North Korea’s artillery attack on Yeonpyeong Island on Nov. 23 placed the Korean Peninsula at the center of regional attention and intensified diplomatic pressures on China as an indispensable player.  Beijing mobilized a remarkably swift diplomatic effort in response, sending State Councilor Dai Bingguo to Seoul to meet President Lee Myung-bak and Foreign Minister Kim Sung-hwan, and to Pyongyang to meet Kim Jong Il and Vice Premier Kang Sok Ju.  Chinese calls for regional dialogue intensified with South Korean efforts to deter North Korea through joint naval exercises with the US in the Yellow Sea and live-fire artillery drills.  Despite urgent Chinese entreaties to convene “emergency consultations” among senior envoys, North Korean provocations appeared to undermine already limited prospects for Six-Party Talks. Beijing’s persistent calls for both Koreas to return to dialogue and Seoul’s apparent support for inter-Korean dialogue and Six-Party Talks, may open the way for a return to negotiations, but South Korea’s position remains conditional upon North Korea acknowledging its responsibility for provocations and taking concrete steps to show its commitment to denuclearization.

Following North Korea’s Workers’ Party of Korea (WPK) Conference on Sept. 28, China and North Korea took unprecedented steps to consolidate political ties through historic high-level party and military exchanges in October commemorating the 65^th anniversary of the founding of the WPK and the 60^th anniversary of the entry of the Chinese People’s Volunteers (CPV) into the Korean War.  Zhou Yongkang, member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee and Secretary of the CPC Political and Legislative Affairs Committee, led a party delegation to North Korea and met Kim Jong Il and Kim Yong Nam, president of the Presidium of the DPRK Supreme People’s Assembly.  A week later, Kim Jong Il received CPV veterans and a Chinese military delegation to Pyongyang led by Guo Boxiong, Vice Chairman of the Central Military Commission, who also held talks with Ri Yong Ho, vice chairman of the WPK Central Military Commission.  ROK and Chinese leaders, meanwhile, met on the sidelines of major regional and international summits. Presidents Lee Myung-bak and Hu Jintao met at the G20 Summit in Seoul and Foreign Ministers Kim Sung-hwan and Yang Jiechi met ahead of ASEAN-related summits in Hanoi.  President Lee and Premier Wen Jiabao met at the Asia-Europe Meeting in Brussels and held trilateral talks with Japanese Prime Minister Kan Naoto in Hanoi.

Yeonpyeong attack catalyzes Chinese regional diplomacy

Before the G20 Summit in Seoul, President Lee Myung-bak signaled a willingness to move past the March 2010 Cheonan incident and toward resumption of six-party dialogue. But, North Korea’s Nov. 23 attack on Yeonpyeong Island set back hopes for improvement in inter-Korean relations.  The attack occurred a week after Pyongyang’s revelations of a uranium enrichment facility.  In contrast to China’s delayed reaction to the Cheonan sinking, the People’s Republic of China (PRC) Foreign Ministry quickly expressed “concern” over the Korean Peninsula situation a day after the Yeonpyeong attack and “regret” over South Korean casualties.

Beijing stepped up its diplomatic outreach in immediate response to the attack but also reaffirmed its opposition to US-ROK military exercises designed to strengthen deterrence against North Korea.  PRC Foreign Minister Yang Jiechi postponed his visit to South Korea scheduled for Nov. 26-27 in apparent protest against the four-day US-ROK naval drills in the Yellow Sea from Nov. 28 involving the USS George Washington, while the Foreign Ministry spokesperson warned that “China opposes any military acts in its exclusive economic zone without permission.”  State Councilor Dai Binguo met President Lee and ROK Foreign Minister Kim Sung-hwan on Nov. 27-28 in Seoul, and Kim Jong Il and Vice Premier Kang Sok Ju 10 days later in Pyongyang in efforts to bring heightened tensions on the peninsula back under control.  Chinese cooperation on North Korea has been most notable in recent exchanges with Russia.  In telephone remarks with Russian counterpart Sergei Lavrov on Dec. 18, Foreign Minister Yang called on both Koreas to “carry out dialogue and contact,” warning that the peninsula situation “may further deteriorate.”  PRC Assistant Foreign Minister Cheng Guoping and Russian counterpart Alexei Borodavkin pledged to “push forward the direct dialogue between the ROK and the DPRK” in a joint statement following bilateral talks in Moscow on Dec. 28, and urged the two Koreas to “jointly mitigate tensions on the peninsula.”

