Beijing Keeps a Wary Eye on the Korean Peace Process

Publication: China Brief Volume: 7 Issue: 22

Earlier in October, the Six-Party Talks—a multilateral process established in 2003 to defuse and resolve the North Korean nuclear issue that contains the United States, the two Koreas, Japan, Russia and host country China—reached an agreement seen as a major step toward the dismantlement of North Korea’s nuclear weapons program. The “Second-Phase Actions for the Implementation of the Joint Statement” commits North Korea to “disabling” the three main facilities at its Yongbyon nuclear complex, declaring all its nuclear activities by the end of the year, and reaffirming its pledge not to engage in nuclear transfers of any kind—materials, technology, or know-how.

Meanwhile, another major event, the second inter-Korea summit between North Korean leader Kim Jong-Il and South Korean President Roh Moo-hyun, closely following the Six-Party Talks also took a small—albeit important—step in the long and at times tortuous road toward peninsular peace and reconciliation. The two leaders signed the “Declaration on the Advancement of South-North Relations, Peace and Prosperity,” which pledges to expand and promote inter-Korean economic cooperation, hold frequent meetings between “their highest authorities,” and enhance military confidence-building measures. What is most interesting to note, though, is the nuance with significant policy implications in the Roh-Kim joint declaration’s call for having the “leaders of the three-four parties directly concerned” negotiate an end to the current armistice and build a permanent peace regime on the Peninsula.

Beijing Buys In on “Any” Peace Process

China views the outcomes of both the latest round of the Six-Party Talks and the inter-Korea summit with guarded praise. On the former, it reinforces Beijing’s persistent emphasis that “patience, sincerity, and pragmatism” are keys to moving the negotiation process forward. On the summit, greater economic interactions between the North and the South are compatible with Beijing’s peninsular interests, as a less fragile and paranoid North Korea lifts some burden from China as well as ensures an atmosphere conducive to bilateral and multilateral discussions on the North Korean nuclear issue and the future of peninsular peace and stability.

Beijing, however, reacted to the joint declaration’s somewhat puzzling reference to the peace regime negotiation in forceful and unambiguous terms. While praising and endorsing the two Koreas’ efforts in reconciliation and toward establishing a peace regime, a Foreign Ministry spokesman also emphasized that as a signatory state to the 1953 Armistice Agreement and an important and influential country in Northeast Asia, China expects to be included in any negotiation leading to a peace regime on the Korean Peninsula (Ministry of Foreign Affairs, October 9). Chinese Premier Wen Jiabao in a recent meeting with President Roh in Singapore for the ASEAN +3 Summit likewise stated that “China will support negotiation on a Korean Peninsula peace regime. As a signatory to the cease-fire of the (1950-53) Korean War, China will actively participate in negotiations on a Korean Peninsula peace regime” (Yonhap News, November 20). Chinese analysts, not surprisingly, echo the official position and emphasize that China made great sacrifices during the Korean War and should not be excluded from any negotiation leading to a peace regime on the Peninsula. Whether peace and stability can be achieved and in what form will have direct bearing on China’s security interests (Xinwen Chenbao, October 10; People’s Daily, October 10).

Interestingly, China even alludes to the condition under which a peninsular peace regime is conceivable. Ning Fukui, Chinese ambassador to South Korea, stated that a formal inter-Korean peace treaty cannot be signed as long as the North keeps nuclear weapons (Lianhe Zaobao, October 18). Beijing’s quick reactions to the peninsular peace process reflect its keen interest and growing stakes in balancing the following four policy objectives. First, a de-nuclearized Korean Peninsula to avert a possible nuclear domino effect in Northeast Asia, with the possibility that Japan, South Korea, and even Taiwan might follow suit. Second, a stable and working PRC-DPRK relationship. Third, the growing ties between Beijing and Seoul and China’s views of the longer term prospects of a unified Korea and the consequences for China’s economic security and strategic interests. Fourth, the complexity of Sino-U.S. relations with its regional and global implications, and their differences in assessments, priorities, and the end game regarding both the North Korean nuclear issue and the future of peninsular developments [1].

