China’s Cheonan Dilemma

The biggest loser from the ongoing tensions surrounding the sinking of a South Korean vessel may not be Seoul, or Pyongyang, but Beijing.

By refusing to condemn North Korea for its deliberate attack and sinking of a South Korean Navy corvette in March, China has lost hard-won credibility and reminded countries throughout Asia of the importance of the United States and its dominant presence in the Western Pacific.

The recovery of the vessel, the Cheonan, and dredging the seabed revealed a smoking gun — the remains of a North Korean torpedo. A South Korean report drawing upon the participation of experts from Australia, Britain, Sweden, and the United States and released in late May laid the blame squarely at the feet of North Korea, thus prompting the real aftershocks of the incident.

In response to the report, Beijing chose not to take a clear stand and simply acknowledged the report, as well as North Korea’s shrieks of denial. Rather than condemn North Korea’s violent act, Beijing ignored the findings of the international investigators after reportedly having been invited to join the team but declining. In early May, before the report’s release, both South Korean President Lee Myung-bak and North Korean leader Kim Jong Il had summits in China with President Hu Jintao to plead their respective cases, but neither came away satisfied.

China’s decision to protect North Korea reflects not only a careful policy calculation based on parochial self-interest, but also Beijing’s desire to maintain the regional security balance that, as the country’s leaders see it, is dependent on a strong China-North Korea relationship. Failure to support North Korea could lead to its collapse — which could bring far worse consequences for China than most outside observers realize.

China fears the potential for chaos in North Korea for a number of reasons. For starters, the prospect of starving refugees and the remnants of the Korean People’s Army so close to its own border is an obvious concern. The 1,400 kilometers of river that separate the two countries is narrow and shallow in many places, presenting an insignificant barrier to refugees and bandits seeking to cross. It is no coincidence that of all China’s 14 borders with neighboring states, the country’s People’s Liberation Army is the lead authority only for those frontiers that border North Korea and Myanmar.

Meanwhile, integration of North Korea’s economy and China’s northeastern provinces, particularly the provinces of Liaoning and Jilin, ensure that northeast China will pay a significant price should North Korea implode. Economic stability in these "rust belt" provinces, part of the struggling industrial region known informally in the West as Manchuria, is a key concern for Beijing. Having banked on trade with North Korea as a central part of their development plan (about half of the Chinese investors in North Korean joint ventures come from just these two provinces), these northern provinces might suffer significant economic impacts from further instability in North Korea. Not only is all politics local, but sometimes foreign policy is local too.

We take it for granted that North Korea is dependent on China, but key parts of China depend on North Korea as well. Regional authorities in Jilin have invested billions in infrastructure to create an economic corridor from the Chinese city of Changchun, running across the border, and ultimately linking to China’s lease on a pier at North Korea’s port of Rajin. Jilin’s plans have been blessed at the highest levels in Beijing. Should North Korea fail, the catastrophe would hit Beijing in the heart — and the northeast in the wallet.

Another motivating factor for Beijing is the notion held by many Chinese leaders that their relationship with North Korea maintains a fragile balance in Asia, pitting two erstwhile communist countries against the United States and its allies. Failing to support North Korea, in the minds of some Chinese strategists, even after such an egregious provocation as the Cheonan attack, might ultimately lead to the demise of the People’s Republic of China.

China’s unwillingness to allow North Korea to collapse under the weight of its own political and economic mismanagement reflects all these concerns. While China appears willing to pay the cost of at least maintaining the regime, neither China nor South Korea is willing to pay the price of rebuilding a failed state, resulting in an uneasy status quo.

Not surprisingly, China’s unwillingness to punish North Korea for its action or deter the regime from taking aggressive action in the first place has laid bare the limits of Chinese influence in the region and has been met with frustration in many parts of Asia.

China’s handling of the incident has already caused political shock waves in Japan. Prime Minister Yukio Hatoyama’s resignation and the sudden resolution of the status of the Futenma Air Station on Okinawa have injected tremendous uncertainty in Japanese politics that will undoubtedly affect the Diet’s upper-house elections in July. China’s response has only guaranteed a large U.S. military presence in Japan for the foreseeable future.

Although the Cheonan incident was traumatic for the South Korean people, President Lee has handled it deftly with a cautious, transparent, and measured response that appears to have prevented an escalation of tensions. However, the Cheonan tragedy will undoubtedly shape South Korean politics and unification policy. The North Korean torpedo is an exclamation point on the demise of the "Sunshine Policy" — South Korea’s much-criticized approach to economic engagement with the North. Any potential that China might have held in South Korean eyes to act as an intermediary or honest broker between North and South has likely evaporated as well.

China’s strategy to woo neighbors throughout Asia with promises of economic integration and repeately asserting its peaceful intentions has suffered a significant setback, even as China’s decision to "postpone" U.S. Defense Secretary Robert Gates’s visit to Beijing reflects China’s unease with the current regional security situation.

In the coming weeks and months, it will only become more unmistakable how the sinking of the Cheonan has roiled the region.