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China - Korea


With North Korea’s Feb. 10 announcement that it would indefinitely suspend its participation in the Six-Party Talks, a series of intensive bilateral and multilateral consultations regarding the North Korean nuclear weapons program took center stage this quarter. China’s diplomacy with both Koreas intensified accordingly. PRC-DPRK diplomacy reached the highest levels, with an exchange of messages between President Hu Jintao and Central Defense Commission Chairman Kim Jong-il and the scheduling of a visit by Hu to the DPRK for later this year through an invitation conveyed by DPRK Prime Minister Pak Pong-ju during his March visit to Beijing.

There was a simultaneous intensification of diplomatic contact between Beijing and Seoul, with South Korea and all other parties looking to Beijing to find a way to reverse the DPRK position on the Six-Party Talks.  These intensive consultations took place at the same time that a series of diplomatic setbacks occurred in the PRC-South Korean relationship, including the forcible shutdown of a press conference on North Korean refugees that South Korean National Assemblymen tried to hold at a Beijing hotel, the repatriation to North Korea of a South Korean prisoner of war, and increasing signs of bilateral economic tensions.

Beijing’s long-term strategy of hedging its bets on the Korean Peninsula through a vibrant relationship with South Korea appeared to be paying handsome dividends as South Korean President Roh Moo-hyun, in response to rising bilateral tensions with Japan, suggested that South Korea may step outside the constraints of the U.S.-ROK alliance to play a strategic balancing role in the region.  In short, no parties in the regional nuclear poker game in Northeast Asia actually had to show their cards this quarter, but North Korea raised the stakes and every other party matched North Korea’s bet and remained in the game; it remains to be seen who is bluffing and who holds a winning hand.

The torrid growth in Sino-Korean bilateral trade relations has slowed by half to the 20 percent range in the first part of 2005 after expanding by almost 40 percent to $79.3 billion in 2004. Nonetheless, South Korean firms are working with their government to lobby for expanded access to China’s domestic market in key sectors. This quarter, the focus included the Chinese energy, insurance, and automobile sectors, cooperation in nanotechnology research, and facilitation of Korean expanded cultural exports to China. A bevy of South Korean ministers, CEOs, and opinion leaders flocked to Beijing – including separate visits by the prime minister and the Grand National Party (GNP) opposition leader – to meet Chinese counterparts and to lobby for expanded Sino-South Korean economic cooperation.  Presidents Hu Jintao and Roh Moo-hyun met briefly on the sidelines of a ceremony commemorating the end of World War II in Moscow, and Foreign Ministers Ban Ki-moon and Li Zhaoxing also met on the side of an Asia-Europe Meeting (ASEM) in Kyoto for consultations on the North Korean nuclear issue, including a “balanced” rebuke to both the U.S. and DPRK for exchanging vituperative rhetoric instead of face-to-face negotiations.

 

The Sino-Korean contact that did not take place this quarter was an anticipated call by PRC President Hu Jintao on the Dear Leader in Pyongyang. Despite extensive China-DPRK diplomatic activity in early April, including a visit to Beijing by Kim Jong-il’s trusted advisor Vice Minister Kang Sok-ju, the Chinese made no apparent progress in securing the DPRK’s participation in the Six-Party Talks. (The talks marked the first anniversary of their suspension in June.)  While Washington tried to turn up the heat on Beijing to turn up the heat on Pyongyang, Chinese diplomats blew hot and cold in public comments about when and whether North Korea would return to the talks.  Following a mid-May jolt from The New York Times, which reported that the U.S. intelligence community was debating an imminent North Korean nuclear test, Chinese and South Korean officials downplayed the possibility of a test and treated the reports with skepticism.

After over a year of anticipation, the fourth round of Six-Party Talks finally reconvened and even made progress, concluding with a joint statement of principles that will serve as guidelines for a more specific agreement on how to resolve the North Korean nuclear crisis. China was the linchpin and host of the diplomatic effort to achieve an agreement, the outcome of which was largely influenced by a combination of Chinese efforts to woo the North Koreans back to the talks and Beijing’s increasingly steadfast alignment with South Korea as factors that ultimately constrained and induced concessions from both the DPRK and the United States. PRC State Councilor Tang Jiaxuan’s visits to Pyongyang and Washington in July for meetings with Chairman Kim Jong-il and President George W. Bush, respectively, were emblematic of China’s diplomatic efforts to push forward the six-party process. Although the Bush administration’s willingness to initiate bilateral negotiations with the DPRK inside the six-party framework was a prerequisite for progress and South Korea’s enhanced efforts through a revived inter-Korean dialogue also facilitated the process, Chinese diplomacy with North and South Korea was possibly the critical factor in shaping – and limiting – the parameters of a deal.

The impact of China’s yuan revaluation reverberated in South Korea this quarter with mixed effect.  On the one hand, the South Korean won is one of the currencies against which the Chinese yuan will “float,” a tangible recognition of the rising importance of the Sino-South Korean trade relationship; on the other hand, South Korean companies nervously watched the effect of the revaluation on exchange rate margins on their operations in China and anticipated whether and to what extent those margins may be adjusted. A spate of tainted food cases involving imports to South Korea from China was a public health concern for Korean families that slowed but has not derailed a more active interest within the private sector for a China-South Korea free trade agreement (FTA) to complement China’s regional and ASEAN-focused FTA efforts.

China - Korea

October — December 2005

Hu Visits the Two Koreas

Completion of the Sept. 19 Joint Statement at the Six-Party Talks set the stage this quarter for top-level Chinese diplomatic interaction with the two Koreas. PRC President Hu Jintao made successive visits to Pyongyang and Seoul in October and November.  Hu’s visit to Pyongyang at the end of October was the first visit by a Chinese president since Jiang Zemin’s visit in September 2001, and his state visit to Seoul in conjunction with the APEC meeting in Busan was his first as president of the PRC. Both visits boosted China’s diplomatic aims and strengthened China’s relations with Pyongyang and Seoul, respectively.  But the visits also highlighted the economic, diplomatic, and policy gaps in China’s relationships with the two Koreas and shed new light on the difficulty of reaching a satisfactory solution to the DPRK’s ongoing nuclear development efforts.

