Illustration: Rebecca Zisser / Axios

As Chinese President Xi Jinping consolidates power and rolls out his trillion-dollar plan for international influence, there's one undeniable thorn in his side: Kim Jong-un. If the North Korean regime falls, a unified Korea likely means American troops on Chinese shores. But if Kim holds onto his nuclear weapons, the likelihood of a devastating war on China's turf keeps escalating.

The bottom line: The instability makes Beijing extremely nervous. Its goal: no chaos, no war, no nukes. And it will do whatever it takes to get there.

"Belligerent little brother"
  • Since Xi and Kim took power, China's diplomatic relationship with North Korea has deteriorated, Alison Evans, deputy head of Asia-Pacific country risk at IHS Markit, tells Axios.
  • Fighting together in the Korean War, the two nations had a "blood relationship." Now, Xi is treating North Korea like any other country, says Hui Zhang, who studies China and nuclear policy at the Harvard Kennedy School.
  • North Korea is like China's "belligerent little brother," Evans says. As a new and young leader, Kim has challenged the Chinese authority that his father accepted and sidelined pro-China factions of the North Korean leadership.
Don't underestimate how much North Korea and Kim hate China. And the feeling is mutual.
— Axios contributor Bill Bishop

What China wants: Stability and security in northeast Asia so China's strategic interests and trajectory of economic growth are preserved.

Sanctions squeeze

China's participation in the U.S.'s "maximum pressure campaign" against North Korea has played a big role in bringing North Korea to the table. North Korea gets 85% of its imports from China and sells 83% of its exports to China, per MIT's Observatory of Economic Complexity.

A closer look at how Chinese sanctions are beginning to hurt North Korea, from the Wall Street Journal:

  • If sanctions continue, the impact could trigger an economic crisis by 2019.
  • The price of North Korean seafood has fallen by half as Chinese rejection of exported fish overwhelms the local markets.
  • After China adopted the U.N.'s ban on importing North Korean garments, one Chinese businessman abruptly shut down his factory, cutting the jobs of "200 North Korean workers, half of whose pay was going to the Pyongyang government."

Yes, but: Sanctions take years to take effect. Instead, the primary factor pushing North Korea to talk is the big nuclear bargaining chip, says Zhang: Kim's assurance that he's built up a strong enough nuclear arsenal to deter attack from the U.S. and ask for regime security.

What to watch

China has three roles to play in the negotiations between the U.S. and North Korea:

  • China can guarantee North Korea that it'll hold the U.S. to its promise that it won’t attack or invade North Korea if Kim gives up his nuclear weapons. But it's hard for China to turn to the U.S. and say, "We'll come after you if you go after North Korea," says Zhang. The role of guarantor will have to be played in a strictly diplomatic sense.
  • China can offer help to verify denuclearization. The major dispute that will emerge in bilateral talks between the U.S. and North Korea is how Kim will allow the international community to verify denuclearization. North Korea is still a black hole for U.S. intelligence, and verification is the biggest hurdle in this latest round of talks, Axios' Shannon Vavra reports.
  • China can threaten further economic sanctions. The U.S. has the carrot that North Korea wants: the promise of regime security. And China's sanctions are the big stick that'll keep the pressure on Kim to negotiate.

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