The China–North Korea Relationship

North Korean leader Kim Jong-un meets with China’s Xi Jinping in Beijing. KCNA via Reuters

China is North Korea’s biggest trade partner and arguably has the most leverage on Kim Jong-un’s regime. But while Beijing appears willing to condemn its neighbor’s nuclear developments, analysts say its cautious policies remain focused on stability.

Last updated March 28, 2018

North Korean leader Kim Jong-un meets with China’s Xi Jinping in Beijing. KCNA via Reuters
Backgrounder
Current political and economic issues succinctly explained.

Introduction

China is North Korea’s most important trading partner and main source of food and energy. It has helped sustain Kim Jong-un’s regime, and has historically opposed harsh international sanctions on North Korea in the hope of avoiding regime collapse and a refugee influx across their 870-mile border. Pyongyang’s nuclear tests and ongoing missile launches have complicated its relationship with Beijing, which has continued to advocate for the resumption of the Six Party Talks, the multilateral framework aimed at denuclearizing North Korea. A purge of top North Korean officials since its young leader came to power and the assassination of Kim Jong-nam, Kim Jong-un’s exiled half- brother, in Malaysia also spurred concern from China about the stability and direction of North Korean leadership. Yet China’s policies have done little to deter its neighbor’s nuclear ambitions.

Alliance Under Stress

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China’s support for North Korea dates back to the Korean War (1950–1953), when its troops flooded the Korean Peninsula to aid its northern ally. Since the war, China has lent political and economic backing to North Korea’s leaders: Kim Il-sung (estimated 1948–1994), Kim Jong-il (roughly 1994–2011), and Kim Jong-un (2011–). But strains in the relationship began to surface when Pyongyang tested a nuclear weapon in October 2006 and Beijing supported UN Security Council Resolution 1718, which imposed sanctions on Pyongyang. With this resolution and subsequent ones, Beijing signaled a shift in tone from diplomacy to punishment. After North Korea’s latest missile launch in November 2017, China expressed “grave concern and opposition,” calling on North Korea to cease actions that have increased tensions on the Korean peninsula.

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China’s punitive steps have been somewhat restrained though. For example, China backed UN Resolution 2375 in September 2017 after some of the measures in a draft version were dropped, including an oil embargo and the authorization to use force when ships do not comply with mandated inspections. Western officials and experts doubt how committed China is to implementing even limited trade restrictions.

Still, Beijing continues to have sizeable economic ties with Pyongyang. Bilateral trade increased tenfold between 2000 and 2015, peaking in 2014 at $6.86 billion, according to figures from the Seoul-based Korea Trade-Investment Promotion Agency. With the advent of tougher sanctions, trade growth has dampened, but Pyongyang is still dependent on Beijing for economic activity.

Yet Beijing seems more inclined to uphold some of the international sanctions against Pyongyang and increasingly poised to take some limited measures to squeeze its neighbor economically. For example, China’s commerce ministry temporarily suspended coal imports from North Korea in February 2017. State-owned oil giant China National Petroleum Corporation suspended fuel sales to North Korea in June 2017, citing concerns that North Korea would fail to pay the company. In September 2017, media reports cited efforts by Chinese banks, including China Construction Bank, Bank of China, and the Agricultural Bank of China, to restrict the financial activities of North Korean individuals and businesses.

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Aid and Trade for Pyongyang

16.7%
The drop in Chinese imports from North Korea in first three quarters of 2017
Source:
China General Administration of Customs

In recent years, despite Beijing’s displeasure at Kim Jong-un’s unwavering nuclear ambition, connectivity between China and North Korea has grown. China provides North Korea with most of its food and energy supplies and accounts for more than 90 percent of North Korea’s total trade volume. In the first three quarters of 2017, Chinese imports from North Korea actually fell by 16.7 percent, though exports were up by 20.9 percent. Despite announced trade restrictions in textiles, seafood, and oil products, there are reports of North Korean businessesstill in operation in China.

Bilateral trade between China and North Korea has steadily increased. Korea Trade-Investment Promotion Agency (KOTRA).

