September 22, 2017 / 5:39 AM / a year ago

Breakingviews - Diplomatic fog blinds China and U.S. over N. Korea

HONG KONG (Reuters Breakingviews) - China’s central bank has ordered lenders to halt business with North Korean clients, Reuters reports. Tightening Chinese sanctions on the secretive regime are starting to show signs of economic effect, but Kim Jong Un’s volley of missiles tests continues. Half-hearted cooperation between presidents Xi Jinping and Donald Trump is no credible deterrent, alas. The risk of real violence, instigated by a weak and reckless U.S. president, is rising.

A ballistic rocket is test-fired through a precision control guidance system in this undated photo released by North Korea's Korean Central News Agency (KCNA) May 30, 2017. KCNA/via REUTERS

Given the ugliness of the military option, it is laudable so much effort has gone into peaceably dissuading the Democratic People’s Republic of Korea from going nuclear. Alas, this moral high road has led nowhere.

China is struggling to accept the fact that its ostensible ally could now be a bigger threat than the United States. Policy reflects this. On the one hand, Beijing is tightening restrictions on trade, credit and investments, and cutting oil exports. That drains Pyongyang’s hard currency reserves, and increases transport costs; black-market diesel prices have nearly tripled. Interdicting smuggling has pushed up prices of imported goods like laundry powder.

Graphic: Chinese cutbacks on oil exports to North Korea may push up prices in border black markets:

Yet China keeps squeezing South Korea to deactivate its new U.S. missile-defence system, and lobbying for a halt to American and South Korean military exercises. This suggests Beijing still believes the root of the problem is America’s presence in Asia, not the instability inherent in the world’s only communist dynasty.

Kim is reassured by such actions, and unconcerned by the price of laundry powder. What economic development the DPRK has enjoyed is largely an unintended spillover from China, not a policy goal; the Kims prefer to rely on malnourished xenophobia for mandate.

In recent weeks Trump administration figures have verbally cleared the decks for military action. If this tougher sanctions regime doesn’t work, violence could be imminent. Kim is certain to punish South Korea in response: bombing harbours, sinking ships, hacking power grids. He may believe the People’s Liberation Army will defend him while he does. Given the confused and contradictory state of Sino-U.S. relations, this situation would almost certainly spiral out of control. It is, tragically, a more likely outcome than Kim laying down nuclear arms for the good of his people.


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