The economic balance sheet illustrates the differences in China’s relationship with the two Koreas: Hu’s visit marked an intensification of China-DPRK economic ties, with reports of PRC pledges of up to $2 billion in investments in the DPRK within the next few years to enhance stability and promote economic reform in North Korea, while indirectly stimulating greater PRC-DPRK trade that could expand as much as 30 percent to $2 billion in 2005. During Hu’s visit to Seoul, South Korea formally gave the PRC “market economy” status. The PRC-ROK bilateral trade balance will reach over $100 billion for 2005, three years earlier than had been anticipated. In addition, South Korea has emerged in 2005 as one of the top three leading investors in China. The issue of North Korea’s counterfeiting of U.S. dollars also involves China since U.S. sanctions on a bank located in Chinese-controlled Macao became a central challenge for Chinese diplomats responsible for overcoming an emerging stalemate in the Six-Party Talks.

Despite continued growth in the bilateral trade volume, tensions reemerged with the outbreak of public and symbolic “kimchi wars” over phytosanitary standards for South Korean imports of kimchi made in China. There were also a number of private-sector developments in the automobile and high-tech sectors that illustrate the complexity and likely challenges that intensified bilateral trade relationships may bring to the China-South Korean economic relationship.

With prospects for renewed Six-Party Talks diminishing, Kim Jong-il’s unannounced visit to China in January appears to have been a turning point for the Korean Peninsula and the North Korean nuclear issue. The rumors began as soon as Kim’s special train was sighted crossing the border into China Jan. 10, sparking a week of “Where’s Waldo” speculation and media sightings of Kim in various parts of China. Despite the rumors, Chinese officials followed precedent and kept mum until Kim’s departure on Jan. 18. The fact that Kim’s route overlapped with that of Deng Xiaoping’s famous 1992 southern tour stimulated further speculation about North Korean efforts at economic reform. Chairman Kim got the red carpet treatment: he was accompanied throughout his visit by all nine members of the Central Committee of China’s Politburo, and capped the trip with a meeting with President Hu Jintao in Beijing. But unlike Korea’s tributary relationship with the Middle Kingdom in dynastic times, Chairman Kim seemed to come with empty suitcases, prepared more to pack and take home China’s reward for good behavior than to offer gifts of his own.

China’s embrace of Kim has produced considerable angst in South Korea, which fears that North Korea will become “China’s fourth northeastern province,” and thwart South Korean hopes for enhanced influence and eventual unification with North Korea. South Korea’s “China threat” usually refers to China’s rapid erosion of critical Korean technological advantages even as China’s overall growth remains a boon to South Korean producers in many sectors. South Korean businesses face the dilemma of figuring out how to benefit from China’s rise, while fending off its effects on Korea’s competitiveness.

A series of false starts characterized Chinese efforts to reinvigorate diplomacy to address North Korea’s nuclear weapons program this quarter.  Chinese negotiator Wu Dawei failed in his efforts to jump-start six-party contacts through a nonofficial meeting in Tokyo between U.S. Assistant Secretary of State Chris Hill and DPRK Vice Minister Kim Gye-gwan. Then attention shifted to whether the Bush-Hu summit might catalyze a resumption of Six-Party Talks, but the summit produced no apparent agreement between the two leaders and probably gave North Korea no reason to come back to the negotiations. Chinese State Councilor Tang Jiaxuan’s meetings with Kim Jong-il following that visit likewise yielded no diplomatic progress, while the quarter ended with another widely anticipated, but (as of the end of this quarter) nonevent:  North Korea’s widely anticipated and widely publicized launching of Taepodong 2, a multi-stage rocket. [Editor’s Note: The multiple launches of misiles July 4-5 will be taken up in next quarter’s analysis.]  The lack of progress took its toll on South Korea-China relations due to mounting frustrations in Seoul until Foreign Minister Ban Ki-moon visited Beijing for consultations on a coordinated approach toward North Korea at the end of June. China’s defense minister did manage a successful visit with counterparts in both North and South Korea in April.

China-South Korea economic relations centered on a shift in the bilateral trade balance as Chinese imports to South Korea have begun to outpace growth in South Korean exports to China.  South Korean foreign direct investment in China has continued to grow, while facilities investment in South Korea has remained low, leading to worries in South Korea over its own long-term competitiveness vis-à-vis China.  SK Telecom’s attempts to gain a significant stake in China Unicom are emblematic of South Korean investment opportunities in China, while South Korean telecommunications companies face slowing exports as China’s market matures.  POSCO completed a major new investment in a steel mill in Zhang Jia Gang, China, while Hyundai’s striking success in China was overshadowed by CEO Chung Mong-koo’s legal problems over questions of political influence buying and illegal wealth transfers to his son. Finally, despite efforts in recent years to curb “yellow dust” from China by planting trees in the Gobi Desert, this spring was one of the worst, with the dust containing considerably higher levels of toxic materials than in the past.

 

China - Korea

July — September 2006

Unrestrained Defiance

North Korea’s July 5 missile tests set the stage for a quarter of active diplomacy designed to prevent Pyongyang from taking additional escalatory actions and to further isolate and punish Pyongyang. To the surprise of many, China signed on to the strongly worded UN Security Council (UNSC) Resolution 1695 that condemned the North Korean missile tests.  This followed the failure of last-ditch diplomatic efforts to convince North Korea to exercise restraint and return to the negotiating table.

Diplomatic activity this quarter focused almost exclusively on how China could re-establish high-level communications with North Korea while seeking to revive an effective multilateral channel for addressing North Korea’s nuclear challenge. PRC Foreign Minister Li Zhaoxing met with his counterpart Ban Ki-moon several times during the quarter to discuss North Korea, and Roh Moo-hyun placed a rare phone call in late July to Hu Jintao, who counseled patience and restraint on the part of all parties in responding to the situation. Rumors of North Korean plans for a nuclear test gained momentum throughout the quarter and were given official credence by the North Koreans in an official statement Oct. 3. Union leaders from ailing Ssangyong Motors took a page from North Korea’s book with a general strike against Chinese management at Shanghai Automotive Corporation, while China’s attempts to restrain its booming economy reverberated in the form of slower growth of Korean exports to China.

