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[轉載] North Korean Foreign Relations

By Samuel S. Kim, Strategic Studies 4/07
May 9, 2007 - 10:13:08 AM

This dire assessment stems from the troublesome fact that the country has encountered a rapid succession of external shocks?he crumbling of the Berlin Wall, the end of both the Cold War and superpower rivalry, the demise of the Soviet Union and international communism, Moscow-Seoul normalization, and Beijing-Seoul normalization?n top of a series of internal woes, including the death of its founder, the ?ternal president??Kim Il Sung, a downward spiral of industrial output, food/energy/ hard currency shortages, shrinking trade, and deepening systemic dissonance, with the resulting famine killing at least 3?? percent of the population in the latter half of the 1990s.


Thus for the first time since the Korean War, the question of the future of North Korea?hether it will survive or collapse, slowly or suddenly?as prompted a flurry of debates and has provoked many on-the-fly pundits and soothsayers of one kind or another in the United States. Many of these predicted that in the wake of Kim Il Sung? death, the DPRK would collapse within 6 months; or that in less than 3 years, Korea would have a German-style reunification by absorption.

The popularity of this ?ollapsist??scenario also has been evident in the policy communities of some of the neighboring states. In 1994 and 1995, for example, South Korean President Kim Young Sam jumped on the collapsist bandwagon when he depicted North Korea as a ?roken airplane??headed for a crash landing that would be followed by a quick Korean reunification. The specter of collapse has even prompted behind-the-scenes efforts by the U.S. Department of Defense (DoD) to coordinate contingency planning with South Korean and Japanese allies. At a summit meeting held on Cheju Island in April 1996, leaders of South Korea and the United States jointly agreed to promote a two-plus-two formula, the Four-Party Peace Talks, even as they privately predicted that the collapse in the North could come as soon as 2 or 3 years.1 Such endgame speculation on the future of post?im Il Sung North Korea has become a favorite diplomatic sport.2

At the turn of the new millennium, which many predicted North Korea would not survive to see, not only does the socialist ?ermit kingdom??still exist, but with its nuclear and missile brinkmanship diplomacy, it has become a focus of regional and global prime-time coverage. The new consensus in South Korean and American intelligence communities in early 2000 was that North Korea would survive at least until 2015.3 Paradoxically, Pyongyang seems to have turned its weakness into strength by playing its ?ollapse card,??driving home that it is anything but a Fourth World banana republic that would disappear quietly without a big fight or a huge mess, a mess that no outside neighboring power would be willing or able to clean up. In addition, North Korea has catapulted itself into the position of a primary driver of Northeast Asian geopolitics through its nuclear diplomacy. Thus emerges the greatest irony of the region: today, in the post?old War world, North Korea seems both to enjoy a more secure sovereignty and pose greater security risks to its neighbors than has ever been the case in recent history.

The premise of this monograph is that for all its uniqueness as a state and its putative political autonomy, post?im Il Sung North Korea has been subject to the same external pressures and dynamics that are inherent in an increasingly interdependent and interactive world. The foreign relations that define the place of North Korea in the international community today are the result of trajectories that Pyongyang has chosen to take?r was forced to take?iven its national interests and politics. In addition, the choices of the North Korean state are constrained by the international environment in which they interact, given its location at the center of Northeast Asian (NEA) geopolitics in which the interests of the Big Four inevitably compete, clash, mesh, etc., with each other in various issue areas as these nations pursue their self-determined courses in the region. North Korea, per se, is seldom of great importance to any of the Big Four. Its importance is closely keyed to and shaped by the overall foreign policy goals of each of the Big Four. North Korea is thus seen merely as part of the problem or part of the solution for Northeast Asia.

Rather than examining North Korean foreign relations strictly in the material terms of strategic state interests, balance of power, nuclear arsenals, and conventional force capabilities, it is important to question how instances of conflict and cooperation might be redefined in terms of conflicting and commensurable identities. Traditional realist national security approaches cannot escape the reactive (and self-fulfilling) consequences of a state? security behavior for the behavior of its adversary. The issue of North Korea? nuclear program can never be settled without addressing the country? legitimate security needs and fears in strategically credible ways.4 This is not to say, however, that force ratios and trade levels do not matter, but rather that the contours of North Korean foreign relations are shaped by far more fundamental considerations.