Chinese calls for six-party dialogue challenged

The Yeonpyeong attack prompted a series of Chinese calls for addressing regional tensions through six-party dialogue.  Foreign Minister Yang met new DPRK Ambassador to China Ji Jae Ryong in Beijing and held telephone conversations with US, ROK, Russian, and Japanese counterparts on Nov. 26-27 regarding the Korean situation.  On Nov. 28, Special Representative for Korean Peninsula Affairs Wu Dawei proposed “emergency consultations” among chief representatives to the Six-Party Talks, a move that served to instead reinforce widespread regional skepticism about both Six-Party Talks as a regional security mechanism and China’s role as mediator of the talks.  The US and South Korea held trilateral foreign ministerial talks with Japan in Washington on Dec. 6 in a clear dismissal of Chinese propositions, pledging that the Six-Party Talks should not be resumed until Pyongyang shows a “responsible attitude.”

Chinese mediation efforts have reflected its concern about the response to North Korea since the Cheonan incident, including US-ROK exercises in the Yellow Sea on Nov. 28-Dec. 1, US-Japan exercises on Dec. 3-5, and ROK drills in the Yellow Sea on Dec. 18-21.  On Dec. 2, the PRC Foreign Ministry spokesperson asserted that “military alliances and displays of force cannot solve the issue,” expressing China’s hopes that the US-ROK-Japan trilateral in Washington would “ease tensions and promote dialogue.”  Chinese scholars remain divided about the growing regional challenge to Chinese interests emerging from recurring DPRK provocations.  According to Yu Shaohua of the China Institute of International Studies, “dialogue and negotiation are the only practical and feasible solutions,” while You Ji at Nanyang Technological University has indicated that “both the Cheonan and Yeonpyeong events substantially hurt China’s strategic interests” in terms of strained China-ROK relations and strengthened US-Japan-ROK alliance cooperation, arguing that “it is high time for Beijing to review its overall strategy towards North Korea.”

Reconciling China-ROK efforts on North Korea

In bilateral talks with President Lee in Seoul on Nov. 11, President Hu expressed support for Seoul’s “active steps” to enhance inter-Korean ties, according to the Cheong Wa Dae spokesperson, while Lee in turn recognized China’s role in promoting North Korea’s economic reform and opening.  According to ROK media, Lee also expressed support for Chinese efforts on DPRK reform and opening “for the improvement in inter-Korean relations” during his Oct. 5 meeting with Premier Wen Jiabao in Brussels. There, both sides agreed to enhance “communication and cooperation” on common goals of DPRK denuclearization and peninsular and regional stability.  Wen reportedly noted South Korean “misunderstanding about China after the Cheonan incident” in an attempt to ease South Korean perceptions of China challenging ROK efforts to secure international condemnation of Pyongyang.  Lee and Wen met again in late October for trilateral talks with their Japanese counterpart in Hanoi, after which the three parties signed an agreement on Dec. 15 to establish a permanent “Plus three” secretariat in Seoul in 2011, marking positive prospects for China-ROK-Japan cooperation.

On Dec. 30, the PRC Foreign Ministry spokesperson expressed China’s “sincere hope and support” for inter-Korean dialogue following President Lee’s remarks signaling Seoul’s renewed support for dialogue with the North and the resumption of Six-Party Talks.  Lee stated that South Korea has “no choice” but to address North Korean denuclearization “diplomatically through six-party talks” as he received a policy report detailing plans for 2011 from the ROK Foreign Ministry on Dec. 29.  Unification Minister Hyun In-taek recognized the need to restore inter-Korean dialogue while maintaining measures designed to punish Pyongyang for its provocations as part of Seoul’s North Korea policy, pledging to press North Korea to move toward denuclearization and opening through the “Chinese-style model.”

