The September China-ROK summit in Beijing catalyzed the resumption of trilateral talks with Japan in October and the launch of the China-ROK Free Trade Agreement in December. Beijing’s Korean engagement also included a visit to North Korea in October by Politburo Standing Committee member Liu Yunshan for 70^th anniversary celebrations of the founding of the Workers’ Party of Korea (WPK).  The visit was credited with preventing a rocket launch by Pyongyang that had reportedly been planned to mark the anniversary. Meanwhile, Pyongyang’s reached out to Beijing with a “friendship tour” to China led by Choe Hwi.  Despite new initiatives to expand economic cooperation, Pyongyang’s apparent defiance of Chinese diplomatic efforts on denuclearization suggests further difficulties in Sino-DPRK relations.

An upgraded China-ROK strategic partnership?

The launching of the China-ROK Free Trade Agreement (FTA) on Dec. 20 marked a new stage in bilateral diplomacy under Presidents Xi Jinping and Park Geun-hye, who met in September for the sixth time since taking office.  Breaking a three-year deadlock, China and South Korea resumed trilateral talks with Japan on Nov. 1 in Seoul, where Premier Li Keqiang met separately with President Park, Prime Minister Hwang Kyo-ahn, and National Assembly Speaker Chung Ui-hwa.  A day ahead of talks with Japanese Prime Minister Abe Shinzo, Park and Li oversaw the signing of 17 bilateral agreements in various functional areas of cooperation.

Since November, China-ROK political and security exchanges have shown steady improvements in strategic coordination and trust-building between the two countries, a priority of Xi and Park since their first summit in 2013.  Ruling Saenuri Party Representative Suh Chung-won led a ROK bipartisan parliamentary delegation to China to meet PRC leaders including Liu Yunshan on Nov. 10, a month after Liu met Kim Jong Un at Pyongyang’s 70^th anniversary celebrations of the WPK’s founding.  PRC and ROK navies advanced China-South Korean global cooperation by holding their first joint anti-piracy drills in the Gulf of Aden on Nov. 17, following an agreement reached during PLA Navy Rear Adm. Yu Manjiang’s tour of a ROK Navy destroyer in the region in September.  Seoul hosted a joint conference on public diplomacy on Nov. 19 and a bilateral forum of state-run research institutions on Dec. 3.  These engagements were part of an initiative begun in 2013 to promote people-to-people exchanges.

Following a 2014 summit agreement between Presidents Xi and Park, China and South Korea launched a new round of talks on the demarcation of exclusive economic zones (EEZs) in late December.  Despite regular consultations on the demarcation of sea boundaries over the past two decades, tensions have remained since China’s November 2013 declaration of an air defense identification zone over the East China Sea, including frictions over the submerged rock Ieodo and confrontations over illegal Chinese fishing in waters claimed by South Korea.  Within two weeks following the eighth round of working-level consultations on fisheries cooperation, the ROK Navy’s firing of warning shots at a Chinese patrol boat in the Yellow Sea on Dec. 8 drew criticism from the PRC Foreign Ministry and official media outlets.   Despite early skepticism, the resumption of talks on Dec. 22 talks led by Vice Foreign Ministers Liu Zhenmin and Cho Tae-yul is significant since they were convened at a  higher level than the  director general-level talks held from 1996-2008.  In addition, the heads of PRC and ROK Coast Guards Hong Ik-tae and Meng Hongwei reached an agreement on Dec. 17 to open a maritime hotline and to hold annual consultations to promote mutual understanding.

President Park’s China policy has drawn positive public reactions in both China and South Korea.  Korean media attributed a spike in Park’s domestic approval rating in early September to public support for her China visit.  Chinese media organizations selected Park among the top 10 people of 2015, citing her “balancing” role between major powers and attendance at Beijing’s military parade commemorating the 70^th anniversary of the end of World War II.  However, at a parliamentary audit of the ROK Foreign Ministry in September, opposition lawmakers questioned whether Park had been able to use her China visit to win Beijing’s support for the ROK’s core priorities, namely North Korean denuclearization and Korean reunification.  These criticisms reflect the domestic debate on the substantive value of Seoul’s outreach to China.

