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Chinese Walk Tightrope over Links with Korea

Geoff Dyer in Beijing
Thursday, 27 May 2010 | 3:10 AM ET

Wen Jiabao must be cursing the timing. China’s mild-mannered premier flies into Seoul on Friday for a summit with South Korea and Japan where he probably hoped to talk about booming trade ties. Instead, he will be put on the spot over North Korea.

Great Wall of China
CNBC.com photo composite
Great Wall of China

Ever since the South Korean government announced the results of its investigation last week into the sinking of the Cheonan warship, putting the blame on a North Korean torpedo, Beijing has been playing for time.

After two days of talks with Hillary Clinton this week when North Korea was top of the agenda, Dai Bingguo, China’s senior foreign policy official, would say only that “relevant parties” should “calmly and properly handle the issue and avoid escalation of tension”. With an eye on the clock, Chinese officials said they needed more information about the investigation.

Beijing has been following a well-worn script of trying not to offend its erratic ally. The ties between China and North Korea are deep – by some estimates, more than 400,000 Chinese soldiers died in the Korean war, forging a bond that Beijing used to describe as “close as lips and teeth”.

More recently, as the decay of the North Korean regime has become ever-more apparent, Beijing has fallen back on two strategic reasons for maintaining its support. It wants a buffer between the Chinese border and South Korea, a country where 28,500 US soldiers are still stationed. And it wants to avoid the chaos from a regime collapse, which it fears would bring a tidal wave of refugees.

Whatever Beijing’s misgivings might be about the idea of a nuclear North Korea, it fears instability on the Korean peninsula even more. Those considerations are probably still the bottom line as it decides how to respond to the Cheonan sinking.

Yet the striking thing about Beijing’s ties to North Korea is the way that they increasingly clash with the rapid modernisation of Chinese society and economy.

While North Korea has stagnated, China’s trade with South Korea has mushroomed. South Korean companies are now an integral part of the supply chain for China’s manufacturing powerhouse. Samsung has 16 factories in China, while Hyundai has a booming business making cars for the Chinese market in a joint venture with Beijing municipality’s own carmaker. There was one weekly flight between China and South Korea 20 years ago: now there are 642. Mr Wen knows the outrage in Seoul at China’s silence over the Cheonan is growing daily.

Public opinion is also less than favourable. Usually when Washington tries to lobby Beijing, the default popular view is that the US wants to undermine China’s interests – be it over the currency or Iran. But North Korea is different.

Especially among younger Chinese, there is often a sense of embarrassment that China is the enabler for such an unpleasant regime. And for some officials, North Korea is an uncomfortable reminder of communist China’s dark days during the Cultural Revolution.

They know that if one day North Korea does open up and the grim details of recent history are uncovered, it will not reflect well on China.

These frustrations burst into the open last summer in an unprecedented bout of public criticism after North Korea conducted two nuclear tests. One scholar described Pyongyang’s antics as “nuclear blackmail” and Beijing supported new UN sanctions. A shift in policy seemed possible.

Beijing has since patched things up. Mr Wen went to Pyongyang in October, and Kim Jong-il visited China this month.

Sunshine Policies Won't Work
Sunshine policies won't work after a decade of North Korea playing the game of brinkmanship, says Rajiv Biswas, director for South-East Asia at The Economist Group. He tells CNBC's Chloe Cho and Steve Sedgwick why China needs to play the middleman in the escalating tensions between North and South Korea.

One theory is that China, worried about the ailing Mr Kim, is trying to help ensure a smooth succession – indeed, some South Korea reports suggested his chosen son, Kim Jong-Eun, was also on the trip. With so much uncertainty, China seems to have gone back to supporting the status quo.

There is also renewed talk in Beijing that North Korea will embrace China-style economic reforms, even after so many past disappointments.

During the current crisis, China will try to find a way to muddle through, privately pressing Pyongyang to calm down but also finding some form of words to soften the anger in Seoul. Yet the balancing act is getting harder and harder. The sinking of the Cheonan will embolden those in Beijing who want to escape the ties with North Korea.

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