Vice Chairman of the Workers’ Party of Korea (WPK) Central Committee Ri Su Yong visited Beijing at the end of May to deliver a message of friendship from Kim Jong Un and to report on the results of the May 6-9 WPK Congress, which reportedly marked the “official start to Kim Jong-un’s era.” Ri’s visit drew attention to Pyongyang’s nuclear policy as a continued source of friction in relations with Beijing. China-ROK tensions rose with the announcement of a US-ROK agreement to deploy the THAAD missile defense system in South Korea and South Korean protests against illegal Chinese fishing. Exclusive Economic Zones (EEZs) remain another point of China-ROK tension. Although China and South Korea seek to advance trade within various frameworks, such efforts only highlight a widening gap between the economic and political aspects of their relationship.  Current security priorities require effective approaches to both immediate differences over THAAD and EEZs and longer-term preferences over how to effectively promote lasting stability on the Korean Peninsula.

Dealing with Kim Jong Un’s nuclear strategy

North Korea has increased the frequency and variety of its missile tests in violation of UN Security Council resolutions with the test-firing of intermediate-range ballistic missiles (IRBMs) and submarine-launched ballistic missiles (SLBMs) on May 31, June 22, and Aug. 29.  The tests reinforced Pyongyang’s aspirations as a nuclear weapon state following its Workers’ Party of Korea (WPK) Congress in early May, which consolidated Kim Jong Un’s leadership and reaffirmed his national strategy of nuclear and economic development.  Talks in Beijing between Xi Jinping and Vice Chairman of the WPK Central Committee Ri Su Yong on June 1 coincided with a trilateral meeting in Tokyo of US, ROK, and Japanese nuclear envoys, who demanded a tougher response from Beijing. Although China’s Foreign Ministry reiterated its hopes for denuclearization ahead of the WPK Congress, pledged support for the implementation of UN sanctions, and called for resuming multilateral dialogue following the IAEA’s June report on North Korea’s Yongbyon nuclear facility, South Korean counterparts remain skeptical that such goals would be realized.  A June 2 Global Times editorial indicated that China “cannot make a breakthrough” on the North Korean nuclear issue but instead “serves as a balancing actor in the game.”  Chinese and DPRK state media reports of Ri Su Yong’s visit appeared to downplay the nuclear issue, referring to the visit as an indicator of continued friendship.

At the Track 1.5 Northeast Asia Cooperation Dialogue meeting involving representatives from all of the countries in the Six-Party Talks held in Beijing on June 22-23, Choe Son Hui, deputy director of North American affairs at the DPRK Foreign Ministry and North Korea’s deputy chief nuclear envoy, described the Six-Party Talks as obsolete, indicating no change in Pyongyang’s nuclear policy under Kim Jong Un.  The annual security forum was held shortly after North Korea’s test-launch of two IRBMs.

South Korea’s Foreign Ministry on May 9 dismissed a JoongAng Daily report on China’s proposal for peace treaty talks between Washington and Pyongyang in exchange for North Korea freezing its nuclear weapons program and returning to the Nuclear Non-Proliferation Treaty.  Later that month, China’s Foreign Ministry also denied a US media report on a China-DPRK agreement on Chinese food aid in return for Pyongyang’s restraint from conducting a fifth nuclear test to mark the WPK Congress.

North Korea’s WPK Congress raised expectations among some South Korean scholars over a North Korean charm offensive toward Washington in which North Korea would call for peace treaty talks in exchange for a suspension of nuclear activities.  Kim Jong Un’s calls at the WPK Congress for inter-Korean dialogue led to North Korean proposals on May 21 and 24 for working-level military talks, both of which South Korea summarily dismissed.  US Republican presidential candidate Donald Trump’s indications of openness to talks with Kim Jong Un, however, drew support from the Chinese Foreign Ministry on May 18, which said that “direct dialogue and communication between the U.S. and North Korea” is a “very conducive” means toward promoting Korean Peninsula denuclearization.