This monograph consists of four sections. The first depicts in broad strokes sui generis regional (?ear abroad?? characteristics for a contextual analysis of North Korean foreign relations in the post?old War era. The second examines the complex interplay of global, regional, and national forces that have influenced and shaped the changing relational patterns between North Korea and the Big Four Plus One. The third assesses Pyongyang? survival strategy in both the security and economic domains. Finally, the fourth briefly addresses the future prospects of North Korea? relations with the Big Four Plus One.


In these early years of the new millennium, there is something both very old and very new in the regional security complex surrounding the Korean peninsula. What remains unchanged and unchangeable is the geographical location of North Korea, which is tightly surrounded and squeezed by no less than five countries?he Big Four and the southern rival, South Korea (the ?ig Four plus One??. As Jules Cambon wrote in 1935, ?he geographical position of a nation is the principal factor conditioning its foreign policy??the principal reason why it must have a foreign policy at all.??sup>5

Of course, geography matters in the shaping of any state? foreign policy, but this is especially true for the foreign policies of the two Koreas and their three neighboring powers. A glance at the map and a whiff of the geopolitical smoke from the latest (second) U.S.??DPRK nuclear standoff suggest why Northest Asia (NEA) is one of the most important yet most volatile regions of the world. When it comes to the dream of a Eurasian ?ron Silk Road,??North Korea? hub position makes China, Russia, South Korea, and even Japan more receptive to upgrading its dilapidated transportation infrastructure. It is hardly surprising, then, that each of the Big Four has come to regard the Korean peninsula as the strategic pivot point of NEA security and therefore as falling within its own geostrategic ambit.6 Indeed, North Korea? unique place in the geopolitics of NEA remains at once a blessing, a curse, and a Rorschach test.

The world? heaviest concentration of military and economic capabilities lies in this region: the world? three largest nuclear weapon states (the United States, Russia, and China), one nuclear ambiguous state (North Korea), three threshold nuclear weapon states (Japan, South Korea, and Taiwan), the world? three largest economies on a purchasing power parity basis (the United States, China, and Japan),7 and East Asia? three largest economies (Japan, China, and South Korea). It was in NEA that the Cold War turned into a hot war, and the region, lacking any nonaligned states, was more involved in Cold War politics than any other region or subregion. Even with the end of the Cold War and superpower rivalry, the region is still distinguished by continuing, if somewhat anachronistic, Cold War alliance systems linking the two Koreas, Japan, China, and the United States in a bilateralized regional security complex.

NEA is more than a geographical entity. Although

geographical proximity is important, defining East Asia

or especially NEA in these terms alone is problematic because any strictly geographical approach would obscure rather than reveal the critical role of the United States in Northeast Asian international relations.8 NEA is considered to be vitally important to America? security and economic interests, and the U.S. role remains a crucial factor (perhaps the most crucial) in the regional geostrategic and geo-economic equations. The United States, by dint of its deep interest and involvement in Northeast Asian geopolitics and geoeconomics, deploys some 100,000 troops in the Asia-

Pacific region, concentrated mostly in Japan and South


As this might suggest, the divide in NEA between regional and global politics is blurred substantially, if not completely erased, for several reasons. First, the region is the ?trategic home??of three of the five permanent members of the United Nations Security Council (UNSC), which are also three of the five original nuclear weapon states shielded by the two-tiered, discriminatory Non-Proliferation Treaty (NPT) regime. Second, Japan, Greater China, and South Korea alone accounted for about 25 percent of the world gross domestic product (GDP) in 2000. As of mid-2005, NEA is home to the world? four largest holders of foreign exchange reserves: Japan ($825.0 billion), China ($711.0 billion), Taiwan ($253.6 billion), and South Korea ($205.7 billion).10 In addition, Japan remains the world? second largest financial contributor to the United Nations (UN) and its associated specialized agencies. Finally, the rapid rise of China? economic power and related military power has given rise to many debates among

specialists and policymakers over how much influence

Beijing actually exerts in NEA and what this means for

U.S. interests as well as an emerging Northeast Asian order.11

The structural impact of power transition and globalization seems to have accentuated the uncertainties and complexities of great power politics in the region. The centripetal forces of increasing economic interaction and interdependence are straining against the centrifugal forces tending toward protection of national identity and sovereignty, not to mention the widely differing notions of conflict management in NEA. In the absence of superpower conflict, the foreign policies of the two Koreas and the Big Four are subject to competing pressures, especially the twin pressures of globalization from above and localization from below. All are experiencing wrenching national identity difficulties in adjusting to post??Cold War realignments, and all are in flux regarding their national identities and how these relate to the region as a whole.