The North Korea’s Oct. 3 announcement and Oct. 9 test of a nuclear device provided the catalyst for regional diplomacy this quarter, including enhanced scrutiny and a possible reevaluation of China’s strategic relationship with North Korea. Near-term Chinese responses to North Korea’s test included public rhetorical condemnation of North Korea’s “brazen” act, a Chinese decision to back a stronger-than-expected UN Security Council resolution that imposes limited sanctions on North Korea, stepped-up speculation among Chinese and international analysts about how China might effectively utilize its economic leverage to rein in North Korea, and enhanced efforts to manage diplomatic fallout from the test by re-establishing direct dialogue with Kim Jong-il and through efforts to re-establish multilateral dialogue through Six-Party Talks.

North Korea’s nuclear test also stimulated intensive high-level Chinese meetings with South Korea (although South Korea’s diplomatic influence was further constrained by regional responses to North Korea’s test). President Roh Moo-hyun met Hu Jintao during a Beijing summit one week after North Korea’s test. Incoming UN Secretary General and former South Korean Foreign Minister Ban Ki-moon, who could not have been selected for the post without China’s support, made a special visit to Beijing in November to discuss the response to North Korea’s test prior to departing for New York to take up his new post. Despite a steady increase in Chinese-South Korean trade, investment, and tourism, the tone of China’s relations with South Korea has become more sober due to persistent sensitivities in Seoul regarding China’s Northeast Asian history project and rising anxieties about slowing growth of South Korean exports to China and rising imports of cheap Chinese industrial goods, among other issues.

China played a key role in resurrecting the Six-Party Talks from near death through a Feb. 13 agreement in which North Korea would shut down its reactors for 50,000 tons of heavy fuel oil and disable its reactors for an additional 950,000 tons of heavy fuel oil or the equivalent. The deal had stalled by the end of the quarter over the return of North Korean funds frozen at the Macau-based Banco Delta Asia (BDA) to the account owners. This glitch underscored the extent of North Korea’s financial and political isolation from China as well as the distance between Beijing and Pyongyang, especially on economic matters. During bilateral working group meetings with the United States in New York in early March, DPRK Vice Foreign Minister Kim Gye-gwan publicly vented frustrations about China, even while Kim Jong-il maintained the facade of Sino-DPRK friendship through a rare visit to the PRC Embassy in Pyongyang during the first full moon following the Spring Festival.

China-South Korea coordination in the six-party process and through three-way dialogue with Japan on the sidelines of the ASEAN Plus Three Meeting continued to develop. South Korea proposed to institutionalize tripartite consultations among the three foreign ministers. China-South Korea trade and investment grew to new highs amid a mounting list of irritations and obstacles. These challenges included disputes over the handling of North Korean refugees, worsening pollution from China, historical and territorial spats, concerns over changes in Chinese investment rules, and shifts in the balance of China-South Korea trade and investment relations.

China’s shadow over the Korean Peninsula is growing larger, stimulating strategic efforts in Seoul and Pyongyang to draw in the U.S. As soon as KORUS FTA negotiations were concluded, the South Korean media played up the FTA as having both strategic and economic significance as a counter to the centripetal pull of China’s economic rise. Likewise, despite a quarter of delay, North Korea’s eagerness to accept a surprise visit by Assistant Secretary of State Christopher Hill in an effort to confirm North Korea’s intention to shut down the Yongbyon reactor has stimulated concern among some Chinese analysts that a rapid U.S.-DPRK rapprochement would cut China out of the picture. Meanwhile, the Sino-DPRK trade and aid relationship continues to grow, creating another source of anxiety for South Koreans worried that China is taking advantage of special concessions in economic relations with the North.

During Chinese Premier Wen Jiabao’s meetings in Seoul on April 9-10, he pressed for an early opening of FTA negotiations with Seoul, celebrated the 15th anniversary of China-ROK diplomatic normalization, and cultivated deepening economic ties. In seeming parallel with the improved mood in U.S.-DPRK relations, China and South Korea agreed to open a military hotline and exchanged top-level visits between defense ministers and army chiefs of staff. While the Sino-South Korean economic relationship continues to grow steadily, China is gradually cutting the technology gap, either because South Korean employees are willing to sell proprietary technologies for personal gain or because of China’s continuing wage advantages and increasingly modern plant.

China and South Korea commemorated the 15th anniversary of diplomatic normalization Aug. 24.  In contrast to the unbridled optimism and buoyant lure of mutual economic opportunity that characterized the 10th anniversary of normalization, this one was greeted with more realism and mixed feelings about the future of the relationship.  China’s relationship with North Korea, in contrast, remained estranged as ever despite an important meeting between Foreign Minister Yang Jiechi and National Defense Commission Chairman Kim Jong-il in Pyongyang. This was the first Chinese high-level contact with Kim Jong-il since Tang Jiaxuan went to Pyongyang as a special envoy immediately following North Korea’s nuclear test in October of 2006.

Changes in the Sino-South Korean economic relationship, driven by China’s rising international competitiveness, changes in Chinese investment regulations safety, and concerns attached to Chinese consumer products, were reinforced by the sudden death due to medical error of South Korea’s number two diplomat in Beijing. South Korean caution regarding Chinese policies toward North Korea remained a central focus of concern, as China’s economic growth and influence continued to expand in both parts of the Korean Peninsula.

The Oct. 3 Six-Party Talks agreement on next steps in North Korea’s denuclearization and the Oct. 4 inter-Korean summit declaration shaped developments in China-Korean relations in the last quarter of 2007, as China reaffirmed its peacemaking role on the Korean Peninsula.  Chinese Communist Party official Liu Yunshan visited Pyongyang in late October with a message from Hu Jintao, resuming party-to-party high-level contacts with Pyongyang after a year’s break.  Similarly, Six-Party Talks lead negotiator Wu Dawei visited Pyongyang in mid-December to encourage North Korean counterparts to follow through on obligations to disable and declare nuclear facilities by the end of the year in accordance with the Feb. 13 and Oct. 3 agreements.  South Korean telecommunications companies worked hard to gain an advantage over global competitors in the Chinese market, while Korean automobile and steel manufacturers faced new challenges as industrial espionage involving proprietary technology drew an even higher profile in both sectors.  China’s search for financing has not bypassed the Korean equity market, as Korea’s China-focused equity funds gained while the Korean Stock Exchange attempts to attract Chinese firms to list directly on the Korean exchange.