China-ROK coordination on North Korea

While Kim Jong Un’s Dec. 10 claims regarding North Korea’s new nuclear capabilities as a “powerful nuclear weapons state” were received with skepticism in Washington, the cancellation of a three-day “friendship performance” by North Korea’s Moranbong propaganda band in Beijing, and simultaneous breakdown of inter-Korean talks on Dec. 12, underscored the nuclear issue as an obstacle in both Beijing and Seoul’s diplomacy toward Pyongyang.  China-ROK coordination on DPRK denuclearization within the Six-Party Talks framework included meetings between chief envoys Wu Dawei and Hwang Joon-kook on Sep. 1 and Nov. 24, and between deputy envoys Xiao Qian and Kim Gunn on Sep. 7.  In an apparent dismissal of efforts to resume dialogue, however, DPRK representatives reportedly did not attend a forum on the Six-Party Talks hosted by China Institute of International Studies in September, which First Vice Foreign Minister Kim Kye Gwan and chief nuclear envoy Ri Yong Ho had attended in the past.

Presidents Xi and Park’s respective statements with President Obama on Sep. 25 and Oct. 16 further affirmed an emerging Chinese and South Korean consensus with the US on Korean Peninsula denuclearization, sending a message of solidarity on the nuclear issue to Pyongyang.  At their press conference in Washington, Xi and Obama renewed their commitment to “complete and verifiable denuclearization,” called for “full implementation” of relevant UN resolutions, and stated that “we will not accept North Korea as a nuclear weapon state.”  In her talks with Obama, Park identified US-ROK coordination with China, Russia, and Japan as her first priority in the effort to “deter any strategic provocation by the North.”  While the ROK Foreign Ministry on Oct. 19 called for Chinese cooperation on Seoul’s and Washington’s two-pronged approach of pressure and incentives, White House officials ahead of the US-China summit indicated China’s growing support for the necessity of both denuclearization and pressure on Pyongyang.

President Park’s consecutive summits with Xi and Obama also highlighted looming questions over Seoul’s strategic orientation between China and the US.  After meeting Xi in Washington, Obama emphasized “no contradiction” in South Korea’s pursuit of “good relations” with both the US and China, supporting ROK Ambassador Ahn Ho-young’s remarks to Korean lawmakers in September on the importance of the US-ROK alliance as the foundation of Seoul’s engagement with China.  Former ROK Foreign Minister Han Sung-joo at a September forum at the Carnegie Endowment for International Peace further indicated that Park’s attendance at Beijing’s military parade would help reassure China over the potential deployment of the Terminal High Altitude Area Defense (THAAD) system on the Korean Peninsula, a point of recent strain in China’s relations with South Korea and the US.  The US-China Economic and Security Review Commission’s annual report to Congress in November, however, suggested that Chinese opposition to THAAD is likely to be based on concerns that such deployments would reduce the value of China’s missile inventory supporting its regional ambitions, revealing suspicion over Beijing’s strategic intentions.

Warming China-DPRK diplomatic ties?

Liu Yunshan’s October visit to North Korea and Choe Hwi’s “friendship tour” to China in December were the first public signs of mutual China-DPRK diplomatic reengagement efforts following an extended period of cool relations.  Liu attended North Korea’s biggest ever military parade on Oct. 10 as Kim Jong Un’s highest-ranking foreign guest, demonstrating renewed “solidarity” with Pyongyang in the most significant display of support for the North since Kim took power in 2011.  In talks with ceremonial head of state Kim Yong Nam, Liu expressed China’s willingness to maintain high-level political exchanges and promote economic cooperation.   DPRK Health Minister and Chairman of the DPRK-China Friendship Association Kang Ha Kuk reciprocated during PRC Civil Affairs Minister Li Liguo’s Oct. 26 visit to Pyongyang, where Li paid respects to Chinese and North Korean soldiers killed during the Korean War.  While Kim Jong Un in his public speech on Oct. 10 declared North Korea’s military as a “global military power,” the Chinese state media instead emphasized Pyongyang’s prioritization of a stable external environment for economic development as well as efforts to improve inter-Korean ties.

