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Why China Doesn’t Want a Nuclear North Korea

9 January 2008

by Daniel Michaeli

Date: 9 January 2008.

Publication: Far Eastern Economic Review.

Author: Daniel Michaeli.

North Korea’s nuclear program is a danger not only to the United States, but also to China. A proliferation crisis, particularly in the Middle East, would carry consequences compromising the delicately balanced domestic economic and social stability that China’s leaders strive to maintain. In order to preserve its own interests, China must prevent such a crisis from occurring.

The discovery of another nuclear weapons program in the Middle East would inflame tensions and could lead to a wide-scale war. North Korea was caught this summer assisting a nascent Syrian nuclear program, which was easily destroyed by an Israeli air strike.

But Israel’s successful past strikes against nuclear targets in Iraq and Syria provide no indication of how far Israel would go if a neighbor’s nuclear program is too well protected to be disabled from the air. Indeed, Israel has pledged to attack pre-emptively any regional nuclear program at its own discretion, whatever the consequences.

The Chinese economy would be particularly hard hit by a new war in the Middle East. Instability would elevate oil prices, reducing demand and consumer confidence in China’s export markets. In the event of a war, an upswing in terrorist attacks against American targets is also possible. At the same time, the energy efficiency of China’s economy is 10% below that of developed nations; if China’s government is unable to increase oil subsidies, higher costs will have a particularly serious impact on Chinese manufacturers.

Rising prices are already a major problem in China, where inflation rates are the highest in 11 years. According to Albert Keidel, a China expert at the Carnegie Endowment for International Peace, China’s current policies on inflation are similar to those that forced harsh corrective steps in 1988-1989 and 1993–1996. An additional steep oil price increase resulting from nuclear proliferation could spark an inflation crisis and even social instability (inflation played a major role in the emergence of the Tiananmen Square protest movement of 1989).

Another vulnerability arises for China if North Korean nuclear material is ever used in a devastating terrorist attack. The global economic impact of such an attack would be far more severe than after 9/11. Even worse, the U.S. retaliation against North Korea may result in disarray in South Korea, China’s third-largest trading partner, and a destabilizing influx of Korean refugees into China’s northeast.

The only way to be sure North Korea will stop proliferating is if Kim Jong Il is made to believe that being caught will result in an unbearable consequence. But the U.S. lacks the credibility and the leverage to provide a deterrent. Only the credible threat of the complete cutoff of oil supplies from and trade with China, which provides 80%-90% of North Korea’s oil, is likely to force Kim to reconsider his nuclear activities.

In compelling North Korea to stop its nuclear proliferation, China can protect its economic and social stability while bolstering its international status. While acting now will also help secure U.S. interests, Chinese leaders will likely take this step only when they understand what is at stake for China.


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