The South Korean political transition to a new administration under President Lee Myung-bak catalyzed diplomatic contacts designed to size up the new leader and to establish the foundations for a new era in the Sino-South Korean relationship.  Accompanying this transition, Beijing redoubled efforts to manage relations with Pyongyang through high-level party-to-party exchanges with Kim Jong-il.  Chinese food assistance to North Korea and the North Korean commitments in the Six-Party Talks framework to declare nuclear-related programs dominated conversations with the Dear Leader.  The rise in “fly-by-night” departures of South Korean small investors from China resulting from rising Chinese labor costs and changing incentives for investments in China requires diplomatic management between Beijing and Seoul.  Finally, “yellow dust,” Tibet, Taiwan, and quality controls on food exports to Korea are nagging issues that cloud the relationship.

The Lee Myung-bak administration committed to the establishment of a “strategic cooperative partnership” with China during Lee’s inaugural visit to Beijing as the new president of South Korea.  The visit occurred on schedule in late May, coming only weeks after the tragic Sichuan earthquake and in the midst of protests in South Korea over Lee’s decision to allow imports of U.S. beef.  Those events also quickly overshadowed a late April flap during the Olympic torch relay in Seoul over Chinese students who came to cheer the torch but reacted violently to Korean groups protesting Chinese government treatment of refugees and political suppression in Tibet.  PRC Vice President Xi Jinping, China’s designated successor to President Hu Jintao, made his maiden international visit to Pyongyang where he met with North Korea’s top leaders, including Kim Jong-il and affirmed the importance of the Sino-DPRK relationship.  As host of the Six-Party Talks, China received North Korea’s declaration of its nuclear programs on June 26 in what really was a formality given the critical role of U.S.-DPRK talks in paving the way for the declaration. Nevertheless, the submission of the declaration did set the stage for the reactivation of Six-Party Talks in Beijing.  Hyundai-Kia opened a new factory in Beijing and SK Telecom responded to strategic changes in China’s telecommunications market by diversifying its investments in various Chinese multimedia companies in pursuit of a “convergence strategy” for delivery of multimedia, computer, and telecommunications applications to Chinese consumers.

The Games of the 29th Olympiad had preoccupied Chinese leaders for almost a decade as they sought to utilize it to project to domestic and international audiences China’s accomplishments on an international stage. It has framed many issues in Sino-Korean relations, especially given the many resonances between the 1988 Olympics in Seoul and the Beijing Olympics two decades later.  But now that the Games are over, Chinese leaders may adopt a different frame for viewing the world and the Korean Peninsula, the details of which have begun to emerge in the “post-Olympics era.” President Lee Myung-bak was among the many world leaders who attended the opening ceremonies, while President Hu Jintao returned the visit to Seoul only two weeks later, less than a day after the closing ceremonies in Beijing.  In contrast, Kim Jong-il was a no-show not only for the Olympics, but also for the 60th anniversary commemoration of the founding of the DPRK on Sept. 9.  The Olympics brought with it a surprising undercurrent of popular anti-Korean sentiment in China, most of it stimulated through internet rumors and the attempt by Korean journalists to tape and release a portion of the Olympic opening ceremonies days before the event.  This sentiment may suggest that the “Korean wave” (Chinese attraction to Korean pop culture) is receding – or at least that it is accompanied by a strong undertow of backlash among certain segments of Chinese society.  On the Korean side, Chinese product safety issues are another drag on the relationship.

China - Korea

October — December 2008

Sweet and Sour Aftertaste

High-level interaction between Presidents Hu Jintao and Lee Myung-bak continues to intensify following the upgrading of the Sino-South Korean relationship to a “strategic cooperative partnership” in August of 2008.  The increase in the number of meetings between top leaders is in part a by-product of the proliferation of regional forums in which China and South Korea both have membership and in part an affirmation of the rising importance of the relationship to both sides.   This quarter Hu and Lee participated in the Asia-Europe Meeting (ASEM) in Beijing in October as well as the G20 meeting in Washington and the Asia Pacific Economic Cooperation (APEC) forum in Peru in November. Lee and Premier Wen Jiabao also met as part of the first trilateral meeting among Chinese, South Korean, and Japanese leaders held in Dazaifu, Fukuoka in mid-December.  In contrast, Chinese and North Korean leaders rarely meet these days, and Chinese officials confess ignorance regarding the health of Kim Jong-il despite being North Korea’s closest of neighbors.

The global financial crisis and the widespread effects of China’s tainted food exports are the latest wild cards in the Sino-South Korean relationship.  Likewise, North Korea’s intransigence brings China and South Korea closer together, while its vulnerability may pose insurmountable contradictions between Seoul and Beijing. Chinese analysts suggest that their government has reconciled itself to maintaining relations with North Korea at some level in order to preserve stability and secure its own strategic interests, although some suggest that things will never be the same as before as long as North Korea retains its nuclear weapons capability.  Chinese analysts voice heightened concern about the deterioration of inter-Korean relations, South Korean expressions of “extreme nationalism,” and South Korea’s apparent tilt toward the U.S. under President Lee. In order to meet emerging challenges as a by-product of intensified relations, China and South Korea continue to develop new mechanisms for  bilateral and multilateral engagement, both to address “strategic issues” and  emerging nontraditional security issues like public health.

