China, North Korea Tensions Rise After Failed Venture

As China and North Korea deepen their ties with Kim Jong-Un’s uncle’s visit and the hiring of North Korean guest workers in China, the New York Times reports tensions between China and North Korea seems to be on the rise after a failed mining venture:

 Lured by cheap iron ore and low wages, the Xiyang Group, one of China’s biggest mining conglomerates, took a significant risk, building a mine in economically backward North Korea that was designed to feed China’s steel mills and provide much-needed investment to China’s impoverished ally. The business spat came into the open last month when Xiyang posted a gritty, salacious blog item describing what the company called its “nightmare” in running the mine. It included details of high living by the North Korean managers when they visited China, where they were said to have demanded female escorts, expensive alcohol and cars. To the surprise of many, North Korea responded to Xiyang’s accusations with some of its own, despite its heavy dependence on Chinese aid and the investment of Chinese companies. The Beijing office of the Joint Venture and Investment Committee of North Korea posted a note on its Web site saying that Xiyang had failed to provide up to half of the investment it promised even after several years, and that many laws and regulations had been passed to provide more legal protection for foreign investors. To stand a chance of real economic advancement, analysts say, he would need continuing support from China. About two-thirds of the 305 foreign investments in North Korea are Chinese, according to a list published by the Open Source Center, a United States government intelligence organization that analyzes publicly available material. Japan comes next with 15 investments, according to the list.

Despite this spat between North Korea and a Chinese company, Chinese state media is claiming that North Korea is becoming a field for Chinese firms to compete in, from The Global Times:

As often with stories about North Korea, interest quickly faded once it was clear that this was not “the end of China’s support for North Korea” as so often predicted but something more akin to the normal give and take of business activities. The Chinese position seems to be that North Korea is stable under its new leadership and, no doubt with proper precautions, can be a reliable business partner. Negative assessments of North Korea’s economic development continue as regular features in most of the world’s press. Journalists who manage to get to the country, or who rely on refugee reports, play down the signs of economic change.

As with Myanmar about 10 years ago, some commentators see all Chinese activities as a seamless whole.

While speculations on China and North Korea’s economic relationship continues, the North’s relations with South Korea have been deteriorating as the South preparing to evacuate over 800 people at the DMZ . Amid mounting tensions, China is urging restraint between the two Koreas, Reuters adds:

Impoverished North Korea said on Friday it would attack if Seoul allowed activists to drop anti-northern leaflets on its territory, in its most strident warning against its long-time foe for months. “As a close neighbor of the peninsula, China urges the two Koreas to resolve the conflict through dialogue and consultation,” Chinese Foreign Ministry spokesman Hong Lei said in a statement. “We hope the two parties can stay calm and not make any provocative or radical actions.”

A looming presidential election in the south and plans to deploy longer-range missiles by the government in Seoul have angered the north and prompted an escalation of belligerent rhetoric from Pyongyang.