Published daily by the Lowy Institute

On North Korea, China’s interests are unchanged

China closing North Korean businesses should not be seen as a shift in approach.

'Friendship Bridge' and 'Broken Bridge', which link China and North Korea, May 2017 (Photo: Kevin Frayer/Getty Images)
'Friendship Bridge' and 'Broken Bridge', which link China and North Korea, May 2017 (Photo: Kevin Frayer/Getty Images)

China's recent move to close North Korean businesses operating in China is undoubtedly welcome news to Australian and US policymakers. However, this is should not be seen as a shift in China's approach to North Korea. Rather, it is a tactical manoeuvre – China's goals and interests regarding the Peninsula remain the same.

In the last few weeks, we have seen China undertake several measures in relation to North Korea. Aside from the order for all North Korean businesses operating in China to close, China's central bank has ordered all Chinese banks to stop working with the North Korean regime. China also announced last week that it would cut off gas and limit the amount of refined petroleum products it ships to North Korea.

These moves should not be understood as a shift in China's mindset towards North Korea or Kim Jong-un's regime. China's agenda for the Peninsula is fundamentally different from that of Australia or the US. While all three want to see denuclearisation, regime collapse is absolute anathema to Xi's government. For China, concerns about a wave of North Korean refugees flooding into China (and the instability that would cause) as well as the potential for a unified, US-allied Korea bordering China outweigh fears of nuclear war. While there is debate within China about policy towards North Korea, there is little to suggest that avoiding regime collapse has ceased to be the primary goal.

So what has motivated China to undertake these measures now?

It's hard to say with any real certainty, but one possible factor could be concerns about regional stability and security (both central to China's own development and prosperity). Another could be China's frustration at the poor state of relations between China and North Korea, which are at their lowest for many years and show no signs of improving. It is also conceivable that China wants to dampen US President Donald Trump's bellicose rhetoric, given that it seems to be further inflaming the situation. How China is perceived by the international community and the desire to be seen as a responsible global actor could also play a role. The upcoming National Congress and the importance for Xi that the Chinese population see him as a powerful and relevant global leader may be a consideration as well. It is critical for Xi's legitimacy that he be seen as able to manage the US-China relationship – taking action that diminishes US criticism of China could play well for him at home.

While all of these are possibilities, the extent to which any of these factors is causal remains to be seen. What we do know is that while China has undertaken some measures, it has not yet done all it could to squeeze the Kim regime. For example, it has not mentioned any plans to reduce crude oil shipments to North Korea, which are an important part of China's energy supplies to the country. This would suggest that China remains unwilling to put the kind of pressure on Kim Jong-un that could really threaten the viability of the regime. By the same token, the measures China has taken indicate that China is increasingly frustrated with the direction the situation on the Peninsula is heading.

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