Beijing’s opposition to THAAD; Seoul’s opposition to EEZ violations

North Korea’s sprint to advance its nuclear and missile capabilities catalyzed a US-ROK agreement on July 8 to deploy the Terminal High Altitude Area Defense (THAAD) missile defense system on the Korean Peninsula. The Chinese Foreign Ministry responded that it is “strongly dissatisfied with and firmly opposes” the decision.  Foreign Minister Wang Yi on July 9 argued that THAAD deployment would go beyond the defense needs of the Korean Peninsula, while China’s Defense Ministry spokesperson claimed that it will consider “measures to safeguard the nation’s strategic security and the strategic balance in the region.”  Since a US-ROK Feb. 7 announcement on launching official talks to consider the deployment of THAAD, Beijing has expressed its opposition with both the US and ROK through various regional diplomatic channels and at the highest levels.   Vice Foreign Minister Li Baodong raised such concerns in May to US Undersecretary of State for Arms Control and International Security Rose Gottemoeller and President Xi Jinping reportedly raised the issue with both President Obama and President Park in bilateral meetings on the sidelines of the Nuclear Security Summit.

Friction over THAAD surfaced during the Shangri-La Dialogue in Singapore on June 3-5, where ROK Defense Minister Han Min-koo signaled to regional leaders South Korea’s “undoubtedly clear will to deploy THAAD.”  In his plenary speech on June 5, Adm. Sun Jianguo, deputy chief of China’s Central Military Commission Joint Staff, argued that THAAD deployment would “erode the security of the region.”  Ahead of the Shangri-La Dialogue, the ROK Defense Ministry had sought to avoid the issue amid heated domestic debates on THAAD within South Korea as well as criticism from China and Russia.  The THAAD controversy coincided with South Korean efforts to clarify its maritime security policies in advance of a long-anticipated July 12 ruling of the International Tribunal on the Law of the Sea (ITLOS) on China’s South China Sea claims, another focal point of the Singapore meeting.  The Shangri-La Dialogue also served as a platform for mobilizing international support on the North Korean nuclear issue.  In his address to participants on June 4, Defense Minister Han Min-koo sought “collective strength” against Pyongyang’s military provocations, arguing that Seoul will not support the “meaningless dialogue” proposed by Pyongyang without any commitments on denuclearization.

The formal announcement on July 9 on the decision to deploy THAAD unleashed weeks of Chinese editorial debate over South Korea’s perceived betrayal of Chinese security interests and the negative impact on the regional security balance.  The emotional Chinese debate included discussion of a wide range of threats of economic retaliation by China against South Korea and coincided with a heated domestic political debate within South Korea over the THAAD deployment and the decision to locate the battery in Seongju, Kyeongsang Province.  South Korean media made much of the fact that Foreign Minister Wang Yi shared an airplane to the ASEAN Regional Forum meeting in Laos with North Korean Foreign Minister Ri Yong Ho, speculating that China would recalibrate its relations with North Korea in retaliation for the decision to deploy THAAD.

Chinese threats of economic retaliation fed South Korea’s sharpening domestic debate over the deployment decision, which received support from slightly over 50 percent of the Korean public but met with a strong NIMBY backlash and protests from Seongju citizens, joined by opposition National Assembly members.  South Korean media scrutinized Chinese handling of K-pop concerts, tourism, and sales of Korean cosmetics in China for evidence of retaliation against Seoul. The PRC tightened the process of visa issuance to South Korean visitors, but did not take significant economic measures against South Korea in advance of the September G20 Summit.  On the occasion of a trilateral China-Japan-ROK Foreign Ministers Meeting in Japan on Aug. 24, China separated its handling of North Korea from the THAAD decision by joining with South Korea and Japan in opposing North Korea’s nuclear development and pledging to implement UN Security Council resolutions while Foreign Minister Wang Yi expressed China’s opposition to THAAD in a bilateral meeting with Foreign Minister Yun Byung-se.