PRC Ambassador to South Korea Qui Guihong at a Seoul National University forum on Oct. 29 noted Beijing’s quest for “normal” ties with Pyongyang, attributing the North’s military restraint to both international pressure and improving political ties with China.  South Korean perceptions of China’s “normal” (vs. “special”) approach to relations with Pyongyang were further reinforced by Beijing’s replacement of CPC International Department head Wang Jiarui, who cultivated close political ties with Pyongyang over the past 12 years. The new head, Song Tao, who accompanied Liu Yunshan to Pyongyang in October, has limited experience in Korean affairs.  Kim Jong Un’s nuclear claims on Dec. 10 and the subsequent breakdown of Choe Hwi’s planned six-day visit to China – what China’s Foreign Ministry identified as part of people-to-people exchanges “conducive to our mutual understanding and friendship” – revealed the growing political costs of Pyongyang’s military provocations.

Since Choe Hwi’s visit, China-DPRK friendship exchanges have continued in the form of sports diplomacy. For instance, DPRK Vice Sports Minister Son Kwang-ho’s visited China in December to promote sports exchanges in 2016.  Although some Chinese analysts attributed Pyongyang’s apparent restraint from an October rocket launch to improving political ties with China, South Korean observers raised early doubts over the likelihood of China and North Korea reaching consensus on the nuclear issue.  The DPRK state media did not mention Liu Yunshan’s expression of China’s willingness to work together for the resumption of Six-Party Talks as reported by Chinese counterparts.  According to the ROK Unification Ministry, Pyongyang’s 70^th anniversary commemorations of the WPK’s founding were primarily targeted at a domestic audience, designed to strengthen internal solidarity by promoting Kim Jong Un’s own “people-first” policy.  DPRK Health Minister Kang Ha Guk in a Sep. 30 meeting with PRC Ambassador Li Jinjun in Pyongyang claimed that North Korea is “undergoing a dramatic change” under Kim Jong Un’s rule.

Meanwhile, recent political contacts between Beijing and Pyongyang reignited controversy in South Korea.  South Korean reactions to Ambassador Li Jinjun’s remarks praising the role of China’s intervention in the Korean War in his tribute to Chinese soldiers on the eve of China’s National Day revealed public concerns over Chinese interpretations of history.

Chinese assessments of North Korea friendship

While both Beijing and Pyongyang have declined to elaborate on the current status of political ties, Chinese commentaries in the state-run Global Times reflect an active reassessment of the relationship.  In October, Da Zhigang of the Heilongjiang Academic of Social Sciences claimed that Liu Yunshan’s visit would not only “consolidate” the traditional friendship but also expand China’s strategic choices in safeguarding its geopolitical interests against challenges posed by “major countries or aligned nations outside the region.”  Other assessments suggest differences over the nuclear issue between the two countries have not been avoided.  There is also some skepticism over the impact of China’s political reengagement such as Liu’s high-profile visit, which, according to Yu Shaohua of the China Institute of International Studies, is unlikely to restrain Pyongyang from missile and nuclear advancement.  Pyongyang’s 70^th anniversary celebrations of the WPK’s founding even drew negative reactions on Chinese social media where some mocked the North’s military parade and others expressed anger over recent attacks on Chinese citizens by North Korean soldiers on the China-DPRK border.  The PRC Foreign Ministry on Sep. 24 revealed that China’s public security agency was investigating another shooting incident in Changbai that occurred on Sep. 18.

Recent activity on the human rights issue also suggests a shift in China’s approach to North Korea, as evidenced by reactions to the UN General Assembly’s Dec. 17 resolution referring North Korea to the International Criminal Court.  While China has long supported North Korea at the UN, a Dec. 19 Global Times editorial warned that Beijing’s vote against the resolution was made “under certain domestic pressures” and based on China’s basic policy of non-interference, claiming that the vote “does not mean we endorse the human rights situation in North Korea.”  In a more direct message to the Kim regime, it also argued that “North Korean authorities should also strive to provide a positive environment, so that the Chinese public can better appreciate the country.”

China-DPRK trade and economic cooperation

South Korean data shows that the recent decline in China-DPRK diplomatic contacts has been accompanied by a downward trend in bilateral trade and investment over the past two years.  According to the Korea International Trade Association (KITA), North Korea’s trade with China reached $2.5 billion in the first half of this year, reflecting a 10.6 percent decline in exports and 15.8 percent decline in imports compared to the same period last year.  In 2014, Chinese investment in North Korea totaled $59.1 million, half the amount in 2012, while North Korean investment in China reached $0.29 million, less than 11 percent of levels in 2013.  At an annual international trade fair in Pyongyang in September, PRC Ambassador to North Korea Li Junjun called for deepening China’s trade and economic cooperation with North Korea, urging more Chinese firms to invest in the North Korean market.