Thus policymakers in Pyongyang?o less than scholars and policymakers elsewhere?re challenged by a unique and complex cocktail of regional characteristics: high capability, abiding animus, deep albeit differentiated entanglement of the Big Four in Korean affairs, North Korea? recent emergence as a nuclear loose cannon, the absence of multilateral security institutions, the rise of America? unilateral triumphalism, growing economic integration and regionalization, and the resulting uncertainties and unpredictability in the international politics of NEA. Regional cooperation to alleviate the security dilemma or to establish a viable security community is not

impossible, but it is more difficult to accomplish when

the major regional actors are working under the long shadows of historical enmities and contested political identities.


China and North Korea.

Without a doubt, China holds greater importance in North Korea? foreign policy than the DPRK holds in Chinese foreign policy. China? potential trump cards in Korean affairs are legion, including demographic weight as the world? most populous country, territorial size and contiguity, military power as the world? third-largest nuclear weapons state after the United States and Russia, veto power in the UNSC, new market power as the world? fastest growing economy, and the traditional Confucian cultural influence with strong historical roots.

Moreover, in describing relations between the People? Republic of China (PRC or China) and the Democratic People? Republic of Korea, the term ?ilateral??is somewhat of a misnomer. Since the end of the Cold War and the demise of global socialist ideology, Sino-North Korean relations have developed with a constant eye toward both South Korea (ROK or Republic of Korea) and the United States. While the relationship between Beijing and Pyongyang remains a special one, its unique characteristics are now defined by China? use of its connections with the DPRK for the maintenance of domestic and ?ear abroad??stability rather than for any grander ambitions.

Political and Diplomatic Interaction . During the Cold War, North Korea? geostrategic importance and its proximity to China and the Soviet Union made it easier for Pyongyang to cope with the twin abandonment/ entrapment security dilemmas. With the rise of the Sino?oviet dispute in the late 1950s and the eruption

of open conflict in the 1960s, Kim Il Sung made a virtue

of necessity by manipulating his country? strategic relations with Moscow and Beijing in a self-serving manner. He took sides when necessary on particular issues, always attempting to extract maximum payoffs in economic, technical, and military aid, but never completely casting his lot with one over the other.

In the 1980s, however, the PRC and DPRK were on separate and less entangled trajectories. If the central challenge of post-Mao Chinese foreign policy was how to make the world congenial for its resurgent modernization drive via reform and opening to the capitalist world system, then Pyongyang? top priority, at least in the 1980s, was to contain, isolate, and destabilize South Korea in the seemingly endless pursuit of absolute one-nation legitimation and Korean reunification on its own terms. The 1983 Rangoon bombing (in which 17 members of South Korean President Chun Doo Hwan? delegation were killed) and the 1987 mid-air sabotage of a Korean Air jetliner (which claimed the lives of all 115 people aboard) brought into sharp relief the vicious circle of the politics of competitive legitimation and delegitimation on the Korean peninsula.

During the long Deng decade, Beijing? Korea policy evolved through several phases?rom the familiar one-Korea (pro-Pyongyang) policy, to a one-Korea de jure /two-Koreas de facto policy, and finally to a policy of two Koreas de facto and de jure . The decision to normalize relations with South Korea, finalized in August 1992, was the culmination of a gradual process of balancing and adjusting post-Mao foreign policy to the logic of changing domestic, regional, and global situations.12 The Sino?OK normalization was made possible by the mutual acceptance of differences in political identity following China? long-standing Five Principles of Peaceful Coexistence and Seoul? Nordpolitik , which called for the improvement of inter-Korean relations as well as South Korea? relations with socialist countries in conformity with the principles of equality, respect, and mutual prosperity, irrespective of political and ideological differences. Ironically, but not surprisingly, the greater challenge has been to China and the DPRK in adjusting their socialist identities in the post?old War (and post-Socialist) world.