Illegal Chinese fishing is another area of recent political confrontation between Seoul and Beijing.  Following the capture of Chinese fishing boats in neutral waters near the inter-Korean border in early June, Seoul issued a formal complaint to Beijing demanding practical action.  Deputy Foreign Minister Kim Hyoung-zhin further raised South Korean opposition by summoning PRC Ambassador to the ROK Qiu Guohong on two occasions that month, demanding active measures from Beijing. Such developments undermined the renewal of consultation channels established last December in response to limited achievements of regular talks among foreign affairs, maritime law enforcement, and fishery authorities.  South Korea’s military police on June 10 initiated its first joint operations with the US-led UN Command, authorized to use force against Chinese fishing boats in the event of noncompliance with verbal warnings.  In South Korea’s latest move against illegal fishing, the Ministry of Public Safety and Security on June 22 announced the stationing of the Coast Guard’s biggest patrol vessel off Jeju Island, named after Coast Guard officer Lee Cheong-ho who was killed during clashes with Chinese fishermen in 2011.  The patrol operations extend to the Ieodo Ocean Research Station on Ieodo, a submerged rock that is the subject of competing claims from China and South Korea.

Chinese assessments of relations with the two Koreas

WPK Vice Chairman Ri Su-yong’s visit to China on May 31-June 2 for talks with President Xi Jinping and Communist Party of China (CPC) counterpart Song Tao represented the highest-level bilateral exchange since North Korea’s January 2016 nuclear test. The level of Ri’s reception signaled Beijing’s willingness to renew friendship and strengthen party-to-party coordination, while Pyongyang simultaneously sought working-level military talks with Seoul.  The official purpose of Ri’s visit was to brief Chinese counterparts on the WPK Congress, where Ri was promoted into the WPK Political Bureau from his previous position as foreign minister.  The CPC sent a congratulatory message on the opening of the WPK Congress on May 6, and President Xi extended a personal message to Kim Jong Un on his election as WPK chairman.  But while Beijing sent a vice premier to North Korea’s most recent prior party congress in 1980, the absence of a similar representation at the May congress highlighted political strains in the China-DPRK relationship over Pyongyang’s nuclear development. North Korea’s ceremonial head of state Kim Yong Nam arrived in Beijing on May 17 on his way to Equatorial Guinea but had no reported meetings with Chinese leaders.

The WPK Congress was a catalyst for Chinese debate on relations with Korea after the “official start to Kim Jong Un’s era.”  Although Kim’s byeongjin policy of nuclear and economic development signifies change from Kim Jong Il’s military-first songun policy, Chinese observers recognize the practical constraints to the Kim regime’s current strategy.  A Global Times editorial on May 6 claimed that nuclear development “has brought Pyongyang far more negative effects on its security than it may have predicted,” but expressed hopes for a “pragmatic” assessment on resolving the “contradictions” in Kim’s dual strategy of national development.  Referring to Kim’s nuclear goals as “poison for his country’s economy,” a China Daily commentator on May 11 more explicitly argued that “it is simply beyond Pyongyang’s competence to pursue the twin goals at once,” citing not just limited national resources but also limited support from the international community.  As a May 9 Global Times editorial indicated, “International society is firmly against Pyongyang’s nuclear program … major countries will not change their stance to recognize North Korea as a nuclear state.”  According to Jin Qiangyi, director of Yanbian University’s Institute of International Politics, North Korea’s proposal of inter-Korean military talks in May was “insincere” in the absence of steps toward denuclearization, aimed instead to ease the pressures of tightened sanctions since March.  Deng Yuwen, former deputy editor of a CPC paper, even suggested that the downfall of the Kim regime is only “a matter of time” unless Pyongyang changes its policy orientation, projecting such a scenario within 10 to 15 years.  Despite such warnings on Pyongyang’s international isolation, however, South Korean observers remain skeptical about Beijing’s support for tougher measures given the implications for China’s own stability in the northeast.

