Author: Victor Cha
Posted on: Foreign Affairs | March 21st, 2017
Why Beijing’s Coal Ban Isn’t Enough
On February 18, the Chinese Commerce Ministry announced a ban on coal imports from North Korea, raising hopes that Beijing may finally be ending its support for its communist ally and neighbor. The ban went into effect immediately and will remain in place until the end of the year. China appeared to be going beyond its November commitments, stated in UN Security Council Resolution (UNSCR) 2321, which involved capping North Korean coal imports rather than halting them outright.
Analysts saw the ban as a demonstration of Chinese discontent with North Korea’s murder of Kim Jong Nam, the half-brother of Kim Jong Un. Jong Nam had been critical of his younger brother’s rule, telling the Japanese journalist Yoji Gumi that he questioned “how Jong Un, who merely resembles my grandfather, will be able to satisfy the needs of North Koreans.” Rumor has it that Kim Jong Un had previously tried to have Jong Nam killed in 2012, and South Korean intelligence officials admitted after his death that there has been a standing order to kill him since 2011, after which the Chinese informally committed to protecting him as he shuttled between casinos in Macao and his mistresses in Southeast Asia. Given that between 80 and 85 percent of North Korea’s external trade is with China, Beijing’s decision to pressure North Korea economically could help compel Pyongyang to denuclearize.
But when it comes to China and North Korea, nothing is ever as simple as it seems. China is part of the solution when it comes to North Korea, but, through its continued material support of the Kim regime, it is also part of the problem. In order to make progress on North Korea’s nuclear program, Western leaders will therefore need to frame near-term policy choices for China in a way that encourages Beijing’s compliance with existing UN sanctions on North Korea, while creating in the longer term a more direct Chinese stake in its neighbor’s denuclearization.
FROM SPECIAL TO NORMAL
All signs point to the Chinese being upset with the North Koreans. There has not been a summit between Chinese President Xi Jinping and Kim since the latter’s ascent to power at the end of 2011—in stark contrast to the history of summit diplomacy between the two allies. Chinese officials and academics in Washington, D.C. seem to have been given the license to express open frustration with the regime. A telling example was the scathing December 2014 commentary published in Global Times by Chinese Lt. Gen. Wang Hongguang, in which he said that China was “used to clean[ing] up the [North Korea’s] mess … but it doesn’t have to do that in the future.” Every North Korean provocation now leads to complaints and criticism of Beijing by the international community, and the cumulative effect may be wearing Beijing’s patience thin.
Still, China’s sentiments can be difficult to measure. At CSIS Beyond Parallel, a data-based analytic microsite on Korean unification, we have therefore gathered data to measure the Chinese government’s anger toward North Korea. The site recorded all high-level visits between the two countries in the 63 years from the end of the Korean War to the present. High-level visits were defined as those involving the minister of foreign affairs and above on the Chinese side, and officials of similar status, such as members of the Politburo and cabinet-level officials on the North Korean side. The data set was drawn from the official list of high-level exchanges published by the Chinese foreign ministry and supplemented by visits documented elsewhere. Given that summit meetings (meetings between heads of state) carry more significance than foreign ministry meetings, these were weighted when calculating the average annual frequency of diplomatic exchanges. These results may be the best comparative metric for understanding how relations have soured in recent years.
Since 1953 there have been 161 officially documented high-level visits between the two sides. The data show that under Xi and Kim, there has been a significant drop in the average annual frequency of high-level exchanges. North Korea under Kim Jong Un has averaged only 1.8 visits per year, and China under Xi has averaged only 1.25. By comparison, during the Kim Jong Il and Hu Jintao periods, the average annual frequencies were 4.8 and 6.6, respectively. The current period has the lowest weighted frequency of visits in the history of the relationship, and the second-lowest unweighted frequency, ahead of only the Mao Zedong era.
The data also show that the Chinese were making a concerted effort to promote top-down reform during the Kim Jong Il years. During his eight trips to China between 2000 and 2011, the elder Kim was treated to a litany of visits to Chinese car factories, cellphone plants, fiber optics plants, solar panel makers, LCD panel plants, computer makers, high-tech science & IT research centers and companies and other manufacturing sites. But Kim Jong Un has not been accorded similar treatment, suggesting that Beijing may have given up on this effort.
The data thus appear to support China’s claim, made in 2013, that its relationship with North Korea has changed from a special one to a normal one. High-level exchanges between the two countries have declined in frequency, and there have been no summits in almost six years, which indicates a downturn in relations. The data also suggest China’s reduced ability to maintain high-level contact in crisis situations. After North Korea’s first nuclear test, in October 2006, the Chinese dispatched a high-level envoy within 11 days to help manage the diplomatic emergency that ensued. Yet between the second test, in May 2009, and the fifth one, in September 2016, an average of 120 days lapsed between the test and a visit by any high-level envoy from one country to the other. Since the fifth test, there has been no visit by either side (the March 1 visit by North Korean Vice Foreign Minister Ri Kil Song to China does not qualify under our definition of “high-level”).
Western policymakers may feel encouraged by China’s evident disenchantment with North Korea, which might present them with opportunities for more cooperation with Beijing. Yet as is often the case with China and North Korea, nothing is ever how it appears at first glance.
PART OF THE PROBLEM
China’s diplomatic pique is likely to be part of any successful attempt to get North Korea back at the denuclearization negotiating table. Pyongyang has spurned negotiations since 2008, when Six Party talks broke down after North Korea refused to provide a verifiable nuclear declaration. But Beijing’s continued material support of the regime, coal ban notwithstanding, remains part of the problem.
