Another August crisis

The Chinese proverb “If the lips are gone, the teeth will be cold” is an old one, coined to describe an interdependent relationship. In more modern times it has featured in terms of China’s ties with North Korea, which Mao Zedong once deemed as “close as lips and teeth”.

But the harsher reality is that Beijing’s attitude towards Pyongyang is shaped more by frustration than friendship and we have tracked the deteriorating mood for some time, starting with a look at how Kim Jong-il was riling the Chinese with a round of missile tests in 2009 (see WiC10). Two years later we mulled the prospects for better relations as Kim Jong-un took over (see WiC88), although China’s fury with his own missile programme later spilled over (see WiC309) and there were reports that ties had frayed to such an extent that the North Koreans were reclassifying the Chinese with “detested enemy” status (see WiC319).

Kim’s refusal to abandon his military build-up pushed the Chinese towards economic sanctions (see WiC355) and prompted an ugly row with the South Koreans over the deployment of a missile shield of its own (see WiC357).

With Donald Trump’s threat to unleash “fire and fury” on the recalcitrant regime this month, tensions have been stoked to new highs and the American president is demanding that the Chinese do more to constrain their longtime ally, putting Beijing in the unenviable position of both protagonist and peacemaker. How is China responding?

Time to turn tougher on Pyongyang?

Chinese diplomats backed another round of sanctions from the United Nations earlier this month, which are expected to reduce North Korea’s export income by at least $1 billion, or a third of its total exports.

The new resolution bans North Korean sales of coal, iron ore, lead and seafood. It also prohibits countries from accepting further numbers of North Korean labourers, blocks new business partnerships with North Korean companies and curtails further investment in pre-existing joint ventures.

Washington sources have been briefing that the threat of “secondary sanctions” against Chinese firms with North Korean ties helped persuade Beijing to drop opposition to the latest round of restrictions, although China’s media has focused more on the severity of the new ban, and the speed at which it is being implemented.

Justin Hastings, writing for the Lowy Institute, an Australian think tank, says that when the North Koreans were notified that trade in these restricted goods would cease (within thirty days) they were so infuriated they shut down their customs offices on the border immediately. The Chinese government then informed North Korean firms doing business in China that they would have to leave at the end of their contracts and instructed Chinese state-owned enterprises to leave North Korea.

“All of these actions can and probably will be reversed, but if China and North Korea actually follow through on their threats, they would amount to a shutdown of a large portion of legal China-North Korea trade,” Hastings says.

Others doubt that the sanctions will do much to dent North Korea’s export income, expressing longstanding scepticism about Beijing’s determination to enforce restrictions on cross-border trade.

“The $1 billion number depends on China implementing the UN sanctions, and we only have 11 years of evidence they will not do so,” Anthony Ruggiero, a former official at the US State and Treasury departments, tweeted following the announcement.

The rebuke is rejected by Chinese leaders, who also make the point that their country will bear most of the burden of the clampdown. “Given China’s traditional economic ties with North Korea, China more than anyone will pay a price for implementing the resolution,” Foreign Minister Wang Yi noted at an ASEAN meeting in the Philippines. “In order to maintain the international nuclear non-proliferation system and regional peace and stability, China will, as always, enforce the full content of relevant resolutions in a comprehensive and strict manner.”

What other action could Beijing take?

Because the North Koreans rely on China for more than 80% of their international trade, hawks in the West have been calling for tougher action, including blocks on flights into North Korea from Beijing and Shenyang (the main routes into the renegade nation from the outside world) and the suspension of cross-border banking.

Most of all the critics say that oil imports – a lifeline for Kim’s regime – should be curbed as well. “North Korea’s dependency on Chinese fuel is China’s choke hold on Pyongyang,” Dennis Wilder, formerly a senior director at the National Security Council during the George W Bush administration, told Bloomberg. “If this goes, the North Korean air force can’t fly jets and their electricity system can’t function.”

The backdrop to the view that enforcement of sanctions has been lax is that Chinese trade with North Korea increased in the first half of this year by about 10%, amounting to $2.6 billion.

The Chinese counter that imports from North Korea fell 13% to $888 million in the six months to the end of June and that coal imports plunged by 75%, proving that North Korea’s main source of foreign currency is being squeezed hard. Beijing banned coal imports in April but had previously allowed exceptions for “people’s well-being”.

However, exports from China rose by almost a third, largely driven by textiles, which aren’t on the embargo list. Chinese textile firms have been sending fabric into North Korean factories where garments are assembled and exported, and textiles are now North Korea’s second biggest export after coal and other minerals. Many of the factories are located in Sinuiju, a city just across the border from Dandong on China’s frontier.

Chinese manufacturers can cut costs by 75% by making their clothes there, Reuters says, and the finished items are shipped to Chinese ports before being sent on to the rest of the world.

Why won’t the Chinese do more?

Commentators on the latest sanctions point out that Pyongyang has been testing missiles since 2006 and that successive rounds of heavier restrictions have done little to deter the regime.

“External sanctions will only delay North Korea’s development of nuclear weapons and missiles, but cannot crush the determination of Pyongyang to stick to its path,” the Global Times warned.

The prospects for coordinated action against Kim Jong-un’s regime have also been undermined by Chinese suspicions of American motives and their frustration at being singled out for failing to crimp Kim’s behaviour. “The US wants China to play a leading role in sanctioning Pyongyang so it can reap the benefits. Meanwhile, the US and South Korea could just be bystanders as China and North Korea confront each other,” the newspaper complained. “By shifting responsibility to China, the US can also cover up its inability to deal with the North Korean nuclear issue.”