China and North Korea sustained high-level contacts during the quarter, but there seems to be little to show for it. Wang Jiarui, head of the International Department of the Communist Party of China (CPC) Central Committee, met Kim Jong-il in Pyongyang and delivered a letter from President Hu Jintao, reportedly extending an invitation to Kim to visit China.  Following the visit, the Chinese Foreign Ministry confirmed Pyongyang’s “persistent stance” toward denuclearization while Hu affirmed that friendly ties is China’s “consistent policy” toward Pyongyang.  Two weeks later Kim Yong-il, director of the International Affairs Department of the Workers’ Party of Korea (WPK) Central Committee, visited Beijing, where he met President Hu.  North Korea’s major push to attract foreign investment appears to involve potential economic deals that Beijing has claimed do not violate UN resolutions toward the North. Meanwhile, Chinese leaders presented a positive outlook for the resumption of Six-Party Talks on the sidelines of the annual session of the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) in March.  Having received the title of representative for Korean Peninsula Affairs, China’s lead representative to the Six-Party Talks Wu Dawei stated that talks might resume before July this year in light of favorable diplomatic contacts with Pyongyang.  Foreign Minister Yang Jiechi expressed support for improved inter-Korean and US-DPRK ties.  China and South Korea officially launched Visit China Year 2010, pledging to strengthen their strategic cooperative partnership through intensified diplomatic, cultural, and economic exchanges.  ROK Foreign Minister Yu Myung-hwan held talks with Premier Wen Jiabao and Foreign Minister Yang Jiechi in Beijing.

The March 26 sinking of the South Korean warship Cheonan in the West Sea that killed 46 soldiers served as the backdrop for a series of high-level exchanges between China and the two Koreas as China came under international pressure to provide a tough response to the incident.  Kim Jong-il paid an “unofficial” visit to China on May 3-7 and met President Hu Jintao in Beijing, days after ROK President Lee Myung-bak’s summit with Hu.  Kim’s delegation included senior officials from the Foreign Ministry, Worker’s Party of Korea, and the DPRK Cabinet. Lee attended the April 30 opening ceremony of the 2010 World Expo in Shanghai, where President Hu also met the DPRK’s top legislator Kim Yong Nam.  Lee and Hu held another round of bilateral talks on the sidelines of the G20 Summit on June 26 in Toronto, where they pledged to strengthen the China-ROK strategic cooperative partnership despite unresolved tensions over North Korea.  Premier Wen Jiabao paid a three-day visit to South Korea on May 28-30 and met President Lee in Seoul prior to the third China-ROK-Japan trilateral meeting in Jeju.  Foreign Ministers Yu Myung-hwan and Yang Jiechi also held talks on the sidelines of the fourth trilateral foreign ministers meeting with Japan on May 15-16 in Gyeongju.

South Korea formally referred the Cheonan case to the UN Security Council on June 4 after results of an international investigation were released on May 20 indicating that the warship sinking was caused by a North Korean torpedo. Meanwhile, Beijing has repeatedly called for “calm and restraint” in dealing with the crisis.  South Korean media criticized President Hu for remaining “non-committal” toward the sinking of the Cheonan at his summit with President Lee in Toronto, where Hu stated that “China opposes and condemns any act that would undermine stability in the region” but did not make any reference to North Korea.

China reaffirmed its traditional friendship with a revamped leadership in Pyongyang that emerged from the historic Workers’ Party of Korea (WPK) conference that re-elected Kim Jong-il as party and state leader.  Kim Jong-il visited Northeast China, holding his second summit with President Hu Jintao this year. Immediately after Pyongyang’s party conference, Secretary of the WPK Central Committee Choe Tae-bok led a senior party delegation to Beijing to brief President Hu and other officials. Meanwhile, China-ROK relations remain strained following the March 26 Cheonan incident, marking the lowest point in bilateral relations since diplomatic normalization in 1992.  The third China-ROK high-level strategic dialogue was held in Beijing. China and South Korea also held their first preliminary round of free trade agreement talks. Beijing promoted resumption of the Six-Party Talks, sending Special Representative for Korean Peninsula Affairs Wu Dawei to meet counterparts in Pyongyang and Seoul.

North Korea’s artillery attack on Yeonpyeong Island on Nov. 23 placed the Korean Peninsula at the center of regional attention and intensified diplomatic pressures on China as an indispensable player.  Beijing mobilized a remarkably swift diplomatic effort in response, sending State Councilor Dai Bingguo to Seoul to meet President Lee Myung-bak and Foreign Minister Kim Sung-hwan, and to Pyongyang to meet Kim Jong Il and Vice Premier Kang Sok Ju.  Chinese calls for regional dialogue intensified with South Korean efforts to deter North Korea through joint naval exercises with the US in the Yellow Sea and live-fire artillery drills.  Despite urgent Chinese entreaties to convene “emergency consultations” among senior envoys, North Korean provocations appeared to undermine already limited prospects for Six-Party Talks. Beijing’s persistent calls for both Koreas to return to dialogue and Seoul’s apparent support for inter-Korean dialogue and Six-Party Talks, may open the way for a return to negotiations, but South Korea’s position remains conditional upon North Korea acknowledging its responsibility for provocations and taking concrete steps to show its commitment to denuclearization.

Following North Korea’s Workers’ Party of Korea (WPK) Conference on Sept. 28, China and North Korea took unprecedented steps to consolidate political ties through historic high-level party and military exchanges in October commemorating the 65th anniversary of the founding of the WPK and the 60th anniversary of the entry of the Chinese People’s Volunteers (CPV) into the Korean War.  Zhou Yongkang, member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee and Secretary of the CPC Political and Legislative Affairs Committee, led a party delegation to North Korea and met Kim Jong Il and Kim Yong Nam, president of the Presidium of the DPRK Supreme People’s Assembly.  A week later, Kim Jong Il received CPV veterans and a Chinese military delegation to Pyongyang led by Guo Boxiong, Vice Chairman of the Central Military Commission, who also held talks with Ri Yong Ho, vice chairman of the WPK Central Military Commission.  ROK and Chinese leaders, meanwhile, met on the sidelines of major regional and international summits. Presidents Lee Myung-bak and Hu Jintao met at the G20 Summit in Seoul and Foreign Ministers Kim Sung-hwan and Yang Jiechi met ahead of ASEAN-related summits in Hanoi.  President Lee and Premier Wen Jiabao met at the Asia-Europe Meeting in Brussels and held trilateral talks with Japanese Prime Minister Kan Naoto in Hanoi.

