Cheap at Any Price

At a billion dollars a year, it's a bargain for China to prop up its rogue state next door

BY ANDREI LANKOV

For those who worry about North Korea, the past few months can best be described as a time of quiet despair. Since North Korea reneged on the "Leap Day" food aid deal in March by announcing the test of a long-range rocket (the test later failed), it has become painfully clear that neither engagement nor sanctions will deliver what many in Washington still consider to be the only acceptable outcome: the denuclearization of North Korea. And China, long considered the best hope to push North Korea in the right direction, has spent the seven months since Kim Jong Un took power stepping up its efforts to maintain the status quo for its unstable neighbor, increasing aid and trade with Pyongyang.

China already controls approximately three-quarters of North Korea's foreign trade and is by far North Korea's largest provider of food aid -- possibly the only thing preventing North Korea from sliding back into famine. But instead of tweaking its aid in response to the North's bad behavior, China has demonstrated a remarkable willingness to spend money on keeping the Kim family regime afloat, quietly sabotage international sanctions in the process. Since the introduction of U.N. sanctions after the 2006 North Korean nuclear test, Sino-North Korean trade and aid have risen exponentially. Bilateral trade, much of it directly or indirectly subsidized by the Chinese government, has more than tripled, to $5.6 billion in 2011 from $1.7 billion in 2006. Beijing has also reportedly invited tens of thousands of North Korean guest workers into China; the assumption seems to be that the workers will provide needed hard currency to their home country while remaining safely isolated from ideas Pyongyang deems dangerous.

China almost never publicly criticizes North Korea. Occasional critical remarks about North Korea's antics get published in Chinese state media, like when the state-run broadsheet Global Times politely warned in May that North Korea should "clearly understand the public anger of Chinese society" after North Koreans abducted several Chinese fishermen. Yet none of these rare remarks from Beijing has ever been followed by any public concrete action. China's excuse is that its influence is weak. "If they refuse to listen to us," Cui Tiankai, a Chinese vice minister of foreign affairs, told the New York Times in June, "we can't force them," adding that North Korea is a "sovereign state."

So why is China not helping? North Korea is run by the young, untested, and unpredictable Kim Jong Un. And Chinese politicians, having recently weathered the potentially destabilizing purge of Politburo member Bo Xilai and nervous about the once-in-a-decade political transition scheduled for this fall, don't want to risk anything else that might rock the boat. Although China is not happy about the current situation, the three realistic alternatives are even worse from China's perspective: a collapsing North Korea, a North Korea absorbed by the South, and a fully nuclearized North Korea.

A growing number of Chinese analysts privately admit that the Kim family regime might eventually fall, and they sometimes even air this view at international conferences. Nonetheless, some Chinese analysts appear to think that the later the crisis comes, the more China will be able to contain it, because the country's quiet influence grows daily. So maintaining the status quo for as long as possible will minimize the impact of the North Korean regime's inevitable collapse.

But even if it did seek regime change, China, unlike the United States, would prefer to keep the Korean Peninsula divided. North Korea is a useful buffer zone, and China uses the uneasy relations between the two Korean states to its diplomatic and geostrategic advantage. Without such tensions it would be much more difficult for Beijing to acquire mining and port-usage rights in North Korea, and China's rival South Korea would likely be much stronger after the tortuous process of unification. Besides North Korea's mineral wealth, estimated by the South Korean government in 2009 to be worth $6 trillion, a unified Korea would allow Seoul to transport goods overland to Europe and Asia and to potentially rival Japan and India in regional influence. A unified Korea is almost certain to be democratic and nationalistic, and likely to maintain relatively close ties with the United States, China's main geopolitical rival. Unification might also mean U.S. troops on the Chinese border -- a nightmare scenario for Beijing and one that it once shed blood to prevent.

The denuclearization of the Korean Peninsula ranks a distant third on China's list of priorities. China would prefer to see a non-nuclear Korean Peninsula; it worries about nuclear weapons falling into the wrong hands. And as a member of a highly exclusive international club, China does not want to see its privileges eroded by nuclear proliferation. It also fears that a nuclear North Korea might lead other states in the region to seek U.S. nuclear protection, or even lead them to develop their own nuclear capability.

But China is not willing to jeopardize the more important goals of stability and the maintenance of division. Threats created by North Korea's nuclear ambitions are indirect and relatively mild next to the prospect of an outbreak of chaos in a neighboring country or a powerful ally of America on its border.

Even if China wanted to punish North Korea for its nuclear program, it is not in a position to do so. A mild reduction in the amount of aid would have little impact in Pyongyang, whose politicians think that they need nuclear weapons much more than they need economic growth. To be effective enough to influence something as serious as attitude toward nuclear weapons, the aid reduction would have to be drastic enough to threaten the very survival of the North Korean economy. As a senior South Korean diplomat once told me, "China does not have leverage when it comes to dealing with North Korea; it has a hammer."

That said, if China stopped food aid, it would trigger a dramatic economic crisis in the North. North Korean leaders might bow to such pressures, but it is likelier that they will resist until their country starts to crumble. Pyongyang faced a very similar challenge in the early 1990s, when the collapsing Soviet Union suddenly withdrew subsidies. Pyongyang chose to tighten the screws -- and, as a result, its regime survived, albeit at huge cost to its own population. It might survive once again, but economic disaster could trigger regime collapse.

That turn of events would produce great instability: tens, if not hundreds of thousands of refugees, smuggling of nuclear materials and technologies, and perhaps an outbreak of armed violence on the Chinese border. Such crisis might eventually end in the unification of the entire Korean Peninsula under the tutelage of the affluent, democratic, and nationalist South -- an unpalatable option to Beijing, though better than prolonged instability in Korea.

The leadership in Beijing has done its best to maintain the status quo in North Korea. And it's inexpensive -- though the data is murky, all direct and indirect subsidies seem to be below $1 billion a year. For China, this is a small price to avoid potentially massive problems.

Politics is too often a choice between the bad and the worse. Unfortunately for Washington and the vast majority of North Koreans, China sees a nuclear but stable North Korea as a clear-cut case of a lesser evil.