of the Political Bureau of the Workers’ Party of Korea (WPK) Central Committee; and Ju Sang Song, minister of people’s security and member of the WPK Political Bureau, with whom Meng signed a bilateral cooperation agreement on behalf of their respective ministries on Feb. 13.  Weeks later, Ju was removed from his post with no clear explanation, leading to speculation that his departure was related to a more extensive transition connected with North Korea’s political succession.  Xinhua cited Meng’s support for the China-DPRK traditional friendship and expectations of “inheriting the friendship, deepening communications and cooperation in various areas,” while Korean Central News Agency on Feb. 14 quoted Meng’s hopes for a “successful solution of the issue of succession,” the first public statement by a Chinese Cabinet member in support of a smooth leadership transition in Pyongyang.  DPRK top legislator Kim Yong Nam held talks with PRC Vice Foreign Minister Zhang Zhijun in Pyongyang on Feb. 21, during which Kim reportedly outlined North Korea’s efforts in economic development and called on China to “make more achievements in promoting the scientific outlook on development as well as building socialism with Chinese characteristics,” according to Xinhua.

China’s renewed push for Six-Party Talks

Following the US and South Korean dismissal of China’s proposal for emergency six-party consultations at the end of 2010, China secured South Korea’s support of a three-step process for restarting Six-Party Talks as proposed by Wu Dawei during his meeting with Wi Sung-lac in Seoul on April 26, which includes: (1) inter-Korean nuclear talks, (2) US-DPRK dialogue, and (3) multilateral negotiations. This formulation has presented a dilemma for South Korea, given its emphasis on a North Korean apology for the Cheonan and Yeonpyeong incidents as a prerequisite for moving forward on inter-Korean relations.  At the same time, South Korea does not want to be perceived as an obstacle to the resumption of efforts to achieve North Korea’s denuclearization, and has at times suggested that North Korean acknowledgement of the nuclear issue as a legitimate issue in inter-Korean relations might be a sufficient basis upon which to move forward with Six-Party Talks.  There have been mixed messages over the past few months from South Korean senior officials over the specific requirements for resumption of Six-Party Talks.  Wu Dawei held follow-on talks with ROK National Security Adviser Chun Yung-woo in Seoul on April 29 to discuss ways to restart the talks, but no details of the discussion were disclosed.

Although some ROK officials have expressed Seoul’s intention of not tying its desire for a North Korean apology for the provocations to the resumption of Six-Party Talks, in an interview with Arirang News on April 26, Foreign Minister Kim Sung-hwan stated, “We reiterate that the North-led military attacks on the warship Cheonan and Yeonpyeong Island will impact the Six-Party Talks in one way or another.”  Chinese and South Korean negotiators in Seoul on April 26 did not reach agreement on when and how to reengage Pyongyang, which seeks resumption of dialogue without preconditions.  PRC nuclear envoy Wu Dawei did not provide assurances to his ROK counterpart based on his most recent dialogue with Kim Kye Gwan that Pyongyang would back the three-step proposal for restarting six-party negotiations.  There is no means by which to address North Korea’s uranium enrichment program as long as Beijing prefers to deal with the issue through Six-Party Talks while South Korea and the US prefer to start by addressing it at the UN Security Council.  The PRC Foreign Ministry spokesperson made clear its position during Kim Sung-hwan’s March 29^th visit to Beijing, stating that, “The international community is greatly concerned over DPRK’s uranium enrichment issue,” while indicating that the issue should be solved within the Six-Party Talks framework.

