How China can stay in the North Korea influence game

Blink and you would have missed it. When China’s foreign ministry spokesman was asked late last month about plans for a summit in Singapore between the leaders of the United States and North Korea, he appeared to offer a textbook response.

After casting the meeting as “crucial to advancing the denuclearisation of the Korean peninsula”, ministry spokesman Lu Kang said “China has always played a positive and constructive role” in the issue.

For readers of the tea leaves of Chinese official statements, Lu’s emphasis was on “always”, a subtle message that China had no intention of being left out of what happens next with its nuclear-armed neighbour.

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Beijing’s influence over Pyongyang has waned over the years, particularly since China backed tougher United Nations sanctions against North Korea in September over the North’s repeated nuclear tests.

It is also not certain what role China would play in any peace process to formally end the Korean war, with both Washington and Seoul avoiding all mention of Beijing in recent statements about potential negotiations.

But as Lu from the foreign ministry made clear, China intends to stay in the game.

Analysts say China still has economic cards to play to avoid being sidelined on the peninsula’s peace process, a feat it can achieve without compromising the UN sanctions regime.

And with a recent warming in Sino-North Korean ties, the time might be on Beijing’s side.

SO CLOSE BUT ...

Time was that China and North Korea were – in late Chinese leader Mao Zedong’s words – as “close as lips and teeth”.

But relations between the two countries have deteriorated over the last two decades, particularly as Pyongyang has pressed ahead with its nuclear programme.

China remains North Korea’s biggest trading partner and one of its last diplomatic allies but Pyongyang has snubbed Beijing’s envoys and the leaders of the two countries did not meet for the first time until this year – more than half a decade into their terms.

Relations really took a turn for the worse in September when China endorsed UN Security Council Resolution 2375 in response to another of Pyongyang’s nuclear tests.

The resolution limited the export of crude oil and refined petroleum products to North Korea and banned joint ventures.

Yet, according to the resolution, Beijing still has room to manoeuvre in economic cooperation with North Korea, particularly near the border between the two countries.

Wu Jingjing, an associate researcher at China Institute of International Studies, said North Korea’s economy was closely tied to the northeast of China and opening up the reclusive state’s markets could provide new opportunities for the Chinese provinces on its border.

“Some of the infrastructure cooperation could help the North Korean economy,” Wu said.

“Even if the US does not give North Korea financial assistance, China and South Korea can help [North Korean leader Kim Jong-un] to develop the economy [through restoring their economic cooperation].”

POWER PLAYS

One of the major areas of potential is hydropower on the Yalu River, the waterway that separates China and North Korea.

The two countries jointly operate four hydroelectric plants on the river which help power Liaoning and Jilin provinces in China and some northern areas of North Korea.

The joint power project dates back more than 60 years and is exempted from the sanctions.

Two more hydropower plants are under construction in the border area, one by the Chinese in Wangjianglou and the other in Munak by the North Koreans.

“Another area of bilateral cooperation may be Rajin Port in North Korea,” Cheong Seong-chang, a senior researcher at the Sejong Institute in Seoul, said.

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Rajin is an ice-free port in the Rason Special Economic Zone at the northeast tip of North Korea with access to the open seas.

Beijing agreed to invest US$3 billion in Rason in 2011, in exchange for using three piers for 50 years, according to South Korea’s Yonhap news agency. But little headway has been made on the investment as ties have deteriorated.

An investment revival and improved logistics at the port would benefit not only North Korea but also China, giving it direct access to waters that are physically blocked by the Korean peninsula and Russia’s Far East.

A third area of economic potential is a joint free-trade zone set up on two islands in the Yalu. Plans for the zone on the North Korean islands of Hwanggumpyong and Wihwa were announced in 2011, with Kim’s uncle, Jang Song-thaek, a former vice-chairman of the National Defence Commission of North Korea, named to head up Pyongyang’s delegation.

Jang, who had extensive contact with China, was executed in December 2013 and little progress has been made on the zone since then, especially as strains between the two countries have deterred Chinese investment.

Cheong said this could change if North Korea agreed to give up its nuclear weapons.

“If denuclearisation is confirmed, China’s investment in special economic areas such as Hwanggumpyong and Wihwa is likely to dramatically increase,” he said.

There is also the prospect of more flights between the two countries.

North Korea’s national carrier Air Koryo was not part of the sanctions regime and is expected to launch new charter flights between Pyongyang and the western Chinese city of Chengdu this month.

That’s in addition to the flights Air Koryo already operates from Pyongyang to Beijing, Shanghai and Shenyang; delivering a flock of Chinese tourists to the closed economy.

Air China, China’s national carrier, also resumed its Beijing-Pyongyang route on Wednesday, seven months after it suspended flights.

RIGHT TIMING

The need for greater economic cooperation between the two countries was underscored last month when Kim held talks with Chinese President Xi Jinping in the northeastern Chinese city of Dalian.

During the talks, Kim said he anticipated taking “phased and synchronous measures” to “achieve denuclearisation and lasting peace on the peninsula”.

The process would involve a step-by-step easing of sanctions in return for gradual nuclear disarmament.

That would open the door to more cooperation as Kim shifts North Korea’s focus onto the economy.

“China appreciates the move, and supports [North Korea] in shifting its strategic focus to economic construction and [the North Korean] comrades in taking a development path suitable to their own national situation,” Xinhua quoted Xi as saying.

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Gu Gab-woo, a professor at the University of North Korean Studies, said Kim might have also asked Xi to lift sanctions.

“Xi, who wants to maintain [China’s] influence over the regional matters, may have considered Kim’s request positively. China may start with those areas that are not bounded to the UN sanctions regime,” Gu said.

Beijing, along with Seoul, has supported the idea of trading nuclear weapons for economic growth.

Boo Seung-chan, a research fellow at the Yonsei Institute for North Korean Studies in Seoul, said Beijing may be interested in improving its bilateral economic relations with Pyongyang as both countries’ strategic needs converge.

“While Beijing wants a stronger influence over the Korean peninsula, Pyongyang wants to use China as leverage ahead of the summit with [US President Donald] Trump. The bilateral cooperation, including economic, may strengthen in the short term,” Boo said.

But analysts stressed that China would not violate the UN sanctions regime.

“Although China is focusing its energy back on restoring relations with North Korea, all-out economic cooperation can only be achieved after an international consensus of lifting UN sanctions,” Gu said.