In the aftermath of North Korea’s artillery shelling of Yeonpyeong Island on Nov. 23, 2010, Chinese officials showed great concern about the possibility of escalation, focusing special concern on the possibility that South Korean military exercises might lead to military escalation.  The January summit between Presidents Hu and Obama served to reduce tensions to some degree, especially through a call for resumption of inter-Korean talks in the US-China Joint Statement released at the summit.  Following the apparent stabilization of inter-Korean relations, China has stepped up calls for “creating conditions” for the resumption of Six-Party Talks, engaging in diplomatic exchanges with both Koreas, including meetings between Special Representative for Korean Peninsula Affairs Wu Dawei and ROK nuclear envoy Wi Sung-lac on Feb. 10-11 in Beijing and again on April 26 in Seoul, and through DPRK Vice Minister Kim Kye Gwan’s meetings in Beijing with Wu Dawei, Foreign Minister Yang Jiechi, and Vice Foreign Minister Zhang Zhijun respectively in mid-April in China.  Although South Korea in April agreed to China’s proposed “three-step” process toward restarting Six Party Talks – (1) Inter-Korean, (2) US-DPRK, and (3) Six-Party Talks – this plan makes the resumption of multilateral talks depend most critically on reaching consensus on the preconditions for inter-Korean talks, which remain stalled since a preparatory meeting for inter-Korean defense ministers’ talks broke down in February.

Despite the regional stalemate on DPRK denuclearization, China and South Korea have attempted to stabilize and consolidate cooperation on other issues. Foreign Minister Yang met President Lee Myung-bak in Seoul on Feb. 23. ROK Foreign Minister Kim Sung-hwan returned the visit on March 28-30 and met Premier Wen Jiabao and Wang Jiarui, head of the party’s international department.  ROK Prime Minister Kim Hwang-sik visited China in April, holding talks with President Hu Jintao in Sanya, Hainan Province on April 14, and with Wen Jiabao and China’s top legislator Wu Bangguo in Beijing on April 13.  Chinese and ROK leaders also held a series of three-way talks with Japanese counterparts, including a ministerial conference on culture on Jan. 11 in Nara, a foreign ministers meeting on March 19 in Kyoto, trade ministers talks on April 24 in Tokyo, and an environment ministers meeting on April 29 in Busan.

High-level exchanges between China and South Korea’s foreign and defense ministries appeared to recover momentum as the two countries marked their 19th anniversary of diplomatic relations on Aug. 24.  The first China-ROK “strategic defense dialogue” was held in Seoul on July 27 following talks between Defense Ministers Liang Guanglie and Kim Kwan-jin in Beijing on July 15 and in Singapore on June 4 on the sidelines of the Shangri-La Dialogue. Foreign Ministers Yang Jiechi and Kim Sung-hwan met June 6 ahead of the Asia-Europe Foreign Ministers Meeting in Budapest and held another round of talks July 21 in Bali on the sidelines of ASEAN regional meetings.  But efforts to consolidate the China-ROK strategic partnership have exposed policy differences over North Korea and the ROK alliance relationship with the US.

China and North Korea commemorated the 50th anniversary of the Treaty of Friendship, Cooperation and Mutual Assistance in July.  Kim Jong Il visited China on May 20-26, holding talks with President Hu Jintao and Premier Wen Jiabao. He returned Aug. 25-27 and met State Councilor Dai Bingguo in Heilongjiang province on his way back from a meeting in Siberia with Russian President Dmitry Medvedev.  Kim’s May visit was publicly revealed during bilateral talks between Premier Wen and President Lee on the sidelines of the fourth Trilateral China-ROK-Japan Summit in Tokyo.  Communist Party of China (CPC) and DPRK counterparts held an unprecedented “strategic dialogue” ahead of the 90th anniversary of the CPC in June.  China and North Korea also agreed to strengthen military cooperation during a visit by a Korean Peoples’ Army (KPA) delegation to China on Aug. 25-26.  China and North Korea’s new joint economic projects have raised debate on the prospects for North Korean reform.  DPRK denuclearization efforts remain stalled despite apparent increases in regional diplomatic efforts toresume the Six-Party Talks.

Beijing underscored maintaining peace and stability on the Korean Peninsula following Kim Jong Il’s death.  North Korea’s leadership succession raises questions about the future direction of China’s Korea policy, which was most recently reaffirmed during an October visit to the two Koreas by Vice Premier Li Keqiang, the presumed successor of Premier Wen Jiabao.  Li met Kim Jong Il, top legislator Kim Yong Nam, and Premier Choe Yong Rim in Pyongyang, and met President Lee Myung-bak, Prime Minister Kim Hwang-sik, and Parliamentary Speaker Park Hee-tae in Seoul.

Prior to Kim Jong Il’s death, China and North Korea maintained regular high-level contacts at the state, party, and military level.  DPRK Premier Choe Yong Rim visited China in late September. He met President Hu Jintao and Premier Wen Jiabao in Beijing and toured Chinese companies in Shanghai and Jiangsu.  A Communist Party of China (CPC) delegation led by Guo Shengkun, alternate member of the CPC Central Committee and secretary of the CPC Guangxi Zhuang Autonomous Regional Committee, paid a visit to North Korea in early October and met top legislator Kim Yong Nam.  Li Jinai, director of the General Political Department of the People’s Liberation Army (PLA), led a military delegation to North Korea in mid-November and met senior DPRK officials including Kim Jong Il.

There have also been mutual efforts to stabilize Sino-South Korean relations despite many differences that have risen in the aftermath of North Korea’s 2010 provocations.  The fourth China-ROK high-level strategic dialogue was held on Dec. 27 in Seoul, where Vice Foreign Minister Zhang Zhijun met ROK counterpart Park Suk-hwan, Foreign Minister Kim Sung-hwan, and Unification Minister Yu Woo-ik.  Foreign Ministers Yang Jiechi and Kim Sung-hwan met on the sidelines of the annual UN General Assembly session in New York on Sept. 20.  President Lee and Premier Wen attended regional meetings in Bali on Nov. 18-19, including the ASEAN Plus 3 Summit, East Asia Summit, and a China-ROK-Japan trilateral meeting.  Special Representatives Wu Dawei and Lim Sung-nam held talks on Korean Peninsula denuclearization in November and December in Beijing.