China’s Strategic Interests in Peninsular Affairs

China’s long-term interests in peninsular affairs must be understood in geo-strategic and economic terms. Beijing has pursued a three-pronged policy toward the Korean Peninsula. First, China opposes the nuclearization of the Peninsula due to its deep concerns over the potential chain reaction—the domino effect that leads to further nuclear proliferation in the region. This explains why Beijing since 2003 has adopted a more proactive, and at times interventionist diplomacy to manage, deescalate, reverse and, hopefully, resolve the North Korean nuclear dispute. Second, since the establishment of diplomatic relations between Beijing and Seoul in 1992, China has adopted and maintained a balanced two-Korea policy under the new political and security environment. While offering support to the two Koreas’ desire for peace and unification, Beijing also is keen on seeing a neutral unified Korea and certainly would be strongly opposed to one under U.S. influence [2].

Third, China’s continued interests in peninsular stability have been driven in part by its long-standing appreciation of the importance of North Korea as a strategic buffer. Historically, the peninsula acted as the fulcrum for China to exercise its influence in Northeast Asia and it doubles as a passageway for foreign invasion, Japan in particular. Beijing is therefore highly sensitive to any power establishing dominance on the peninsula. This line of thinking partially explains China’s entry into the Korean War and its continued involvement in peninsular affairs [3]. Some Chinese analysts even consider the Korean Peninsula as a major asset in countering U.S. hegemonic ambitions in Northeast Asia and call for the formation of a quasi-military alignment between China, North Korea, and Russia [4]. Yet North Korea’s strategic importance to China also provides Pyongyang with a trump card in its dealing with Beijing—China is averse to seeing the North’s deteriorating situation since this would in turn affect Chinese interests, hence giving it a source of asymmetrical power [5].

Indeed, some Chinese analysts concede that since Pyongyang has drawn the logical conclusion that its very existence has contributed to China’s security by drawing down significant numbers of U.S. and South Korean troops and therefore relieving the pressure on China, Beijing would find it hard to adopt sanctions against North Korea and indeed even had to accept the reality of its nuclear test. The fact that China, however, joined other nations in imposing UN sanctions on North Korea in reaction to its nuclear test also suggested that China’s own security interests were seriously compromised because of Pyongyang’s defiance of international warning, including those from China [6]. That is why while Beijing’s active engagement has prevented the crisis from escalating, it has not been able to reverse the course of developments or bring it to a closure. In that context, China’s role has remained largely procedural in maintaining the process open and at most restraining deterioration of the situation [7].

Retaining that influence remains crucial for China. There are already concerns among Chinese analysts that improvement on the North Korean nuclear issue could dilute the importance of China as a mediator or chair of the Six-Party Talks since one of Pyongyang’s key objectives has always been to talk directly to Washington and, to the extent possible, reduce its dependence on Beijing. The reference to “three parties” in a possible international summit, implying exclusion of China, must be understood within this context (Lianhe Zaobao, October 12). To sustain China’s critical role on peninsular developments, Beijing is likely to advocate and support the expansion and extension of the current Six-Party Talks into a regional crisis management and confidence-building mechanism, leading eventually to a security institution for Northeast Asia [8].

Geo-strategic interest aside, Beijing is also keen on turning North Korea from a basket case into economic opportunities. As a consequence of years of economic difficulties and continued international isolation, China now effectively shoulders a large portion of economic aid to North Korea in terms of food and energy supplies, in addition to exports of critical materials at below market prices, just to keep it afloat and prevent massive exodus of economic refugees from roaming into China. For instance, Beijing reportedly allocates between 25 percent to one-third of its total annual foreign assistance budget to North Korea in recent years. From the mid-1990s to 2001, Chinese financial assistance to North Korea was estimated at U.S. $210 million, about 10 percent of the total provided by the international community during the same period. It provides between 70 to 90 percent of North Korea’s energy supplies, with Chinese fuel supplies estimated at over U.S. $100 million a year. China has now become North Korea’s largest trading partner by default, with bilateral trade in 2003 amounting to U.S. $1 billion, about 33 percent of North Korea’s total foreign trade. This amount grew to U.S. $1.4 billion (2004), U.S. $1.5 billion (2005), and U.S. $1.7 billion (2006), with China accounting for close to 50 percent of the DPRK foreign trade (Asia Times Online, October 6; Congressional Research Service, May 26, 2005; International Crisis Group, February 1, 2006; Nautilus Institute Policy Forum Online, January 6, 2006).

In recent years, China has sought to move the bilateral economic relationship from one of largely financial assistance to economic cooperation with mutual benefits. Over 100 Chinese companies are investing in North Korea, with activities concentrated in mining and resource-related manufacturing to take advantage of the complementary nature of the two economies. Three areas have received particular attention: mining, iron and the steel industry, and port development (International Crisis Group, February 1, 2006). In December 2005, the two governments also signed an agreement on joint exploration of oil in the Yellow Sea during DPRK Vice Premier Ro Tu Chol’s visit to Beijing. Yet, given the significant energy shortage and the poor state of infrastructure and lack of legal framework for contractual sanctity, Chinese investments remain small in scale and have yet to generate meaningful returns [9].