In September 2015, the two countries opened a bulk-cargo and container shipping route to boost North Korea’s export of coal to China and China established a high-speed rail route between the Chinese border city of Dandong and Shenyang, the provincial capital of China’s northeastern Liaoning province. In October 2015, the Guomenwan border trade zone opened in Dandong with the intention of boosting bilateral economic linkages, much like the Rason economic zone and the Sinujiu special administrative zone established in North Korea in the early 1990s and 2002, respectively. Dandong is a hub for trade, investment, and tourism for the two neighbors—exchanges with North Korea made up 40 percent of the city’s total trade in 2015 and 70 percent of trade in and out of North Korea was conducted via Dandong and Sinujiu in 2016. However, a new $350 million bridge over the Yalu River to connect the two cities, intended to open in 2014, remains incomplete across the North Korean border, a symbol of cooled relations between Beijing and Pyongyang. Still, North Korea’s dependence on China continues to grow. Moreover, established informal trade along the China-North Korea border in items such as fuel, seafood, silkworms, and cell phones signals that despite stricter sanctions, smugglers continue to operate.

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Beijing also provides aid [PDF] directly to Pyongyang, primarily in food and energy assistance. China, Japan, South Korea, and the United States have provided more than 75 percent of food aid to North Korea since 1995, but donations from all countries except for China have shrunk significantly since the collapse of the Six Party Talks in 2009. North Korea, whose famine in the 1990s killed between eight hundred thousand and 2.4 million people, has repeatedly faced extensive droughts and severe flooding, which seriously damage harvests, threatening the food supply. UN agencies estimate that up to 70 percent of the population, or eighteen million people, is undernourished and food insecure. There is also concern about the distribution of aid in North Korea, particularly since China has no system [PDF] to monitor shipments.

China’s Priorities

China has regarded stability on the Korean peninsula as its primary interest. Its support for North Korea ensures a buffer between China and the democratic South, which is home to around twenty-nine thousand U.S. troops and marines. “While the Chinese certainly would prefer that North Korea not have nuclear weapons, their greatest fear is regime collapse,” writes Jennifer Lind, a professor at Dartmouth University.

The specter of hundreds of thousands of North Korean refugees flooding into China has been a worry for Beijing. “Instability generated on the peninsula could cascade into China, making China’s challenge of providing for its own people that much more difficult,” says Mike Mullen, former chairman of the U.S. Joint Chiefs of Staff. The refugee issue is already a problem for China: Beijing’s promise to repatriate North Koreans escaping across the border has consistently triggered condemnation from human rights groups. Beijing began constructing a barbed-wire fence more than a decade ago to prevent migrants from crossing, and a report in December 2017 indicated China had plans to construct refugee camps along its border as a contingency for a peninsular crisis. The majority of North Korean refugees first make their way to China before moving to other parts of Asia, including South Korea. However, tightened border controls under Kim Jong-un have decreased the outflow of refugees.

[For Beijing,] stability on the Korean Peninsula has always been prioritized over denuclearization.
Ely Ratner, Council on Foreign Relations

Though Beijing favors a stable relationship with Pyongyang, it has also bolstered its ties with Seoul. China’s Xi Jinping has met with South Korean President Moon Jae-in and his predecessor, Park Geun-hye, on several occasions. China was South Korea’s top trading partner in 2017 and the destination for a quarter of the South’s exports. Meanwhile, South Korea ranked fourth among China’s trade partners. In recent years however, China has taken retaliatory measures against South Korean businesses to oppose the deployment of a U.S. missile defense system in South Korea’s eastern province of North Gyeongsang.

Experts say China has also been ambivalent about its commitment to defend North Korea in case of military conflict. The 1961 Sino-North Korean Treaty of Friendship, Cooperation, and Mutual Assistance, up for renewal in 2021, says China is obliged to intervene against unprovoked aggression. But Bonnie Glaser of the Center for Strategic and International Studies says the Chinese government has tried to persuade North Korean leaders to revoke the clause that would force Beijing to come to Pyongyang’s defense.

Although the Brookings Institution’s Jeffrey Bader has described the alliance between Beijing and Pyongyang as “a thing of the past,” Xi still envisions Beijing as playing an instrumental role in interactions between its neighbor and other international players. Kim and Xi appeared to strike a more amicable chord by holding a secretive meeting in Beijing in late March 2018, marking the North Korean leader’s first trip outside of his country since coming to power more than six years earlier. While Xi heralded the tradition of friendship between China and North Korea, Kim reiterated a commitment to denuclearization and a willingness to hold a dialogue with the United States.

Meanwhile, Beijing has urged world powers not to push Pyongyang too hard, for fear of precipitating the leadership’s collapse and triggering dangerous military action. It has also intimated that if Pyongyang initiates conflict, it would not abide by its treaty obligation and instead stay neutral. Some experts, such as Oriana Skylar Mastro, have suggested that in the event of conflict, Chinese forces may not be involved in coming to North Korea’s defense, but rather would seek to play a significant role in shaping a “post-Kim peninsula to its liking.”