For one thing, China’s supposed squeezing of the North’s coal lifeline looks less impressive upon closer examination. Under UNSCR 2321, China was supposed to cap North Korean coal imports at one million metric tons in December 2016. Instead, it imported double that amount. Initial numbers for January and February 2017 suggest that China has already reached its 2017 cap in terms of dollar value by paying inflated prices for North Korean coal. China could also circumvent its own ban by utilizing a “humanitarian exemption” loophole in the UN sanctions. Last year, for example, China officially reduced North Korean coal in compliance with UN sanctions, but continued to import it by exploiting the “livelihood purposes” exemption in the UN sanctions, which allowed for imports at Chinese discretion. China also recently agreed, for the first time, to import 4,000 metric tons of liquefied petroleum gas from North Korea, which could provide Pyongyang with an additional source of foreign currency.
China couples any sanctions it levies on North Korea with demands for the United States to go back to the negotiating table. As Chinese Foreign Minister Wang Yi stated during U.S. Secretary of State Rex Tillerson’s trip to Asia, the Chinese fear that the United States and North Korea are on a collision course driven by U.S. military pressure and North Korea’s continued advances in its nuclear and missile programs. In addition, Chinese interlocutors have urged the United States to drop its insistence that talks with Pyongyang be about denuclearization, given that Kim Jong Un has declared that his country will never give up its weapons—a declaration that is also enshrined in the North Korean constitution. Rather, Beijing wants Washington to agree to a partial capping and freezing of the North Korean nuclear program in exchange for a peace treaty. The Chinese acknowledge that this is an imperfect solution, but they argue that it is a better option than a full-blown military crisis.
Yet China’s solution would be a bad deal for the United States. As part of the past two denuclearization agreements, in 1994 and 2005, the United States has paid North Korea about $500 million (in heavy fuel oil or its equivalent) for nuclear freezes that turned out to be temporary. It is hard to imagine that President Donald Trump will be willing to pay more for a solution that has failed twice in the past.
MAKING CHINA PAY
Moving beyond the current impasse will require presenting China with specific choices on North Korea. These will help determine whether Beijing is really moving away from Pyongyang or simply playing the same smoke and mirrors game, designed to trap the United States in a doomed negotiation that spares China a near-term crisis on its border, but ultimately just kicks the can down the road.
First, any U.S. strategy regarding North Korea must assume the possibility of failure, and thus we must design policies that will leave the United States and its allies better off even if the overall strategy fails. That is to say, policies are always designed to succeed, but in the case of North Korea, failure is a distinct possibility, and so the policy must take that into account.
Second, the United States should make clear to all interlocutors that it will not enter a negotiation as long as 80 to 85 percent of North Korea’s trade is with China. By definition, this is a losing proposition for the United States and all parties involved. Washington can use sanctions to go after North Korea’s sources of income, but this is ineffective as long as China continues to fund the regime through back channels, and allows its companies and banks to deal with North Korea.
Third, the United States should get China to step up and pay directly for denuclearization of North Korea. This may sound contradictory to the first point, but China has long been a free-rider in the negotiations over North Korea’s nuclear program. In both the 1994 and 2005 denuclearization agreements, the United States and its allies paid for nuclear inspections, and paid Pyongyang in goods, such as heavy fuel oil and energy substitutes, in exchange for a freeze in North Korea’s missile testing. But throughout these agreements, China maintained normal bilateral economic relations with North Korea. Thus Beijing has had no direct stake in the denuclearization project. This needs to change: despite the current ban on coal, if China is eventually going to give money to North Korea in order to keep it from collapsing, then this money must be tied directly to a nuclear freeze, inspections, and ultimately to denuclearization, and not to China’s economic interests. If China is put in a position of paying for denuclearization, it will take North Korea’s denuclearization more seriously than it does now. And should this approach fail, Beijing may see the situation more like the United States does today.
Fourth, China must demonstrate that it is a responsible player in the international counter-proliferation financing regime, which is designed to sanction North Korean entities that are funneling cash to the weapons programs. The United States should compel China to clamp down on domestic Chinese entities doing business with North Korea. The Treasury Department, for example, could announce that it is investigating all Chinese banking activities that wittingly or unwittingly assist the North Korean nuclear program. Those that do should have their assets frozen, or face the monetary fines and reputational consequences of violating UN and U.S. sanctions.
Fifth, as Anthony Ruggiero has argued, China should be asked to punish individuals known to have engaged in criminal collusion with North Korea. Just as with human rights abusers, the United States and its allies should “name and shame” Chinese nationals who have been accused of doing illegal business with Pyongyang. The U.S. Department of Justice, for instance, announced on September 26, 2016, that four Chinese nationals were wanted for conspiring to evade U.S. economic sanctions and facilitating prohibited U.S. dollar transactions for a sanctioned entity in North Korea. If China is serious about addressing the threat, then it should extradite cases like these. Beijing is unlikely to respond, but that should not deter the U.S. government from making a formal request.
Pundits will point to China’s coal ban as evidence of its growing disenchantment with North Korea, and argue that now is the time for a strategic and cooperative discussion about the fate of the Kim regime and the future of the Korean peninsula. But it is far from clear that Beijing is ready to cut off ties with Pyongyang. Rather than hoping for the day when China will make a strategic choice to work with the United States on denuclearization, we must accept that U.S. and Chinese interests on the Korean peninsula do not overlap. But that fact does not preclude a clear-eyed policy designed to make China invest more directly in denuclearization.