Shoring up the China-ROK strategic cooperative partnership

China and South Korea have begun efforts to repair damage to the bilateral relationship over differences regarding North Korea by taking steps to expand political, economic, and cultural cooperation.  Foreign Minister Kim Sung-hwan’s three-day trip to Beijing in late March to meet PRC counterpart Yang Jiechi, Premier Wen Jiabao, and head of the party’s international department, Wang Jiarui, was his first visit to China since taking office.  The visit occurred in accordance with a bilateral agreement reached in 2010 to regularize high-level diplomatic exchanges.  Hu Jintao and Wen Jiabao affirmed the relationship in meetings with ROK Prime Minister Kim Hwang-sik in April, expressing hopes for deepening “mutual political trust and strategic coordination.”  Prime Minister Kim also called for strengthening coordination through multilateral mechanisms such as the UN and G20.  Wu Bangguo, chairman of the Standing Committee of the National People’s Congress, stressed the need to strengthen exchanges between respective parliaments and political parties to promote mutual understanding.  South Korea’s appointment on April 21 of Lee Kyu-hyung, former ambassador to Russia and a career diplomat, as the new ambassador to China to replace Yu Woo-ik, represents a desire to strengthen cooperation with China following differences over how to deal with North Korea.

With a bilateral trade volume that is projected to reach $300 billion by 2015, trade remains the primary foundation of the China-ROK partnership.  Bilateral trade grew by 34 percent in 2009-2010 following a 16 percent decline in 2009.  Leaders from the two countries have identified telecommunications, shipbuilding, finance, logistics, high technology, energy, and environment as high growth sectors. Chinese leaders continue to express support for a bilateral free trade agreement. The year 2012 will mark “Visit Korea Year” and the 20^th anniversary of the establishment of diplomatic ties, for which the two sides have pledged to intensify cooperation in education, culture, tourism, and people-to-people exchanges.  South Korea has gained Chinese support for the 2012 World Expo in Yeosu and the 2014 Asian Games in Incheon.

China-ROK trilateral cooperation with Japan

The impasse in DPRK denuclearization has not prevented China and South Korea from moving forward in promoting trilateral cooperation with Japan on a broad range of issues in preparation for the 4^th China-ROK-Japan summit in May.  A week after its devastating earthquake, Japan hosted as planned the fifth trilateral Foreign Ministers Meeting between Yang Jiechi, Kim Sung-hwan, and Matsumoto Takeiki in Kyoto on March 19, where the top agenda items included disaster management and nuclear safety.  Trade Ministers Chen Deming, Kim Jong-hoon, and Kaieda Banri held three-way talks in Tokyo on April 24 focused on the economic impact of Japan’s earthquake and a potential free trade agreement, for which the fourth joint feasibility study meeting was held in Jeju on March 30-April 1.  Japan also hosted Culture Ministers Cai Wu, Yu In-chon, and Takaki Yoshiaki for the third China-ROK-Japan Ministerial Conference on Culture in Nara on Jan. 19, which produced the “Nara Declaration” for strengthened cultural cooperation under the trilateral “Vision 2020” forged in 2010.  PRC Minister Cai provided five proposals for long-term trilateral cultural cooperation: (1) institutionalization of cultural exchange, (2) cooperation in cultural industries, (3) youth cultural exchange, (4) nontraditional cooperation, and (5) cooperation in the protection of cultural heritage.  Cai held separate talks with ROK counterpart Yu In-chon on Jan. 18 in Nara, where both sides recognized cultural exchange in various areas as an important part of the bilateral strategic partnership.  On April 29 in Busan, ROK Environment Minister Lee Maanee, PRC counterpart Zhou Shengxian, and Japanese counterpart Kondo Shoichi held three-way talks on environmental issues, including discussion of countermeasures against natural disasters.  The highest-level dialogue for environmental cooperation in the region, the meeting produced a joint statement pledging to strengthen cooperation in such common challenges as climate change, green growth, biodiversity, and dust and stand storms.

In one apparent sign of easing trade obstacles, the PRC Ministry of Commerce on April 8 lifted China’s anti-dumping measures against cold-rolled stainless steel sheets imported from Japan and South Korea, restrictions that were first imposed in 2000.  On the sidelines of China’s annual parliamentary session in March, Foreign Minister Yang Jiechi expressed hopes for “greater strategic communication, political mutual trust and more practical cooperation in various fields” between the three countries.  Yang emphasized the promotion of three-way free trade as a top priority, and highlighted the recycling economy, science and technology, environmental protection, and cultural exchanges as key areas for deepening cooperation.  While trade remains the main driver for cooperation given China’s economic significance to both South Korea and Japan, the three countries have committed to a comprehensive trilateral partnership that China has called an “important platform for the three countries to broaden common interests.”

