Beijing faces a stern test over nuclear crisis in its back yard
Mark O'Neill in Beijing
For Beijing, North Korea's nuclear standoff with the United States is a foreign policy crisis potentially more serious than the US-led attack against Iraq that may only be weeks ahead.
The Iraq crisis is bad news enough, with the likelihood of higher oil prices, a possible disruption of oil supplies and a conflict between Muslims and the West that could have many unpredictable consequences.
The White House has issued a new policy of 'tailored containment' against North Korea, including economic sanctions, if it failed to reverse its decision to resume its nuclear programme and continued to refuse inspections by the International Atomic Energy Agency. Pyongyang expelled the last three inspectors, who arrived in Beijing on Tuesday.
Since the US does not permit economic ties with North Korea, what Washington means by sanctions is that the few countries that trade with it - China, Russia, Japan and South Korea - should reduce the level of trade or stop altogether.
'This is typical American hegemonism - Washington telling other countries what to do, to serve its own interests,' said a Chinese scholar.
'In our case, there is no possibility that we will do this. How can we cut off supplies of food and petrol to people who are starving? We have tens of thousands of North Koreans living illegally in China because of famine. Do we want more?'
The official media ridiculed the policy. 'If the US really implements sanctions, it will not lead to the bankruptcy of the North Korean economy,' said the Global Times in a front-page article last week. 'Its reliance on foreign trade is low, with just US$2 billion (HK$15.6 billion) in 2000.
'Although this has grown in the last two years, it is far from being the pillar of the economy that it is in other countries. The only result of sanctions would be to make North Korea even more reliant on itself. It would not bring down the regime at all,' it said.
Its biggest trading partner is China, which in 2001 exported to North Korea goods worth US$573 million goods and imported US$167 million.
For years, China has provided aid in the form of grain, oil, fertiliser and other items.
Beijing looked on with approval last year as North Korea took its first faltering steps at reform, raising prices up to 60-fold and wages up to 15-fold, in an attempt to stimulate production and ease chronic shortages. It devalued the official rate of its currency, the won, from 2.15 to 150 against the US dollar.
For Beijing, this is the solution - a gradual, Chinese-style reform of the economy, raising production and living standards, controlled inflow of foreign capital and technology, which would persuade North Koreans to stay at home and not escape abroad.
This kind of normality would give it sources of foreign exchange other than arms and weapons technology and a sufficient stake in the world trading system not to threaten nuclear attack.
The approach of the Bush administration is the opposite - branding North Korea part of an 'axis of evil', abandoning any hope of internal reform and seeking a confrontation, which in the worst case scenario could become a military one.
The scholar said that, for Beijing, support for North Korea was not negotiable. 'It goes back many years and is like two brothers in the same family. We could not implement sanctions if the US demanded that.'
China has given sanctuary to high-ranking officials, allowing them to live in areas far from Korea, on the condition that they do not conduct political activities and do not disrupt the relations between the two countries. It did so in the interests of maintaining stability in North Korea.
What Beijing hopes is that the crisis will be averted before it reaches the dangerous point of sanctions. A war against Iraq and its aftermath is foreign policy crisis enough for 2003.
One Western diplomat, who has visited North Korea often, believes that it will not come to sanctions.
He said: 'North Korea is doing all this as part of its negotiations with the United States. As a poor country with a bankrupt economy, it commands no respect and attention in Washington. But, as a nuclear power, real or potential, it counts for something. It is doing this now because the US is preparing for a war in Iraq and is otherwise engaged.
'It is ready to abandon the nuclear programme during the negotiating process.'