Indicative of joint efforts to expand economic ties, China and North Korea began their annual trade fair in Dandong on Oct. 15 with the launching of the Guomenwan trade zone, worth a total investment of $158 million according to the Chinese state media.  Pyongyang reportedly sent a 400-member delegation to this year’s trade fair, where Dandong officials claimed that the trade zone will accommodate up to 50 North Korean businesses by April 2016.  Local officials in Liaoning have long sought to develop the border city as the center of Northeast Asian logistics and China-DPRK trade, which accounts for 40 percent of Dandong’s total foreign trade.  North Korea on Nov. 18 released its own plans to develop the Rason special economic zone as a regional logistics hub on the China-DPRK-Russia border.

Current projects in the China-DPRK border region also include tourism initiatives, such as Jilin province’s five-year project to build a tourism zone with North Korea and Russia in Fangchuan, which was approved by the CPC in October.  Such projects support Kim Jong Un’s current tourism campaign. There are also reported plans to develop a Sinuiju economic zone, which is perceived by South Korean observers as part of Kim’s efforts to earn hard currency while bypassing international sanctions.  One South Korean source estimates that North Korea earned between $30.6 and $43.6 million from  mostly Chinese tourists in 2014, about half as much as North Korea’s $86 million income from the Kaesong Industrial Complex that year.

Although outside observers expect the much-anticipated WPK Congress in 2016 to outline new economic reforms, North Korea’s investment environment remains an issue between Chinese and North Korean partners.  Chinese experts remain doubtful over North Korean efforts to attract foreign investors, pointing to poor infrastructure and geopolitical risks as key obstacles that have deterred investors from Rason economic zone and Sinuiju special administrative zone since they were established in 1991 and 2002.  Despite such setbacks, however, even South Korean counterparts are showing growing interest in Rason as a logistics center supporting a trilateral project for the shipment of Russian coal to South Korea via the North Korean port.

China-ROK FTA and its strategic implications

The launching of the China-ROK FTA on Dec. 20 came at a time of slowing Chinese growth and South Korean exports to China, which declined for the fifth consecutive month in November.  South Korean government projections show that the FTA will raise South Korea’s real GDP by 0.96 percent, create 53,000 new jobs in the next 10 years,  and expand annual bilateral trade to more than $300 billion, a 39.5 percent increase from 2012 levels.  The FTA’s anticipated effect on access to the Chinese consumer market is the biggest gain for South Korean companies, vis-à-vis US, Japanese, and European competitors, all of whom have yet to sign FTAs with China.  Its early implementation was backed by high-level support, including talks between Premier Li Keqiang and President Park, and Trade Ministers Gao Hucheng and Yoon Sang-jick in South Korea in October.  Asia Infrastructure Investment Bank (AIIB) President-designate Jin Linqun’s meetings with Finance Minister Choi Kyung-hwan and other officials and businessmen in Seoul on Sep. 8-9 also aimed to establish the framework for South Korea’s participation in China’s regional initiative.

The China-ROK FTA, however, also draws attention to the strategic implications of China and South Korea’s growing trade interdependence.  First, the trade deal raises questions over Seoul’s position in what is perceived as a US-China rivalry for regional influence.  The National Assembly’s ratification of the China-ROK FTA on Nov. 30, five months after its signing, prompted comparisons with the KORUS FTA, which was ratified in 2011, four years after its initial signing despite teargas protests from an opposition lawmaker.  The Trans-Pacific Partnership (TPP) agreement reached in October posed further questions. In talks with President Obama in October, President Park reaffirmed that the existing KORUS FTA makes the US and South Korea “natural partners” for TPP, but the new partnerships with China have also raised Chinese calls for a bigger South Korean role in China’s regional economic network, suggesting a competition for economic influence in Seoul between Beijing and Washington.