Chinese engagements in North Korea’s troubled economy

According to Chinese Customs data, following the 4 percent decline in bilateral trade in 2009, China-DPRK trade reached a record high of $3.5 billion in 2010, a 29 percent annual increase.  The Korea International Trade Association continues to express concerns about South Korea’s trade performance in North Korea relative to China’s, indicating that inter-Korean trade fell from 91 percent of China-DPRK trade in 2007 to 55 percent by the end of 2010.  DPRK exports to China increased by 51 percent to $1.2 billion in 2010, led by iron ore, coal, and copper. PRC exports to the North increased by 21 percent to $2.3 billion, with wheat and oil supplies reportedly helping to ease chronic shortages.  In early January, local Chinese traders reported efforts by DPRK state-directed trading companies to sell steel to China in exchange for food, including rice, flour, and noodles, as well as construction materials.  North Korean steel exports to China amounted to $82 million between January and October 2010 according to the Korea Trade-Investment Promotion Agency.  While the revival of China-DPRK commercial exchange appears to satisfy North Korea’s food deficit, it continues to challenge the efficacy of international sanctions.  South Korean media has linked China’s trade with the North to efforts to manage North Korea’s domestic situation, noting the importance of Chinese economic support for satisfying Kim Jong-il’s goals of raising people’s livelihoods by 2012 and successfully implementing succession. Further complicating the issue is the difficulty of distinguishing China’s aid and trade interests.  After Beijing’s release of its white paper on foreign aid, PRC Vice Commerce Minister Fu Ziying at a press conference on April 26 detailed China’s aid to the North for the first time, recognizing North Korea as a major focus of Chinese overseas aid efforts over the past 60 years, and stating that while China has supported Pyongyang’s public infrastructure development, no cash has been provided.

Some analysts worry that North Korea is selling its most valuable resources to China too cheaply, focusing on increases in DPRK mineral exports to China this year after North Korea lifted restrictions on mineral exports (imposed in 2007) from the second half of 2010 reportedly to accommodate an increase in rice and corn imports.  Chinese Customs data indicated that in 2010 coal imports from North Korea increased by 54 percent and iron ore imports doubled.  According to South Korean reports, officials of the DPRK Joint Venture and Investment Guidance Bureau and the PRC Commerce Ministry met in mid-February to discuss an agreement on joint development of underground resources, including North Korea’s Musan mine and other rare-earth mines.  Reported developments in rail and road infrastructure in the border region have reinforced speculation about Chinese plans in North Korean resource development.

A focal point of attention and concern among some South Koreans has been the impact of Chinese provincial economic reform plans on North Korea’s Rajin-Sonbong (Rason) special economic zone, where current development plans are aligned with a new initiative on the Chinese side from late 2009 to promote its own “Chang-ji-tu Reform and Development Zone” in Jilin.  The ROK media in early January reported on a Chinese state company’s agreement on Dec. 20, 2010, to invest $2 billion in North Korea’s Rason free trade zone, a “strategic joint project” that aims to build Rason city into a major industrial zone in Northeast Asia in 10 years, pending approval from the North Korean government.  Such reports were followed by speculation on the stationing of Chinese troops in Rason city to protect Chinese-invested port facilities; the PRC Foreign Ministry firmly refuted these claims on Jan. 17.  South Korea’s Chosun Ilbo in February highlighted new developments in Rajin-Sonbong, including Beijing’s plans to supply electricity to the area from April and the establishment of an economic mission there to handle potential conflict with DPRK authorities. Meanwhile, North Korea reportedly was easing traffic, communication, and customs obstacles to Chinese business activities.  Under an agreement with Russian and DPRK counterparts, China reportedly launched a visa-free tour package for Chinese tourists in April beginning from Hunchun port city going through cities of the Russian Far East and North Korea’s Rajin-Songbong special economic zone.  Although Chinese involvement in the zone appears limited given continued mutual mistrust and tensions between traders and public security officials, Rason is regarded as an important potential source of foreign capital in the face of international sanctions and the loss of South Korean investment and aid.  Rason also has potential strategic significance as a major potential export base for China, serving markets in Japan and Southeast Asia as well as domestically in South China.