Washington’s Role

The United States has pushed North Korea to irreversibly give up its nuclear weapons program in return for aid, diplomatic benefits, and normalization of relations. But experts say Washington and Beijing, while sharing the goal of denuclearizing North Korea, have different views on how to reach it. The United States values using pressure to force North Korea to negotiate on its nuclear weapons program, while China advocates for the resumption of multilateral talks and what it has called a “freeze for freeze,” a freeze in military exercises by the United States and its allies for a freeze in North Korea’s nuclear and missile testing. Ultimately, for Beijing, “stability on the Korean Peninsula has always been prioritized over denuclearization,” says CFR’s Ely Ratner.

Washington has also tried to pressure Beijing to lean more heavily on Pyongyang. U.S. presidential executive orders [PDF] and congressional moves impose sanctions on countries, firms, or individuals contributing to North Korea’s ability to finance nuclear and missile development. Some measures target North Korean funds in Chinese banks, while others focus on its mineral and metal export industries, which make up an important part of trade with China. Washington deployed a missile defense system known as the Terminal High Altitude Area Defense, or THAAD, in 2017 to boost regional security, though Beijing strongly condemned the move and sees it as a threat to Chinese national security.

If China is not going to solve North Korea, we will.
Donald J. Trump, President of the United States

The administration of President Donald J. Trump has shaken up U.S. policy toward North Korea. Officials have stated that “all options are on the table,” alluding to the possibility of preemptive military strikes to thwart Pyongyang’s nuclear tests and development. Trump has also warned that Washington will be prepared to take unilateral action against Pyongyang if Beijing remains unwilling to exert more pressure on its neighbor. “If China is not going to solve North Korea, we will,” Trump said in an April 2017 interview with the Financial Times. Going even further, Trump told the UN General Assembly in September 2017 that the United States would “have no choice but to totally destroy North Korea,” if it was forced to defend itself or its allies. In January 2018 Trump softened his rhetoric and and that March he accepted an invitation for talks with Kim in Pyongyang. Meanwhile, the U.S. military has stepped up joint exercises with Japan and South Korea and has periodically dispatched U.S. carrier strike groups near North Korea as a show of force.

Still, the United States appears more interested in leveraging China’s economic influence over North Korea. Some experts, including David S. Cohen and Anthony Ruggiero, argue that Washington should impose more secondary sanctions that will penalize Chinese banks that help finance North Korean front companies. The U.S. Treasury has done just that, imposing some secondary sanctions on both Chinese and Russian entities. Meanwhile, other analysts worry that such economic pressures and further alienation of Pyongyang could embolden the Kim regime to resort to rash military action. Others question the effectiveness of sanctions in getting China to bring North Korea to the negotiating table. North Korea has vowed that the country’s nuclear weapons program will never be up for negotiation.

Looking Forward

“North Korea is in a category all its own,” writes the Brookings Institution’s Jonathan D. Pollack. “The North Korean leadership has thus convinced itself (if not others) that its existence as an autonomous state derives directly from its possession of nuclear weapons.” Though China may be unhappy about North Korea’s nuclear brinkmanship, analysts say it seeks to avoid moves that could cause a sudden regime collapse. In a crisis, however, some say it would act swiftly to maximize its influence and protect its national interests.

Even as China signals that it will toughen its stance toward North Korea—though stopping short of challenging its survivability—there is mounting skepticism that China alone can resolve the North Korea problem. Chinese officials have emphasized that they do not “hold the key to the issue.” Some analysts say that China’s tightening of economic ties are unlikely to deter Kim’s nuclear ambitions, while others say the North Korean leader no longer cares what China thinks of its actions.

Whether Chinese pressure can sway Pyongyang to alter its behavior remains to be seen, especially in a climate of mounting distrust in Northeast Asia, but North Korea’s nuclear program is becoming increasingly problematic for China’s desire to maintain regional stability.

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Resources Up

The New York Times profiles a woman who built a commercial empire on trade between China and North Korea.

Riccardo Alcaro and Ettore Greco analyze the North Korea challenge in a November 2017 Global Governance Working Paper.

Evan Osnos explores China’s reluctance to pressure North Korea in a September 2017 New Yorker article.

CFR experts Ely Ratner, Sheila A. Smith, and Scott A. Snyder discuss U.S. options on North Korea in this August 2017 conference call.

China expert Minxin Pei weighs in on China’s policy decisions vis-à-vis North Korea in the Atlantic.

This 2016 CFR Independent Task Force report, A Sharper Choice on North Korea, argues that China’s policy toward its neighbor will critically affect the fate of Asia.

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