China is the No. 1 trading partner of North Korea. It hosts the largest number of North Korean tourists (and defectors) that travel abroad. It has a unique insight into the opaque and brittle regime in Pyongyang, albeit trade is relatively small. Three weeks of Chinese exports to the United States equate to the entire GDP of North Korea. This one-way dependency gives China a master key that cannot be matched even by unification of the Peninsula.

Chinese politicians are mindful of much broader issues and wish to leverage this master key. The long-term consequences of a unified (pro-western, pro-American) Korea--an heir perhaps to nuclear weapons and missile delivery technology laced with South Korea money--is a valid concern for China. It would not be good news to the older "hardliner" generations of Chinese military officers. No one wants a nuclear unified Korea-- and that is a common point to bargain with America, Japan and Russia.

The crux of bargaining away the North Korea "key" rests with a broader barhain for regional change, and not merely regime change north of the 38th parallel. The Chinese wish list could include long-term assurances: Russian energy supplies, more investments by its Japanese rival, a duopoly of U.S. and Russian civilian nuclear cooperation and a firm regional security structure (akin to OSCE, with China given a seat at the table).China could argue that regional change should not be reserved just to the Middle East or Eastern Europe and that, in step with modern politics, the Asia-Pacific region is also due for a reshuffle. Finally, the Chinese shallwant to reduce pressure on them for democratic reforms and be assured that the G8 will not gang up against Beijing.

China may also signal that the WTO is not enough and it wants to join the G8. Admitting a (semi-industrialised) non-believer to a democratic club of industrial countries would require a grand leap forward. The final bargain could be crafted as a face saving (and more limited) economic partnership, along the original Russian formula; or joining the OECD where agro-industrial players such as Mexico, Turkey and Greece rub shoulders with top tier industrial nations.

In all eastern cultures, wish lists are delivered politely and implicitly. Bargains are struck after long and calm negotiations. In the recent official (but not a state) visit of President Hu to USA, stops with Boeing and Bill Gates were scheduled ahead of lunch with President Bush. Big changes don't come quickly--and any China-North Korean bargain will robably have to wait until after the Japanese elections in September 2006 and the November congressional elections in the United States.