Perhaps because of the lack of change in Pyongyang? international course, Beijing did not pursue a truly active geostrategic engagement as part of its approach to the Korean peninsula after the normalization of relations with the ROK. Instead, it more or less followed Deng Xiaoping? foreign policy axiom of ?iding its light under a bushel,??not placing itself on the front lines of the Korean conflict. While the 1992 two-Koreas decision was arguably the most significant reorientation of post?old War Chinese foreign policy in the Northeast Asian region, it did not signal a greater Chinese conflict management role in regional or global politics. China? hands-off approach was demonstrated particularly in the 1993??4 U.S.-DPRK nuclear standoff, when Beijing played neither mediator nor peacemaker for fear it might get burned if something went wrong. The Chinese repeated the familiar refrain that ?he issue was a direct matter between the DPRK and the three sides?he International Atomic Energy Agency (IAEA), the United States, and the Republic of Korea.??sup>13 This ?ho me???posture reflected a cost-benefit calculus intended to keep the PRC out of harm? way while still holding both Pyongyang and Seoul within

its Sinocentric circle of influence in East Asia. Even

after Pyongyang? alleged confession of the existence of a highly enriched uranium (HEU) program, China persisted in its risk-averse posture toward the nuclear issue on the Korean peninsula.

Security Interaction. All of this changed, and changed dramatically, in the heat of the second U.S.-DPRK nuclear confrontation in early 2003. China suddenly launched an unprecedented flurry of mediation diplomacy. While the idea of a nuclear-free Korean peninsula is important, for the Chinese leadership and most Chinese strategic analysts, the survival of the North Korean regime and the reform of North Korea are China? greatest challenge and prime objective, respectively.14 Growing fears of the potential for reckless action by the United States and North Korea as they engage in mutual provocation?hich could trigger another war in China? strategic backyard??have served as the most decisive proximate catalyst for Beijing? hands-on conflict management diplomacy.

There were other catalysts for the shift, including China? own enhanced geopolitical and economic leverage, the steady rise of regional and global multilateralism in Chinese foreign policy thinking and behavior, and the creeping unilateralism under the Clinton administration that expanded under the Bush administration. In short, the unique confluence of both proximate and underlying factors?reater danger, greater stakes, and greater leverage?xplains why Beijing was spurred into action in early 2003.

With its conflict management resources, both diplomatic and economic, China has clearly made a heavy investment in prompting the Six-Party process toward a negotiated solution or at the very least in averting its collapse. From the beginning, China? mediation-cum

conflict management diplomacy required shuttle/

visitation diplomacy?nd aid diplomacy?o bring the DPRK to a negotiating table in Beijing. From early

2003 to late 2005, senior Chinese officials have stepped

up shuttle/visitation diplomacy on a quarterly basis. Moreover, these visits have been conducted at levels senior enough to require meetings with Chairman Kim Jong Il, serving notice to Washington that direct interaction with the Chairman is the shortest way toward progress in the Six-Party process. The Chinese are reported to have made an exceptional effort in the fourth round of talks?he most important and extended round to date?obilizing a professional work team of about 200 experts from nine departments or bureaus in the Ministry of Foreign Affairs. These diplomats all spent day and night working on successive drafts of a joint statement of principles, pulling together the lowest common denominator among views laid out by the six parties in the behind-the-scenes negotiations, which included an unprecedented half-dozen bilateral meetings between U.S. and North Korean diplomats.15

Caught in diplomatic gridlock and against the

backdrop of being labeled an ?utpost of tyranny??

by the second-term Bush administration, Pyongyang raised the ante of its brinkmanship with a statement

on February 10, 2005, that it had ?anufactured nukes

for self-defense to cope with the Bush administration?

evermore undisguised policy to isolate and stifle the DPRK??and that it was therefore ?ompelled to suspend participation in the [Six Party] talks for an indefinite


Pyongyang? decision to rejoin the Six Party talks after a 13-month hiatus can be partially attributed to the synergy of Chinese and South Korean mediation diplomacy aimed at providing a face-saving exit from the trap of mutual U.S.-DPRK creation. This was particularly important in the wake of the Bush administration? characterization of Kim Jong Il as a

?yrant??and U.S. Secretary of Defense Condoleezza Rice? labeling of North Korea as an ?utpost of

tyranny.??Beijing, Seoul, and Moscow have been prodding the Bush administration to stop using this kind of language and to map out detailed economic and security incentives as quid pro quo for North Korea? nuclear disarmament. The implicit withdrawal of vilifying rhetoric was quite important in Pyongyang,

as made evident in an official statement of the DPRK

Ministry of Foreign Affairs:

. . . the U.S. side at the contact made between the heads

of both delegations in Beijing Saturday clarified that it

would recognize the DPRK as a sovereign state, not to invade it, and hold bilateral talks within the framework of the Six Party talks, and the DPRK side interpreted it as a retraction of its remark designating the former as

an ?utpost of tyranny??and decided to return to the Six

Party talks.17

The ?ords for words??and ?ction for action??approach that North Korea assumed as its negotiating stance and that China inferred as group consensus in the Chairman? statement at the end of the third round of talks, also provided an incentive for Pyongyang, if not for Washington. China was the most critical factor in achieving a group consensus in the form of the Joint Statement of Principles issued by the participants in the fourth round of Six Party talks on September 19, 2005, the first-ever successful outcome of the on-again, off-again multilateral dialogue of more than 2 years. This was a validation of the negotiated approach to the second nuclear standoff on the Korean peninsula that both Pyongyang and Washington have resisted at various times.

China also may have played a critical backstage role in persuading Pyongyang to moderate provocative rhetoric or action. China played a further role in downsizing Pyongyang? demand for a nonaggression treaty, a demand that initially had called for a security pledge or guarantee as well as the removal of the DPRK from the U.S. list of terrorist states. However, Chinese persuasive power has had very real limits. China? efforts to dissuade North Korea from carrying out nuclear or missile tests did not prevent Pyongyang from detonating a nuclear device on October 9, 2006, or launching a Taipodong II (along with six other missiles of different types) on July 5, 2006.

In sum, China? mediation diplomacy since early 2003 has been the primary factor in facilitating and energizing multilateral dialogues among the Northeast Asian states concerned in the nuclear standoff. Whereas in 1994 China wanted the United States and the DPRK to handle their dispute bilaterally, from 2003 to 2005 China succeeded in drawing North Korea into a unique regional, multilateral setting that Pyongyang?s well as Beijing?ad previously foresworn in a quest for direct bilateral negotiations with the United States.

Economic Interaction . Chinese?orth Korean economic relations over the years are notable in several respects. First, Sino-DPRK trade is closely keyed to and determined by turbulent political trajectories. The Chinese percentage of total North Korean foreign trade has fluctuated greatly over the years: (1) 25??0 percent (the absolute value was around U.S.$100 million) in the 1950s; (2) about 30 percent in the 1960s until 1967, after which the ratio declined to around 10 percent in the wake of the Cultural Revolution; (3) increased to about 20 percent since 1973 (to the level of U.S.$300??600 million); and (4) declined to the 10??0 percent range in the 1980s, although its total value had risen to U.S.$3??

$4 billion. In the first post?old War decade, the 1990s,

the ratio started at 10.1 percent in 1990 but increased dramatically to around 30 percent in 1991 and stayed in this range until 1998, even as its total value began to decline from $899 million in 1993 to $371 million in 1999. Nonetheless, due to the renormalization process underway since 1999, Sino-DPRK trade registered a 32 percent increase in 2000 ($488 million) and a whopping

80 percent increase in the first half of 2001 ($311

million) after 2 years of consecutive decreases in 1998 and 1999.

Despite the dramatic increases in total value, the China share declined from 29 percent in 1998 to 20 percent in 2000, only to start rising again, more than tripling from $488 million in 2000 to a new all-time high of just more than $1.58 billion in 2005, demonstrating the paradoxical effect of the second U.S.-DPRK nuclear standoff, which has accelerated Pyongyang? economic isolation due to the reinforced sanctions by Washington and Tokyo, while deepening North Korea? dependence on Beijing and Seoul for trade and aid (see Table 1).

Year    Exports                 Imports                 Total           Chinese                 Percent        
        to              from            North           Trade           Change in      
        North           North           Korean-         Balance                 North Korean-  
        Korea           Korea           Chinese                 with North              Chinese Trade  
                                        Trade           Korea                  
1979    N/A             N/A             N/A             N/A             N/A    
1980    374             303             677             +71             N/A    
1981    300             231             531             +69             -22%   
1982    281             304             585             -23             +10%   
1983    273             254             527             +19             -10%   
1984    226             272             498             -46             -6%    
1985    231             257             488             -26             -2%    
1986    233             277             510             -44             +5%    

Table 1. China? Trade with North Korea, 1990-2005 (Unit: U.S.$ million) (continued).