China’s investment in Rajin-Sonbong partly serve Chinese domestic needs, as evidenced by a major inter-provincial shipment of coal last December from Jilin to Shanghai through Rajin port.  On Jan. 3, Xinhua and local Jilin media confirmed that China transported 20,000 tons of coal from a Jilin mine through Rajin-Sonbong port to Shanghai and Ningbo since Dec. 7, 2010, testing for the first time China’s long-term desire to secure a cost-efficient, East Sea route to transport Northeast China’s coal, used mainly for heating homes in South China during winter.  According to Chinese Customs data, North Korea exported almost 41 million tons of coal to China between January and November 2010, and total coal exports to China amounted to $340 million that year.  The coal industry is a major focus of Pyongyang’s economic and political elites and was among the country’s four “vanguard industries” named in North Korea’s New Year’s Joint Editorial in January, in addition to power, steel, and railways.  While exports to China provide North Korea with foreign capital, increased coal production boosts domestic output in North Korea’s electrical power plants, although media reports have indicated worsening shortages in electricity supply and heating in Pyongyang.

Conclusion: moving from inter-Korean to Six-Party Talks?

The events of 2010 have arguably heightened contradictions in China’s interests on the Korean Peninsula.  China’s top leadership has affirmed the objective of short-term stability on the peninsula, even at the cost of defending North Korea against international outrage resulting from North Korea’s provocations against the South.  Beijing has pursued a strategy of denial in both senses of the word: denying consideration of North Korea’s enriched uranium program at the UNSC while also denying to itself the potential dangers of allowing North Korea’s current leadership to pursue a diplomatic and political strategy designed to support political succession that instead foments instability.  The cost of such a strategy has been a more hard-nosed attitude on the part of South Korea as it views the unwillingness of its China to attribute commensurate political importance to the level and density of its economic ties with South Korea.   Apparently, Chinese leaders believe that they can afford to take economic relations with South Korea for granted when developing North Korean policies. There is little evidence that this judgment is incorrect, considering the continued vitality of China-ROK economic relations despite political difficulties over North Korea.

China’s influence over the Korean Peninsula is bound to increase as its economic, political, and military power continues to grow.  At present, China does not have the capacity to independently shape developments on the Korean Peninsula, but it not unreasonable for Chinese strategists to conclude that it is a suitable strategy to buy time while Chinese influence in both North and South Korea continues to grow.  For the near term, however, China’s efforts to coax the two Koreas toward a stable relationship as a step toward reconstituting the Six-Party Talks are unlikely to succeed.  First, China’s own political influence over North Korea remains limited, as evidenced by China’s inability to convince Pyongyang to return to the denuclearization path despite its growing investment in the relationship.  Second, China’s persuasive influence with South Korea and the US on North Korean issues has waned as a result of China’s active efforts to protect North Korea rather than cooperating to implement international resolutions condemning North Korea’s nuclear development.  Third, the Six-Party Talks themselves may have been dealt a mortal blow with the surfacing of North Korea’s enriched uranium program alongside its plutonium-based nuclear weapons development efforts, given the difficulties of implementing an independent means of verifying North Korea’s activities without relying on the North Koreans for correct information.  This circumstance leaves the profound challenge of managing North Korea as a de facto nuclear weapons state, the absence of consensus on what to do about it, and a division over the issue that separates China ever more deeply from the US and South Korea, which serves North Korea’s interests to a greater extent than those of any other party.  China’s examination of its own equities on the Korean Peninsula, in combination with developments in China-US relations, will likely shape the next steps in this continuing challenge of how to deal with North Korea.