China has important geo-strategic and—over the longer term—economic interests in peninsular affairs. While endorsing the North-South process toward negotiating a permanent peace regime, Beijing will likely insist on retaining its lead role in the process to ensure that its interests are protected and advanced based on—at the least—three principles and policy objectives. First, China would support inter-Korea reconciliation and peace based on de-nuclearization and peninsular stability, and toward a unified but friendly neighbor. Second, Beijing seeks to retain its role in the Six-Party Talks to expand it into a regional security institution. Third, China is working toward promoting its economic interests in North Korea, especially as the latter’s importance as sources of raw materials and future markets grows. In this context, Chinese officials will remain highly vigilant even as the premium of the North Korean nuclear threat decreases as the peace process proceeds. The peace process is expected to run into several electoral hurdles as both Roh and Bush are eager to leave their legacy before the end of their terms, and China, as ever, waits patiently to see the inter-Korean peace process evolve.


1. Teng Jianqun, “Chaohe wenti de lishi he diyuan zhengzhi jieshi [The Historical and Geopolitical Explanations of the North Korean Nuclear Issue],” June 15, 2007, China Institute of International Studies []; Chen Yang, “Zailiyi yu xietiao zhijian: chaohe wenti yu zhongmei guanxi [Between Interests and Coordination: the North Korean Nuclear Issue and Sino-U.S. Relations],” Guoji guancha [International Observation], No. 1 (2005), pp. 53-59; Ren Xiao, “Korean Security Dilemmas: Chinese Policies,” in Hazel Smith, ed., Reconstituting Korean Security: A Policy Primer (TokyoNew YorkParis: United Nations University Press, 2007), pp. 145-161.

2. Xiaoxiong Yi, “A Neutralized Korea? The North-South Rapprochement and China’s Korea Policy,” Korean Journal of Defense Analysis XII: 2 (Winter 2000), pp. 71-118; Fei-Ling Wang, “Joining the Major Powers for the Status Quo: China’s Views and Policy on Korean Reunification,” Pacific Affairs, Vol. 72, No. 2 (Summer 1999), pp. 167-185.

3. Shen Dingli, “North Korea’s Strategic Significance to China,” China Security (Autumn 2006), pp. 19-34.

4. Chen Fengjun and Wang Chuanjian, Yatai daguo yu chaoxian bandao [Asian-Pacific Major Powers and the Korean Peninsula] (Beijing: Beijing University Press, 2002), p. 7.

5. Samuel S. Kim and Tai Hwan Lee, “Chinese-North Korean Relations: Managing Asymmetrical Interdependence,” in Samuel S. Kim and Tai Hwan Lee, eds., North Korea and Northeast Asia (Lanham: Rowman & Littlefield Publishers, Inc., 2002), pp. 111-112.

6. Li Hua and Fang Xiouyu, “Waijiao yu weishe—lun zhongmei zai chaohe weiji zhongde zhengze quxiang jiqi xiandu [Diplomacy and Deterrence—on U.S. and Chinese Policies on the North Korean Nuclear Crisis and Their Limitations],” Guoji wenti luntan [International Review], Spring 2007, pp. 70-85.

7. Li Kaosheng, “Zhongguo dui chaohe wenti yingxiang de dingliang fenxi [An Quantitative Analysis of China’s Influence on the North Korean Nuclear Issue],” Shijie jingji yu zhengzhi [World Economics and Politics], no. 4 (2007), pp. 48-53.

8. Shi Yuanhau, “Liufang huitan mianlin de xintiaozhan yu dongbeiya anquan hezuo [New Challenges for the Six-Party Talks and Northeast Asian Security Cooperation],” Xiandai guoji guanxi [Contemporary International Relations], no. 8 (2007), pp. 8-13.

9. Eastday (Shanghai), “China and North Korea Signed Agreement on Joint Exploration of the Yellow Sea Oil Field,” December 26, 2005; “Lin Jing-shu, “On Chinese Enterprises Investment in North Korea,” International Trade, No. 10 (2005), pp. 18-22; Jae Cheol Kim, “The Political Economy of Chinese Investment in North Korea,” Asian Survey 46:6 (November/December 2006), pp. 898-916.