China to put billions of dollars to North Korea to keep Influence

Radio Free Asia, Feb. 25, 2010-

SEOUL— China’s reported plans to invest billions of dollars in North Korea reflect Beijing’s bid to prop up the regime and keep a dominant role in the region rather than to lure Pyongyang back to multilateral talks, analysts say.

A number of state-owned Chinese banks and other companies are close to a deal to invest nearly U.S. $10 billion in North Korean infrastructure, after talks with the official Pyongyang-based Taepung International Investment Group, Seoul’s Yonhap news agency has reported.

The report couldn’t be immediately confirmed.

The investment earmarks funds to build railroads, harbors, and homes in North Korea, the report said, adding that more than 60 percent of the investment would be put up by Chinese banks.

The deal, with North Korea’s State Development Bank, is expected to be signed next month, Yonhap said.

Winston Yang, a China analyst and professor emeritus from Seton Hall University, gave three reasons for the injection of Chinese funds into North Korea.

“The first is that it will increase [Beijing's] control over North Korea and its influence there. The second is that Beijing fears that Kim Jong Il will fall from power,” Yang said, adding that North Korea’s current economic woes have left millions hungry.

“The third reason is, I believe, that there is a sense in which it goes against the wishes of the United States,” he said.

Yang cited strains in U.S.-China ties stemming from U.S. arms sales to Beijing’s arch-rival Taiwan, a threat from Google to withdraw from China, and a meeting between U.S. President Barack Obama and Tibet’s exiled leader, the Dalai Lama……. (Radio Free Asia)

[Via http://chinaview.wordpress.com]