Year    Exports                 Imports                 Total           Chinese                 Percent        
        to              from            North           Trade           Change in      
        North           North           Korean-         Balance                 North Korean-  
        Korea           Korea           Chinese                 with North              Chinese Trade  
                                        Trade           Korea                  
1987    277             236             513             +41             +1%    
1988    345             234             579             +111            +13%   
1989    377             185             562             +192            -3%    
1990    358             125             483             +233            -14%   
1991    525             86              611             +439            +27%   
1992    541             155             696             +386            +14%   
1993    602             297             899             +305            +29%   
1994    424             199             623             +225            -31%   
1995    486             64              550             +422            -12%   
1996    497             68              565             +429            +3%    
1997    531             121             652             +410            +15%   
1998    355             57              412             +298            -37%   
1999    329             42              371             +287            -10%   
2000    451             37              488             +414            +32%   
2001    571             167             738             +404            +51%   
2002    467             271             738             +196            +0%    
2003    628             396             1,024           +232            +39%   
2004    799             585             1,384           +214            +35%   
2005    1,081           499             1,580           +582            +14%   

Sources : Ministry of Foreign Trade and Economic Relations, People? Republic of China at www.moftec.gov.cn/moftec/official/html / statistics_data ; 1996 Diplomatic White Paper Ministry of Foreign Affairs and Trade (MOFAT), Republic of Korea (ROK), p. 348; 1997 Diplomatic White Paper, pp. 396 and 400; 1998 Diplomatic White Paper, pp. 481 and 486; 2000 Diplomatic White Paper, p. 496; 2001 Diplomatic White Paper, p. 483; 2002 Diplomatic White Paper, p. 497; available at www.mofat.go.kr .

Table 1. China? Trade with North Korea, 1990-2005 (Unit: U.S.$ million) (concluded).

Second, as Table 1 indicates, North Korea? trade

deficits with China have been chronic and substantial.

During the 27 years from 1979 to 2005, the DPRK has enjoyed an annual surplus for only 4 years. Its trade

deficit has amounted to a cumulative total of $4.68

billion between 1990 and 2003?mports to the DPRK worth $6.7 billion and exports worth $2.1 billion. The

cumulative total of the trade deficits for North Korea

amounted to $3.85 billion during the period 1990??2000, with total imports from China at $5.1 billion and total exports to China only $1.3 billion. North Korea?

trade deficit is not likely to improve for a long time,

because it does not have high value products to export and because its primary exportable commodities are losing competitiveness in the Chinese market. In 2005,

North Korea? trade deficit hit an all-time high of $1.1


While China remained North Korea? largest trade partner in the 1990s in terms of total value, Beijing has allowed Pyongyang to run average annual deficits of $318 million for 1990??994, $369 million for 1995??1999, and $423 million for 2000??005. China? role in North Korea? trade would be even larger if barter transactions and aid were factored into these figures. In contrast, South Korea? trade with China in a single year (2004) generated a huge surplus of $20.2 billion.

Although the exact amount and terms of China? aid to North Korea remain unclear, it is generally estimated at one-quarter to one-third of China? overall foreign aid. By mid-1994, China accounted for about three-quarters of North Korea? oil and food imports.18 Whether intentionally or not, Beijing became more deeply involved, playing an increasingly active and, indeed, crucial year-to-year role in the politics of regime survival by providing more aid in a wider variety of forms: direct government-to-government aid, subsidized cross-border trade, and private barter transactions.

North Korea? dependency on China for aid has

grown unabated and has intensified even in the face

of its hardline policy towards Pyongyang? rogue state strategy. Recent estimates of China? aid to North Korea are in the range of 1 million tons of wheat and rice and 500,000 tons of heavy fuel oil per annum, accounting for 70 to 90 percent of North Korea? fuel imports and about one-third of its total food imports. With the cessation of America? heavy fuel oil delivery in November 2002, China? oil aid and exports may now be approaching nearly 100 percent of North Korea? energy imports.19 As a way of enticing Pyongyang to the Six Party talks in late August 2003, President Hu Jintao promised Kim Jong II greater economic aid than in previous years. The Chinese government has extended indirect aid by allowing private economic transactions between North Korean and Chinese companies in the border area, despite North Korea? mounting debt and the bankruptcy of many Chinese companies resulting from North Korean defaults on debts.