Shortly after the Korean National Assembly ratified an accord for South Korea’s participation in the AIIB, deputy AIIB chief Chun Hun in early December indicated hopes for a more active role from South Korea as the bank’s fifth biggest shareholder.  Both Chinese and South Korean officials, however, have emphasized the complementarity of new and existing regional economic initiatives.  The PRC Commerce Ministry reasserted China’s “open attitude” toward the TPP, while ROK Vice Finance Minister Joo Hyung-hwan at a Korea Chamber of Commerce and Industry meeting in November similarly raised the possibility of cooperation between the AIIB and existing lenders on regional infrastructure projects.

The deepened China-ROK trade relationship has also emerged as a point of South Korean leverage for seeking Chinese support for Seoul’s broader regional economic initiatives that ultimately link to North Korea’s reform and denuclearization.  A priority initiative on Seoul’s agenda is the Northeast Asian Development Bank, which aims to complement the AIIB and President Xi’s One Belt, One Road initiative by promoting integration between northeast China, the Russian Far East, and Korea after North Korea’s denuclearization.  President Park pushed for China’s cooperation on the proposed Northeast Asian Development Bank in her talks with Premier Li Keqiang and AIIB President-designate Jin Liqun, as did Finance Minister Choi Kyung-hwan in his meeting with PRC counterpart Lou Jiwei on the sidelines of the G20 in Turkey.  Park’s promotion of regional initiatives such as the Northeast Asian Development Bank and Eurasia Initiative is also linked to calls to Pyongyang to abandon its dual policy of nuclear and economic development.  Recent indications of economic cooperation on the China-DPRK border despite a lack of progress on the nuclear issue raised South Korean debate on the extent of Chinese cooperation on Seoul’s North Korea policy and broader regional integration initiatives.

Conclusion: shift in geopolitics?

President Park’s September visit to Beijing generated public perceptions of a major “shift in geopolitics” in the region, stimulating speculation that South Korea’s increasing alignment with China in pursuit of Korean unification signals abandonment of the US and Japan.  But this speculation has proven to be misplaced for several reasons.

First, such a view suggests that South Korea’s intensified diplomacy with China is unprincipled, ignoring the fact that this enhanced engagement rests on the anchor and platform provided by a solid US-ROK alliance.  President Obama said as much during the Oct. 16 summit when he defended improved China-ROK relations as consistent with US interests, while also encouraging South Korea to stand up publicly against Chinese unilateral efforts to challenge the global order.

Second, this view minimizes Chinese efforts to restore leverage and influence with Pyongyang following Liu Yunshan’s attendance at the Oct. 10 ceremonies marking the 70^th anniversary of the Korean Workers’ Party.  While China clearly opposes North Korea’s nuclear advancement, it remains committed to North Korean stability and to retaining leverage with Pyongyang. In this regard, an unintended consequence of Park’s participation in China’s military parade may have been to bring Pyongyang and Beijing to the realization that both sides needed to work harder to restore Sino-DPRK relations.

Third, improvement in China-ROK relations lays the foundation for coordinated action between Seoul and Beijing to pressure North Korea toward denuclearization, which is also in US interests. Minimizing the gaps between Beijing and Seoul generates greater pressure and limits North Korean alternatives to denuclearization.

Fourth, it is premature to judge whether the Park-Xi discussions on Korean unification are generating tangible strategic gains in line with South Korea’s aspirations.  In the absence of tangible deliverables, Park’s intensification of relations with Beijing may be subject to domestic criticism from both left and right in Seoul.

The Korean Peninsula faces a challenging regional security environment for 2016 including political tensions between Beijing and Pyongyang as well as US-China.  Major risk factors include the heightening of tensions stemming from differences over the South China Sea, cross-strait relations in the aftermath of Taiwan’s presidential election, and the possibility that the US rebalance and China’s response might generate obstacles or preconditions for the common pursuit of a non-nuclear Korean Peninsula and a peaceful, gradual process of Korean unification.  Then there is North Korea, which continues as a matter of state policy to pursue nuclear development unchecked, alongside its economic development efforts. While these developments may challenge effective coordination on North Korea, Seoul may seek a more active approach to regional diplomacy by leading policy coordination efforts with Washington and Beijing to forge a united approach toward North Korea.  As the US and China face an increasingly complicated relationship with North Korea as only one of many issues on the bilateral agenda, South Korea’s role will increasingly be to lead efforts to focus sustained attention and coordination on North Korea in both Washington and Beijing.