Post-WPK Conference China-DPRK exchanges and anniversary celebrations

On Oct. 9, President Hu Jintao sent a congratulatory message to Kim Jong Il marking the 65^th anniversary of the founding of the WPK, praising North Korea’s “achievements in the DPRK-style socialist construction” and affirming China’s “unswerving policy to continuously strengthen and develop bilateral friendly and cooperative ties.”  At the DPRK Embassy in Beijing on Oct. 8, China’s heir apparent, Vice President Xi Jinping, affirmed that “under the new leadership of the WPK, the DPRK people will see greater progress in developing its economy, improving living standards, achieving peaceful national unification and expanding foreign relations.”  During his three-day trip to North Korea on Oct. 9-11, Zhou Yongkang, secretary of the CPC Political and Legislative Affairs Committee, joined DPRK leaders in 65^th anniversary celebrations of the WPK, held talks with Kim Jong Il and Kim Yong Nam, visited the Mangyongdae residence of Kim Il Sung, and toured suburbs of Pyongyang.  North Korea returned Zhou’s visit on Oct. 19, sending a party delegation to Beijing led by Mun Kyon Dok, secretary of the WPK Central Committee and chief secretary of the Pyongyang City Committee, to meet Chinese party leaders including Liu Qi, member of the CPC Central Committee Political Bureau and secretary of the Beijing Municipal Committee, head of the CPC International Department Wang Jiarui, and Zhou Yongkang, who briefed his DPRK counterparts on the 5^th Plenary Session of the 17^th CPC Central Committee held on Oct. 15-18 and China’s next five-year development plan.

According to Chinese state media, Zhou met Kim Jong Il four times during his visit to Pyongyang and oversaw the signing of a bilateral economic and technological cooperation agreement after his meeting with Kim Yong Nam on Oct. 9.  Attended by Kim Jong Il and other senior officials including third-son Kim Jong Un, vice chairman of the Central Military Commission (CMC), the televised party ceremony in Kim Il Sung Square on Oct. 10 highlighted the development history of the WPK under the Kim leadership and North Korea’s recent economic achievements, and featured the country’s biggest military parade in decades.  Xinhua reported that the “DPRK showcases military might to mark the ruling party’s birthday,” recognizing “a new era for the country” following the “transition of power” at the September WPK Conference.  The Zhou-Kim meeting on Oct. 11 was attended by Wang Jiarui, Jilin Provincial Party Committee Secretary Sun Zhengcai, and PRC Ambassador Liu Hongcai, while DPRK representatives included Vice Premier Kang Sok Ju, Vice Chairman of the National Defense Commission (NDC) Jang Song Thaek, and Kim Yong Il, alternate member of the Political Bureau of the WPK Central Committee and secretary of the Secretariat.

Chinese and DPRK military representatives jointly celebrated the 60^th anniversary of the entry of the Chinese People’s Volunteers (CPV) into the Korean War a week after the party exchanges, with China sending to Pyongyang a delegation of CPV veterans on Oct. 19- 26, and a senior military delegation led by Guo Boxiong, vice chairman of the CMC, on Oct. 23-26.  Vice Minister of the DPRK People’s Armed Forces Pyon In Son led a military delegation to Beijing and Yunan province in mid-October, holding talks with Defense Minister Liang Guanglie on Oct. 14.  In Pyongyang, Guo held talks with Kim Jong Il on Oct. 25 and with Ri Yong Ho, vice chairman of the WPK CMC and chief of the General Staff of the Korean People’s Army, on Oct. 26.  Pyongyang hosted a reception for the CPV delegation on Oct. 20, attended by O Kuk Ryol, vice chairman of the DPRK NDC, and an assembly marking the anniversary on Oct. 25, attended by Kim Jong Il and other DPRK officials including Kim Yong Chun, vice chairman of the NDC; Kim Yong Nam; Choe Yong Rim, premier of the DPRK Cabinet; Ri Yong Ho; and Kim Jong Un.  On Oct. 26, Kim Jong Il attended a CPV memorial service in South Phyongan province along with other party and military leaders including Ri Yong Ho, Kim Jong Un, and Kim Yong Chun. Beijing hosted a reception marking the Korean War on Oct. 23, attended by Defense Minister Liang Guanglie, and a symposium on Oct. 25, where President Hu and Vice President Xi, newly-appointed vice chairman of the CPC CMC, met CPV veterans.

The recent proliferation in China-DPRK party and military exchanges is consistent with a policy of consolidating Sino-DPRK ties through joint symbolic efforts to reinforce the bilateral friendship in commemoration of historic political and military anniversaries. These exchanges mark a strengthening of China-DPRK intergovernmental and military ties under a revamped DPRK party/military leadership following the September WPK Conference.  The WPK and CPV anniversaries have been accompanied by bilateral exchanges across broad fields including youth, women, media, culture, health, and legislative agencies, in addition to continued economic cooperation efforts.  Choe Tae Bok, chairman of the DPRK Supreme People’s Assembly, who briefed President Hu and other Chinese leaders in Beijing days after the September WPK Conference, visited Beijing and Jilin on Nov. 30-Dec. 4, holding talks with Wu Bangguo, chairman of the Standing Committee of China’s National People’s Congress (NPC) and Chen Zhili, vice chairperson of the NPC Standing Committee.

