Can China Manage North Korea?

The recent news about the establishment of Special Economic Zones (SEZ) on the Sino-North Korean border has once again attracted much attention to the relations between the two countries.

The remarkable prominence of China in North Korean economy has led to a great deal of speculation pertaining to China’s alleged leverage over Pyongyang. It is quite common to hear from those on the right of the South Korean political spectrum that the North Korean government has already become a client of Beijing. Some elements of the South Korean left agree with this statement even though they hint that it is the incumbent right-leaning administration who should be held responsible for Pyongyang’s drift towards Beijing.
Exchanges between North and South Korea were frozen in 2008-10, so China has indeed become the major – and for all practical purposes, nearly the sole – trading partner of North Korea. North Korea’s trade with China – some $3.4 billion last year – now exceeds its trade with all other countries (including South Korea) combined. China is also the major source of investment, technology and information about the outside world. Nearly all passenger flights and trains which leave North Korea go to China.

However the rumors about the Chinese control over North Korea seem to be seriously exaggerated. Decades of North Korean history have demonstrated that Pyongyang is very difficult – indeed, impossible – to influence through its economy.

The Soviet-North Korean relations are a helpful illustration in this regard. In the 1970s and 1980s, the Soviet share of North Korea’s trade volume was almost as large as China’s share at present. Nonetheless, Moscow had less control over decision-making in Pyongyang than over decision-making in virtually any other Communist regime (if we ignore the openly hostile Beijing).

The Pueblo incident of 1968 is a perfect example of this paradox. When the USS Pueblo was seized, Washington assumed that such an operation must have been authorized by the Kremlin. Now we know this was not the case. Actually, Soviet diplomats worked round-the-clock to keep the Soviet Union out of the possible confrontation. And they were outraged by Pyongynag’s brinksmanship – but still could not do much, all their apparent economic significance notwithstanding.

This paradox is possible because the leadership in Pyongyang does not take economic growth – a sacred cow of nearly all modern governments – too seriously. They welcome economic growth when it happens, but their major concern is political stability. They do not have to worry about election results and they are not particularly afraid of discontent resulting from economic privation.

Thus Pyongyang knows what to do when a foreign power – be it China, South Korea, the Soviet Union or the United States – starts to make political demands which are not to Pyongyang’s liking, whilst also hinting that the refusal to oblige will have grave economic consequences. They just ignore the demands. As a result of such refusal, the common people might suffer but their problems are seen as irreverent by the hereditary elite.

A high-level South Korean diplomat recently said in a conversation, ‘China doesn’t leverage when it comes to dealing with North Korea. What China has is a hammer, not a lever’.

Indeed, if Beijing politicians decide to, they could probably collapse the North. It would probably suffice to close all trade and halt all aid to Pyongyang. A huge socio-economic disaster is likely to ensue to be followed, in all probability, by regime collapse.

However, China has no valid reason to welcome a regime collapse in North Korea. Chinese leaders must be quite unhappy about North Korea’s nuclear program. But they also understand that an unstable, disintegrating North Korea actually constitutes a far greater threat for China than a nuclear-armed but stable North Korea. So China will not take measures which will dramatically endanger the political stability of the North – and subtle measures do not work with Pyongyang, as we have seen.

It is, of course, an open question what China will do when the situation in North Korea deteriorates to breaking point – and it will, eventually. If a major crisis or perhaps a revolution were to erupt in North Korea, would China come with emergency aid? Will it send troops as well? Or will it just leave the Kim family and their henchmen to their own sorry fate, thus saving the money of Chinese taxpayers?

Currently it is impossible to answer these questions with any certainty, but what nonetheless seems likely is that in the foreseeable future China will continue to provide moderate aid and preferential trade to North Korea, even while expressing its discontent about some excessively dangerous acts of Pyongyang (such discontent is likely to be ignored by the North Korean decision makers).

Unfortunately, China has no ability to fine-tune or alter North Korea’s policy in China’s interests. It is therefore quite naïve to expect that China will be capable of persuading North Korea to surrender its nukes.