There are cracks showing in the normally solid wall of friendship between China and North Korea. The unprecedented visibility of a corporate dispute has sown doubt over the real consistency of the industrial integration that the two countries have been developing along their respective border areas. Work was stopped, and the contract governing the relationship between the Xinyang Group of the Chinese Liaoning province and the North Korean state-owned mining company was torn up. The joint venture, owned for 75% by the Chinese partner, had been producing iron dust, a product of the initial refining of the ore, since 2007.
In an exchange of accusations, the two parties threw out an ambitious project that was one of the most important among those installed in North Korea by the Chinese in an attempt to revitalize Pyongyang’s economy. Xiyang went as far as accusing the Chinese government of favoring the North Koreans, asserting that “one of our objectives in spreading the news is to warn other Chinese investors on the dangers of investing in North Korea.” The North Koreans replied, defending their work and reaffirming their desire to collaborate with China and its companies.
Nevertheless, the North Koreans continued the dispute, denying the solid friendship so often touted by propaganda. Chinese attempts at to limit or postpone Pyongyang’s ballistic missile and nuclear tests. Beijing has expressed its irritation publicly, but North Korea’s determination seems to be steadfast. Last May, North Korean soldiers attacked a Chinese fishing vessel and held the crew of 25 men captive for two weeks, for the alleged crime of violating fishing rights. It is next to impossible to gauge the importance of these events. North Korea is virtually impermeable to information, and its dependence on China is immeasurably more important than any dispute that may arise. Without Chinese political protection or its material support, the North Korean regime would not survive for long. China holds 90% of North Korea’s foreign commerce, provides air travel to the outside world, and guarantees vital supplies of food and oil.
In a complex diplomatic dance that involves all of the non-European powers, even China stands to be heavily damaged by a falling out with North Korea. A collapse of the regime would present immediate dangers. Millions of refugees would put pressure on the frontier, and a reunification under the South Korean flag would have destabilizing effects. China would find Seoul’s troops, and their American allies, on her doorstep. The best solution is to help North Korea to emerge from the dramatic economic situation of some years ago.
Some signs are already evident: collaboration in the special economic zones continues, North Korean quality of life – at least in the big cities – is improving, and perhaps the harshness of the regime is being reconsidered. Automobiles and cellular phones can now be seen in Pyongyang, an unimaginable sight just a few years ago. While it signs agreements for the exploitation of North Korea’s mines, Beijing tries to keep its fraternal neighbor on a dual string: economic for survival, and social for the imitation of a model. Giving room to private enterprise, softening the harshness of the law, and enhancing its productive force may be the only chance left for the North Korean regime. If this is the overall picture, the disputes with China are just little bumps along the road, useful only to show North Korea’s pride and independence.