China-ROK trade and investment outlook

China-ROK trade during 2010 amounted to $171 billion according to official South Korean figures, a 21 percent increase from $141 billion in 2009.  However, Chinese exports to South Korea have grown at an increasingly slower rate throughout 2010, rising by 36 percent in November compared to a 98 percent increase in January.  China remains South Korea’s top destination for investment, which totaled over $30 billion in 2010 and represented 21 percent of South Korea’s total foreign direct investment (FDI).  The Export-Import Bank of Korea in October predicted that China will likely overtake the US as South Korea’s top FDI destination in 2010, citing a deepening of ROK trade dependence on China and expansion of Chinese investment in ROK assets.  ROK investment in China amounted to $1.5 billion in the first half of 2010 while that in the US was $800 million.  Although FDI in South Korea reached a 10-year high in 2010, Chinese investment has accounted for a relatively small portion of the overall amount invested.  South Korean sources in late December speculated that state-run sovereign wealth fund China Investment Corporation might expand its presence in the ROK market, a move that may make China the third biggest foreign direct investor in South Korea after the US and Japan.  A Chinese Academy of Social Sciences report indicated that China would become the world’s second-largest overseas investor after the US by the end of 2010 as China continues to increase purchases of foreign assets.

A Korea Trade-Investment Promotion Agency (KOTRA) report in November forecast total ROK exports to exceed $500 billion for the first time in 2011, with newly emerging economies like China driving ROK export growth despite the expected slowdown in the rate of growth.  According to KOTRA, South Korean exports to China and its territories will rise by 13.5 percent in 2011, compared to 7.9 percent and 3.6 percent for North America and Japan respectively, with the automobile parts industry seeing the biggest growth.  In an interview with People’s Daily in early December, China’s Vice Commerce Minister Yi Xiaozhun suggested that trilateral negotiations for a China-ROK-Japan free trade agreement may begin in 2012 as the three parties seek to reduce their economic reliance on the US and the European Union.  Meanwhile, South Korean experts in late December called for diversifying South Korea’s source of rare earth minerals as the PRC Ministry of Commerce announced China’s first round of 2011 export quotas for rare earths that reflected an 11 percent annual decline.

Evaluation of China-DPRK economic exchanges

In a China Daily article in December, an analyst at the Jilin Academy of Social Sciences positively reviewed North Korea’s achievements since the launching of economic development campaigns in 2009, highlighting new technologies in light industries, an increase in cash crops, improvements in electricity supply, a decline in rice prices, an increase in the supply and diversity of consumer goods, and a decline in the yuan:won exchange rate from 1:500 in 2009 to 1:200 in 2010, which has more than doubled the purchasing power of North Koreans.  Arguing that “capital now holds the key” to North Korea’s development efforts, the analyst stresses important “opportunities for China” including the expansion of North Korea’s market for consumer goods and potential opening of DPRK resource markets to raise funds.  A report by the Samsung Economic Research Institute in October indicated that China-DPRK trade represented 52.6 percent of North Korea’s total cross-border trade in 2009 and Chinese investment in the North reached $41 million in 2008 compared to $1.1 million in 2003, noting Chinese plans to spend $2.37 billion on constructing a transportation network linking the two countries.

Chinese exports of luxury goods to the North were highlighted in a Congressional Research Service report in October revealing weaknesses in the implementation of UN Security Council (UNSC) Resolution 1874 despite an overall strengthening of country actions toward North Korea since the Cheonan incident.  According to the report, although China has interdicted shipments of weapons-related material to North Korea and cancelled a joint industrial project with a banned DPRK entity, China’s “minimalist approach” to sanctions implementation has challenged the further strengthening of existing measures.  Recent Wikileaks revelations of China’s failure to interdict transfers of sensitive technologies between Iran and North Korea served as further evidence of the limits of Chinese cooperation on implementing UN resolutions.  Although China’s Deputy Permanent Representative to the UN Wang Min reiterated China’s “deep worries” over tensions on the Korean Peninsula, Beijing blocked a statement at the UNSC explicitly condemning North Korea for the artillery attack on Yeonpyeong Island.  The UNSC failed to reach consensus on a statement regarding North Korea’s actions during an emergency session on Dec. 19, after which the US Ambassador to the UN stated that “the gaps that remain are unlikely to be bridged.”