Chinese assessments of relations with the South reflect an even sharper downturn in reaction to Seoul’s THAAD agreement with Washington, identified as a “barrier to closer relations with China” and part of US efforts to create an “Asian version” of NATO.  As a Xinhua editorial on Aug. 2 indicated, Seoul’s decision “damages the mutual trust and cooperation developed with China by threatening China’s strategic security interests.”  Specifically, the THAAD decision “breaks the regional strategic balance by tying South Korea to the US chariot of Asia-Pacific rebalancing.”  Other commentators threatened retaliation against South Korea’s broader strategic interests.  According to an Aug. 1 Xinhua editorial, the THAAD agreement is “an invitation for economic punishments which Seoul cannot afford,” and will “force Beijing and Moscow to take strategic countermeasures.”  Chinese reporting of the agreement has particularly played into South Korean domestic protests against Seoul’s decision, described by the PRC state media as a “move to serve US hegemony” and an outcome of “humiliated diplomacy.”

China’s economic ties with North Korea and implementation of sanctions

China’s Ministry of Commerce and General Administration of Customs announced an embargo on import of coal and iron products from North Korea on April 5.  China-DPRK trade in April declined by 10.5 percent on-year to $429 million according to Chinese Customs data, including a 22.3 percent drop in DPRK imports to China.  North Korean coal exports to China, which accounted for 40 percent of the North’s total exports to China, fell by 38 percent to $72.27 million in April.   However, the drop in value of bilateral trade may have as much to do with depressed coal prices as China’s implementation of sanctions.

US and Japanese sources suggested in late May that the impact of sanctions has been minimal based on limited changes in the price of basic commodities.  On the other hand, according to Radio Free Asia, China’s public security agents appear to be cracking down harder on illicit trade, including arrests of Dalian-based smugglers in early March engaged in arms trafficking with North Korea. China’s Commerce Ministry on June 14 announced its decision to ban exports to North Korea of “dual-use” items as part of efforts to implement UN Security Council Resolution (UNSCR) 2270, which was supported by pledges from the Foreign Ministry a day later to fully implement UN sanctions against North Korea.

Such measures, however, followed Foreign Ministry statements on June 2 opposing “any country’s unilateral sanctions” in response to the US Treasury Department’s designation of North Korea as a “primary money laundering concern” aimed to restrict the North’s access to the international financial system.  Despite joint pledges of cooperation on sanctions after the US-China Strategic and Economic Dialogue in Beijing on June 7, ROK officials continue to demand more action from Beijing.  In a meeting with PRC Ambassador Qiu Guohong on June 7, interim leader of main opposition Minjoo Party of Korea, Kim Chong-in, sought “more efforts” on denuclearization through sanctions, pointing to economic ties with Pyongyang that limit the effectiveness of economic pressure.  Outside the UN framework, the US Department of Commerce ordered an investigation into Huawei’s exports to North Korea, Cuba, Iran, and Syria, according to The New York Times in early June.

Dandong city’s China Council for the Promotion of International Trade on June 10 announced its annual China-DPRK Economic, Trade, Culture and Tourism Expo on Oct. 15-18, which has served as a platform for promoting bilateral economic and cultural exchanges since 2012.  The announcement came a week after Dandong postponed an inaugural trade fair between Chinese and South Korean small and medium-sized enterprises (SMEs) scheduled for June 9-13, reportedly directed by the central government, citing technical difficulties and “safety” concerns.