The 20-year anniversary of diplomatic relations between China and South Korea may provide a pretext for more active diplomacy to meet a growing list of potential disputes in the relationship. Presidents Hu Jintao and Lee Myung-bak have held two summits this year and there has been increased interaction among other senior leaders as well. These exchanges have sharpened focus on the prospects for the partnership. Meanwhile, high-level contacts between China and North Korea have stalled.  Beijing renewed calls for restraint following North Korea’s failed launch of an “earth observation satellite” and a UNSC President’s Statement strongly condemning it. This has dampened China’s hopes for regional engagement.

Senior-level dialogue between China and North Korea resumed this summer when head of the Chinese Communist Party (CCP) International Department Wang Jiarui became the first senior foreign visitor to meet Kim Jong Un. Previously, there had been a great deal of speculation regarding the absence of leadership exchanges since Kim Jong Il’s death. Several other high-level exchanges followed. Discussions focused on reconciling priorities and Chinese support for Kim Jung Un’s consolidation of power. Although more subdued, there were also several high-level exchanges between China and South Korea as they celebrated the 20th anniversary of diplomatic ties, initiated talks on establishing a bilateral free trade agreement, held the second round of strategic defense talks, and sparred over South Korean concerns about human rights.

China - Korea

September — December 2012

Under New Leaderships

The appointment of Xi Jinping as general secretary of the Chinese Communist Party on Nov. 15 and the election of Park Geun-hye as president of South Korea on Dec. 19 raised hopes for improvement in China-South Korea relations.  Pyongyang’s Dec. 12 rocket launch provides an early challenge at the UN Security Council, where South Korea begins a two-year term alongside permanent members China and the US.  Xi and Park will face a full agenda that includes management of growing economic ties, policy toward North Korea, and a complex regional environment beset by territorial and historical disputes.  Another factor complicating the regional picture is that both leaders face territorial disputes with Japan under returning Liberal Democratic Party (LDP) Prime Minister Abe Shinzo.

South Korea and China both welcomed new leaders as Park Geun-hye and Xi Jinping began their presidential terms.  Both leaders sent signals prior to assuming power that they wanted to repair relations that had frayed under their predecessors.  They also faced an early challenge from Kim Jong Un as North Korea defiantly responded to two UN Security Council resolutions condemning Pyongyang’s December 2012 rocket launch and third nuclear test.  Escalating tensions in Korea provided an urgent rationale for Park and Xi to redouble efforts to establish a stable relationship and to respond to North Korean provocations.  China and South Korea must establish a productive relationship and coordinate policies toward North Korea in an increasingly challenging regional political and strategic environment.

China-Korea relations entered an active phase of leadership exchanges following North Korea’s satellite launch, its nuclear test, and the passage of UN Security Council resolutions condemning these actions. Although the aftermath drove continued debate on the extent of Chinese leverage and patience with Pyongyang, Beijing has reaffirmed its commitment to bring North Korea back to multilateral talks through revived bilateral exchanges with Pyongyang. Beijing’s frustration with its North Korean ally has expanded Chinese willingness to include denuclearization as a policy objective it shares with the US and South Korea, but differences remain regarding long-term strategic interests and the preferred tools for pursuing the objective.

New strategic challenges have emerged in recent months that will influence China’s relations with both Koreas into the New Year.  China’s declaration of an ADIZ that overlaps South Korean jurisdictional claims and developments inside North Korea emerged in November as two priority concerns in Sino-South Korean relations, obscuring more mundane areas of progress in implementing the June 2013 Park-Xi summit statement. Meanwhile, Sino-DPRK relations appeared to suffer a setback following the Dec. 13 execution of Jang Song Thaek, raising concern about policy changes that might result. Kim Jong Un’s strategy of simultaneous nuclear and economic development remains in conflict with Beijing’s priorities, reinforcing widespread pessimism over prospects for the renewal of talks on Korean denuclearization.

In early January South Korean President Park Geun-hye said relations with China had reached an historic high point, but North Korean belligerence posed a challenge to implementation of the China-ROK Joint Statement. Despite increased tensions on the peninsula, China and the ROK have continued to build on their cooperative strategic partnership.  President Xi Jinping and Park met on the sidelines of the Nuclear Security Summit and talked by telephone a month later.  Premiers Li Keqiang and Jung Hong-won met on the sidelines of the Boao Forum for Asia in Hainan, while Foreign Ministers Wang Yi and Yun Byung-se held periodic telephone talks. In contrast, China-DPRK contacts have been limited to low-level visits and routine “friendship” exchanges. The highest level meeting was between President Xi and Kim Yong Nam on the sidelines of the Sochi Winter Olympics.  China’s engagement with the DPRK has focused primarily on mediating the resumption of the Six-Party Talks.

Presidents Xi Jinping and Park Geun-hye met in Seoul while North Korea conducted a series of short-range missile and artillery tests.  The summit produced a joint statement reaffirming cooperation on Korean denuclearization, but Chinese efforts to form a united front in opposition to Japan on history and collective self-defense issues were rebuffed.  Instead, they agreed to move forward on negotiating a China-ROK free trade agreement. Beyond the summit, China-South Korean exchanges remained focused on the North Korean nuclear issue and reviving the Six-Party Talks. Pyongyang has maintained limited contacts with Beijing while attempting to diversify its contacts with other political and economic partners.

Although North Korea’s diplomatic activity in 2014 spiked with senior-level outreach to Southeast Asia, Iran, Russia, the Middle East, Africa, and the United Nations, Beijing has been little more than a stopover for these officials. China-DPRK security and economic ties remain strained as Pyongyang continues its dual pursuit of nuclear and economic development. Instead, South Korean politicians and diplomats have been flocking to Beijing for endless consultations. Multilateral engagements were the primary venue for maintaining the momentum in high-level China-South Korea exchanges following the Xi-Park summit in July. The seemingly perennial agenda for discussion between the two countries was North Korea, followed by discussion of China-South Korea trade, including the announcement that the two countries would meet their end-of-year target to conclude negotiations on a free trade agreement (FTA).