Conclusion: prospects for China-ROK management of DPRK provocations

Despite pledges of strengthened cooperation between Beijing and Pyongyang’s new leadership, several potential conflict points in the China-DPRK relationship appear to test Chinese patience with North Korea.  First, China’s political and economic support of the North at a time of international condemnation of Pyongyang has undermined perceptions of China’s regional role as mediator of Six-Party Talks and as a responsible stakeholder in the international community.  Second, North Korea’s renewed nuclear ambitions challenge Chinese efforts to lead DPRK denuclearization.  Third, North Korea’s emphasis on self-reliance as its national development strategy contradicts Chinese efforts to promote Chinese-style reform and opening of the North.  Fourth, North Korean provocations have introduced an unprecedented level of frustration into the China-ROK relationship.  Fifth, DPRK provocations pushed North Korea higher on the agenda in US-China relations.  Sixth, DPRK provocations led to unprecedented trilateral cooperation between the US and its allies South Korea and Japan, a development that works against China’s interests and regional influence.

In an interview with Yonhap ahead of the G20, President Hu affirmed that “As China and South Korea are important nations in Northeast Asia, it conforms to the fundamental interests of the two countries and their peoples to move the bilateral relations forward solidly, which will also be conducive to peace, stability and prosperity in the region.”  However, China-DPRK commemorations of China’s participation in the Korean War revealed differences with South Korea in historical interpretations when Vice President Xi referred to the Korean War as “a great and just war for safeguarding peace and resisting aggression.” The ROK Foreign Ministry responded in a press release on Oct. 26 stating: “That the Korean War broke out as a result of the North’s southward invasion is an indisputable and historical fact that has been internationally recognized.  China is a permanent member of the UN Security Council and a responsible member of the international community.”  While PRC Foreign Ministry spokesman Ma Zhaoxu reaffirmed on Oct. 28 that Xi’s remark represented an “established theory,” neither side raised the issue when Ma met ROK Deputy Foreign Minister Kim Jae-shin and spokesman Kim Young-sun in Seoul on Oct. 29-30 as part of a bilateral exchange between the foreign ministries.

A second recurring area of China-ROK tensions remains over exclusive economic zones, an issue which re-emerged as a result of violent clashes on Dec. 18 in the Yellow Sea between the ROK Coast Guard and a Chinese boat suspected of illegally operating in South Korea’s exclusive economic zone.  The PRC Foreign Ministry on Dec. 21 accused the ROK Coast Guard for the incident, demanding punishment and compensation. In response, ROK Prime Minister Kim Hwang-sik two days later called for “heavy punishment” against illegal fishing to protect ROK sovereignty over its waters.  Although China and South Korea moved quickly to resolve the diplomatic standoff, Seoul’s decision to release the Chinese fishermen on Dec. 25 raised domestic perceptions of giving in to Chinese pressure.  On Dec. 27, the ROK Foreign Ministry refuted mounting criticisms from protesting Coast Guard officials, opposition party politicians, and netizens, stating that “While there are various problems related to the two countries’ fishing industries, we remain firm in our commitment to establishing order and responding strictly to illegal behavior.”

Third, the extent of Seoul’s willingness to accommodate Chinese engagement with North Korea remains unclear.  The Cheong Wa Dae refuted the Financial Times’ reported interview remarks by President Lee on Oct. 28 urging North Korea to “emulate China’s economic model,” and denied Seoul’s reported concerns about a “belligerent” Pyongyang falling under Beijing’s political influence.  Although Seoul’s major foreign policy goals for 2011 as outlined in the unification and foreign ministries’ reports to the president are to pursue dialogue with North Korea and draw international support and consensus on South Korean plans for “peaceful reunification,” such efforts may uncover growing South Korean concerns over the political implications of Chinese economic engagement with the North.

Differences over how to deal with North Korea placed the greatest strains on the China-ROK relationship in 2010 as DPRK provocations raised tensions on the peninsula.  Recent Chinese cooperation on North Korea may be attributed to President Hu Jintao’s visit to Washington in January 2011 for a summit with President Obama.  While Chinese efforts to promote inter-Korean reconciliation may create a favorable foundation for the resumption of Six-Party Talks, effective regional coordination on Korean Peninsula issues in the long term will require deepened China-ROK understanding on security issues and the future of the Korean peninsula as well as broader regional coordination on North Korea and Korean unification policies.