The delay in such initiatives reinforced speculation about a deteriorating security environment in China’s northeast, given apparent increases in North Korean defections and the reported killing of an ethnic Korean pastor and supporter of DPRK defectors in Yanbian in late April. ROK Unification Ministry data in June indicated a 16 percent annual increase in the number of DPRK defectors coming to the South to 590 from January-May, the biggest increase recorded under Kim Jong Un’s leadership.   The latest officially-reported defection involved three North Korean restaurant workers who arrived in Seoul from China’s Shanxi Province, confirmed by the ROK Ministry of Unification on June 1.  According to Radio Free Asia, North Korea’s State Security Ministry has issued a ban on individual travel to China since March.  South Korean sources in May claimed that Kim Jong Un has even ordered a ban on the use of Chinese cell phones to prevent defections and internal information leaks especially in border regions, where DPRK state security agents have reportedly stepped up monitoring of mobile communications.  Seoul has taken its own measures against security concerns on the China-DPRK border, including the cancelation of official training tours scheduled for late May by the Unification Ministry-affiliated Institute for Unification Education, and travel advisories from the National Unification Advisory Council and Foreign Ministry.

China-ROK FTA confronts declining trade

South Korea’s exports to China, which account for a quarter of its total exports, posted a 18.4 percent annual decline in May according to the Korea International Trade Association (KITA), comparable to previous declines in 2009 and 1998 during the global and Asian financial crises.  Unfavorable trade trends loomed over the 14^th China-ROK Economic Ministers Meeting in Seoul on May 27, led by PRC Finance Minister Xu Shaoshi and ROK counterpart Yoo Il-ho, their second meeting that month since the 16^th China-ROK-Japan Finance Ministers and Central Bank Governors Meeting on the sidelines of the Asian Development Bank annual meeting in Frankfurt on May 3.  Minister Yoo also attended the AIIB’s first General Assembly in Beijing on June 24 as well as the launching ceremony for the establishment of the RMB-Won direct market.  Trade and economic cooperation since the establishment of the China-ROK FTA and AIIB’s founding last summer was a focus of talks between Foreign Ministers Wang Yi and Yun Byung-se on July 25 on the sidelines of the ASEAN Foreign Ministers Meeting in Laos, as well as at the eighth Trilateral Foreign Ministers Meeting with Japanese counterpart Kishida Fumio in Tokyo on Aug. 24.  Talks between Finance Ministers Xu Shaoshi and Yoo Il-ho in Seoul on May 27 produced an agreement to cooperate on infrastructure development in Northeast China.

The ROK Ministry of Trade, Industry and Energy initiated a series of “Korean Wave”-themed product fairs in Shenyang, Xian, and Chongqing in May, in what it has called the biggest event of its kind involving more than 300 Korean firms and more than 1,000 Chinese counterparts.  ROK Trade Minister Joo Hyung-hwan attended the trade fair in Xian on May 13-17, where he also participated in an international “Silk Road” trade fair organized by China’s National Development and Reform Commission (NDRC) and Commerce Ministry.  Xi Jinping’s Silk Road plan since 2013 remains a common theme of new initiatives like the China-ROK “Digital Silk Road,” for which Weihai and Incheon Mayors Zhang Hui and Yoo Jeong-bok on May 16 designated their cities as centers of cooperation.

South Korean concerns, however, remain focused on the impact of China’s slowing growth, seen as a financial threat among 73 percent of respondents in a Bank of Korea survey in May.  Still, corporate organizations continue to promote South Korean expansion into the Chinese market in potential growth sources like the service sector, as emphasized in a Korea Chamber of Commerce and Industry (KCCI) report in May.  On the other hand, China’s economic advancement into high-tech sectors has implied friction with traditional South Korean competitors for the global market.  ROK Minister of Science, ICT and Future Planning Choi Yang-hee on May 26 criticized Huawei for framing its patent suit against Samsung Electronics as “a legal battle between global companies,” as part of a strategy of enhancing Huawei’s global image.  China-based South Korean managers have further reported “cultural differences” between Korean companies and their Chinese employees as well as local Chinese governments.