Few doubt that the Chinese are beyond exasperation with Pyongyang, which has even scheduled some of its missile tests in ways that seem designed to humiliate them (a test in February last year during the visit of a Chinese special envoy to Pyongyang, for instance, and another in September during the G20 Summit in Hangzhou). Kim has also executed his uncle Jang Song-thaek – with whom the Chinese were thought to have good relations – and reportedly ordered the assassination of his half-brother Kim Jong-nam, who was living in Macau under Beijing’s implied protection.

Nonetheless there is little sense that the Chinese want to see him toppled and they fear the calamity of war with the US and the resulting chaos as refugees flood into China’s Northeast. The prospects for a post-conflict Korea aligned with Washington bolsters their “better the devil you know” instinct further.

What have the Chinese been proposing instead?

In the immediate term the Ministry of Foreign Affairs has been trying to dial down the tension, urging all parties to “avoid remarks and actions that could aggravate conflicts and escalate tensions”. Xi Jinping made the same point to President Trump in a telephone call at the weekend and the Chinese published details of a conversation between Foreign Minister Wang and his Russian counterpart Sergey Lavrov on Tuesday in which they discussed the need to “put the brakes” on provocative actions and words.

“The ministers stressed that there is no alternative to a political and diplomatic settlement,” the Chinese statement said.

China has tried to broker a ‘double freeze’ deal in which the US and South Korea stop joint military exercises in the region and North Korea halts its nuclear weapons programme, but the proposal looks like a non-starter, with no interest from Washington or Pyongyang.

At least it looks like a more consistent position than the message coming out of Washington, where Secretary of State Rex Tillerson has publicly rejected the prospect of imminent conflict, while his president tweets that his military is “locked and loaded” for an attack.

Beijing is treading a middle line, keeping both Washington and Pyongyang uncertain of its position and focusing on discouraging a first-strike attack by either side (Kim has threatened to launch a missile at Guam). Some of this messaging has come through in the state media. “China should make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral,” the Global Times advised. “If the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so.”

Although Xi Jinping’s government isn’t ready for a full rupture with Kim, the speculation in the international media is that a time may come in which it views the nuclear threat as more dangerous to China’s security than the likely collapse of the Kim regime. “I don’t know where the breaking point for Beijing is yet, but my view is that China is gradually, but clearly, moving towards a tipping point,” Zhu Feng, dean of the Institute of International Studies at Nanjing University, told Bloomberg earlier this week. “Every provocative move by the Kim regime pushes China a little further from North Korea, and the distance between two countries has become great.”

Another key consideration is whether the threat from Pyongyang will force countries such as South Korea and Japan to think about defending themselves with nuclear weapons of their own. South Korea’s opposition party has been calling for just such a review of its country’s defence policy and American Defence Secretary Mattis and Secretary of State Tillerson played on similar fears of nuclear proliferation in a co-authored op-ed in the Wall Street Journal this week. “Absent China using its influence to show the world how a great power should act to resolve such a well-defined problem as North Korea’s pursuit of nuclear weapons and long-range missile capability, others in the region are obliged to pursue prudent defensive measures to protect their people,” the two men warned. “China’s Security Council vote was a step in the right direction. The region and world need and expect China to do more.”

Will the situation spill over into other areas of US-Sino relations?

Trump has been busy on Twitter linking events in North Korea to a review of trade relations with the Chinese. “I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!” was one of a number of complaints earlier this summer. Charles Schumer, the Senate Minority Leader, has demanded a broader approach to muzzling the North Koreans, urging Trump to suspend the approval of Chinese mergers and acquisitions in the United States if Beijing doesn’t do more to contain Kim.

On Tuesday Trump also gave formal instructions to his trade officials to investigate the Chinese for breaches of intellectual property laws. All the same, he mentioned them by name only once during the announcement of the action and he seemed to frame the issue as a much broader problem than China alone.

Trump also backed away from announcing a fuller ‘section 301’ case against the Chinese, which would have allowed imposition of tariffs or other trade restrictions. Instead, his trade team will consider whether this kind of move is necessary in a process that could take up to a year to complete. That may buy him a little more time to work with the Chinese on choking off North Korean trade, although there was still anger in the China Daily that his “transactional approach to foreign affairs” would see the investigation become a bargaining chip in bringing Kim to heel.

“By trying to incriminate Beijing as an accomplice in the DPRK’s nuclear adventure and blame it for a failure that is essentially a failure of all stakeholders, Trump risks making the serious mistake of splitting up the international coalition that is the means to resolve the issue peacefully,” the newspaper warned.

Back in Washington insiders insisted that the trade investigation isn’t connected to American policy towards North Korea. “These are totally unrelated events. Trade is trade. National security is national security,” an official told the Wall Street Journal, on condition of anonymity.

Unfortunately their boss isn’t bothered about making the same distinction. “We lose hundreds of billions of dollars a year on trade with China. They know how I feel. It’s not going to continue like that,” Trump fumed from his golf club in New Jersey last week. “But if China helps us [with North Korea], I feel a lot differently toward trade – a lot differently toward trade.”

Meanwhile there may be signs that international pressure is having some impact on the renegade regime. On Tuesday Kim said he would continue to “watch the foolish and stupid conduct of the Yankees” before deciding whether or not to carry out his threat to launch four medium-range missiles into the vicinity of Guam. The Financial Times and other media interpreted this announcement as a de-escalation of tensions by the North Korean leader.

Trump tweeted his own reaction:

“Kim made a very wise and well reasoned decision. The alternative would have been both catastrophic and unacceptable!”

But has Trump’s own ‘fire and fury’ bluff been called by his own top strategist? In an interview with The American Prospect magazine published on Wednesday, Steve Bannon gave this candid assessment: “There is no military solution [to North Korea’s nuclear threats]. Until somebody solves the part of the equation where 10 million people in Seoul don’t die in the first 30 minutes from conventional weapons… they got us.”

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