A theme of South Korean opinion leaders in recent years has been the desire to avoid choosing between Beijing and Washington, but this strategy became more difficult in early 2015, as Seoul had to decide how to deal with issues such as AIIB (Asian Infrastructure and Investment Bank) and THAAD (Terminal High Altitude Area Defense) where Beijing and Washington are on opposing sides.  As South Korea weighed these choices, there was a series of high-level Chinese visits to South Korea, including Vice Premier Wang Yang’s to discuss furthering China-ROK economic and cultural cooperation on the foundation of closer political ties and State Councilor and Defense Minister Chang Wanquan to reaffirm opposition to Pyongyang’s nuclear weapons program.  On the economic front, China and South Korea are pushing to sign their FTA deal this year, holding the latest trade meeting on April 9.  Meanwhile, normalization of regional relations in Northeast Asia moved forward with the resumption of trilateral foreign ministerial talks with Japan on March 21 in Seoul.

President Park Geun-hye’s participation in China’s 70th anniversary celebrations of the end of WWII in September affirmed Seoul’s ties with China, while enabling Seoul to go on the offensive to win Beijing’s acceptance of a Seoul-led reunification of the Korean Peninsula.  The escalation of inter-Korean tensions in late August revealed the dilemmas underlying Seoul’s regional diplomacy that continue to undermine coordination on North Korea and other security challenges. Nevertheless, both China and South Korea are engaging in parallel efforts to revive commercial ties with the North.   Meanwhile, South Korea has made clear for now that its ability to engage China lies firmly on the foundations provided by a strong US-ROK security alliance; however, we expect that Beijing will continuously test Seoul’s allegiances.

The September China-ROK summit in Beijing catalyzed the resumption of trilateral talks with Japan in October and the launch of the China-ROK Free Trade Agreement in December. Beijing’s Korean engagement also included a visit to North Korea in October by Politburo Standing Committee member Liu Yunshan for 70th anniversary celebrations of the founding of the Workers’ Party of Korea (WPK).  The visit was credited with preventing a rocket launch by Pyongyang that had reportedly been planned to mark the anniversary. Meanwhile, Pyongyang’s reached out to Beijing with a “friendship tour” to China led by Choe Hwi.  Despite new initiatives to expand economic cooperation, Pyongyang’s apparent defiance of Chinese diplomatic efforts on denuclearization suggests further difficulties in Sino-DPRK relations.

North Korea’s fourth nuclear test in January and long-range rocket launch in February drew global opposition in the form of UN Security Council (UNSC) Resolution 2270 and condemnation by regional leaders.  Pyongyang, however, promptly dismissed such calls with a series of short- and mid-range missile launches in March and April.  Presidents Xi Jinping and Park Geun-hye expressed support for full implementation of UN sanctions in bilateral talks at the Nuclear Security Summit (NSS) in Washington.  Foreign Ministers Wang Yi and Yun Byung-se pledged their commitment to denuclearization at the fifth Foreign Ministers Meeting of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Beijing on April 27-28, where Xi declared that China “will absolutely not permit war or chaos on the peninsula.”  Despite Beijing’s hardened rhetoric, current tensions on the Korean Peninsula point to enduring differences between Beijing and Seoul’s strategic preferences.

Vice Chairman of the Workers’ Party of Korea (WPK) Central Committee Ri Su Yong visited Beijing at the end of May to deliver a message of friendship from Kim Jong Un and to report on the results of the May 6-9 WPK Congress, which reportedly marked the “official start to Kim Jong-un’s era.” Ri’s visit drew attention to Pyongyang’s nuclear policy as a continued source of friction in relations with Beijing. China-ROK tensions rose with the announcement of a US-ROK agreement to deploy the THAAD missile defense system in South Korea and South Korean protests against illegal Chinese fishing. Exclusive Economic Zones (EEZs) remain another point of China-ROK tension. Although China and South Korea seek to advance trade within various frameworks, such efforts only highlight a widening gap between the economic and political aspects of their relationship.  Current security priorities require effective approaches to both immediate differences over THAAD and EEZs and longer-term preferences over how to effectively promote lasting stability on the Korean Peninsula.

Nuclear Test, Political Fallout, and Domestic Turmoil

North Korea’s fifth nuclear test on Sept. 9 and the intensified test-firing of a range of missile types throughout 2016 underscored existing weaknesses in using dialogue and sanctions as a response. The timing of Pyongyang’s latest provocations coincided with the G20 Summit in Hangzhou and ASEAN-related meetings in Vientiane. President Park Geun-hye used the venues for sideline talks with President Xi Jinping and President Obama. The nuclear test directly challenged a nonproliferation statement adopted by East Asia Summit (EAS) members on Oct. 8, which urged North Korea to abandon its weapons programs.  Following extended negotiations with the US, China finally joined the international community in adopting UN Security Council Resolution 2321 on Nov. 30. In addition to strains in the China-DPRK relationship, regional coordination on North Korea remains challenged by disputes between China and the ROK over THAAD and illegal Chinese fishing.

Two Koreas Defy Chinese Sanctions

Pyongyang tested regional and domestic politics on six separate occasions by conducting missile launches between February and April.  The latest tests coincided with the Xi-Trump summit in Mar-a-Lago and Vice President Pence’s visit to South Korea.  They also marked the 105th birth anniversary of Kim Il Sung on April 15 amid intense speculation that North Korea might conduct a sixth nuclear test.  In addition to supporting five UN Security Council statements on North Korea this year, Beijing on Feb. 18 announced a suspension of DPRK coal imports through December.  DPRK military threats also catalyzed US-ROK plans to deploy THAAD, a source of mounting tension that affected all aspects of the China-South Korea relationship.  Beijing’s retaliation took the form of restrictions from March on business and tourism. South Korea appealed to the WTO for redress and South Korean lawmakers passed resolutions condemning China’s retaliation.  THAAD emerged at the center of domestic political debate in Seoul after Park Geun-hye’s ousting on March 10, following which PRC nuclear envoy Wu Dawei in April engaged major presidential contenders ahead of the May 9 elections.  Beijing’s falling out with both Koreas presents a major challenge for coordinating regional policy with new administrations in Washington and Seoul.

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