Emerging areas of China-ROK cooperation

Nontraditional security and local-level exchanges between China and South Korea suggest increasing cooperation despite current political and economic difficulties.  The 13^th China-ROK Nuclear Power Joint Committee met in Beijing on May 26-27, led by Xu Dazhe, director of the China Atomic Energy Authority, and Hong Nam-ki, ROK vice minister of science, ICT and future planning.  Director General of the NDRC Climate Change Department Su Wei and ROK Ambassador for Climate Change Choi Jai-chul led the first meeting of the joint climate change committee in Busan on June 23.  Also on June 23, a Chinese naval squadron arrived in Busan for exchanges with the ROK Navy following its anti-piracy missions in the Gulf of Aden.

At the local level, ROK Trade Minister Joo Hyung-hwan and Jiangsu Governor Shi Taifeng agreed to establish a high-level dialogue mechanism on trade cooperation in talks in Seoul on May 9, making Jiangsu the fifth Chinese province to have such a channel with South Korea.  China’s second biggest province in terms of GDP after Guangdong, Jiangsu was also South Korea’s second biggest provincial partner in 2015 with a total trade volume of $59.8 billion, and represented 21.7 percent ($11.3 billion) of South Korean investment in China.  While China’s northeast provinces remain behind their coastal counterparts in the amount of trade with South Korea, Heilongjiang and North Chungcheong Governors Lu Hao and Lee Si-jong also reached an agreement in Harbin on June 15 to strengthen provincial trade and economic cooperation.  As South Korea’s Ministry of Oceans and Fisheries indicated on May 30, a Chinese state-run company from Liaoning proposed a $177.2 million investment plan in a marina project in Dangjin, South Chungcheong Province.

Conclusion: reversion to the old normal China-ROK relations?

China-South Korean differences over responding to Pyongyang’s nuclear ambitions, Seoul’s THAAD agreement with Washington, and EEZ-related maritime security are major challenges to Presidents Xi and Park’s “trust-building” commitments since taking office in 2013.  As Xinhua commentators indicated on Aug. 2, the THAAD decision “undermines the foundation of their strategic cooperative partnership at a time when it actually should be deepening.”

But as PRC Ambassador Qiu indicated in June talks with Minjoo Party interim leader Kim Chong-in, Seoul and Beijing remain aligned on common goals of peace, stability, and denuclearization. Current frictions reflect longstanding differences over the means to achieve such objectives, reflected in debates over sanctions versus dialogue, and debates over US-DPRK peace talks versus multilateral denuclearization talks.  Similarly, coinciding with a Philippines-led ruling on South China Sea arbitration, the US-ROK THAAD decision and China’s reaction has re-surfaced a longstanding gap in China’s broader regional economic and security relations.

The symbolism of President Park Geun-hye on the rostrum in Beijing with President Xi and Russian President Vladimir Putin at China’s commemoration of the 70^th anniversary of World War II las year has been completely wiped away by Xi’s failure to coordinate effectively with Park to condemn North Korea’s fourth nuclear test and by a widening chasm caused by China’s exaggeration of the strategic significance of planned THAAD deployments to South Korea.

The contrast in China’s handling of the THAAD issue with the United States and South Korea are worth noting. In talks with National Security Advisor Susan Rice in late July, the PRC appeared to compartmentalize objections to THAAD by assuring the US that such issues would not impede China’s implementation of UNSCR 2270 sanctions against North Korea.  But Chinese threats to put at risk the economic relationship with South Korea and Foreign Minister Wang Yi’s assertion to counterpart Yun Byung-se that South Korea’s acceptance of THAAD had damaged trust between the two countries suggests a double-game borne of a desire to ensure that ROK security cooperation with the US stays in the peninsular box rather than risking a long-term possibility that missile defense on the Korean Peninsula could become interoperable with US-Japan missile defense systems aimed at China.  It remains to be seen how North Korea’s fifth nuclear test on Sept. 9 might sharpen or reframe China’s debates over how to deal with South Korea and the United States over North Korea’s deepening threats to regional stability.