Prospects for Change in China

THE POLITICAL ECONOMY OF SANCTIONS AGAINST NORTH KOREA
- Ruediger Frank (pp. 5 - 36)

This article explores sanctions as a policy tool to coerce North Korea's behavior, such as by discontinuing its nuclear-weapons program. It discusses the characteristics of sanctions as well as the practical experience with these restrictions on North Korea. It becomes clear that the concrete goals of coercion through sanctions and the relative power of the sending country to a large extent determine the outcome. Nevertheless, the general limitations of sanctions also apply, including the detrimental effects of unilateral and prolonged restrictions. It appears that the imposition of sanctions against the DPRK is unlikely to succeed. As an alternative way of changing the operating environment for North Korea, assistance deserves consideration. Despite many weaknesses, this instrument is relatively low in cost and risk, and can be applied continuously and flexibly. (Key words: North Korea, sanctions, U.S. foreign policy in East Asia)

POSSIBLE WORLD BANK ASSISTANCE TO NORTH KOREA: ISSUES AND CHALLENGES
- Daniel Morrow (pp. 37 - 67)

Accepting the DPRK as a member of the World Bank would require the political support of most of the Bank's member governments, and this would become possible only if there is a successful resolution of the Six-Party Talks. The amount of financial assistance from the Bank would then depend on how seriously the DPRK pursues a transition to a more open and market-oriented economy, but in any case the Bank's financial assistance would be small compared to the DPRK's needs and to the potential assistance from bilateral sources. Nevertheless, the World Bank's policy advice and its potential role in coordinating and catalyzing other assistance could be important for North Korean economic development. The prospects for quickly launching a constructive relationship between the DPRK and the World Bank following a successful conclusion of the Six-Party Talks would be enhanced by advanced preparation on both sides. In particular, the DPRK should begin to articulate its own strategy for economic transition. (Key words: North Korea, development assistance in East Asia, international financial institutions)

SEZS AND FOREIGN INVESTMENT IN CHINA: EXPERIENCE AND LESSONS FOR NORTH KOREAN DEVELOPMENT
- Hongyi Harry Lai (pp. 69 - 97)

This article analyzes how China succeeded in creating special economic zones (SEZs) and "opening to the outside world." Prudent choice over zone location and leadership, institutional arrangements, and local initiatives combined to produce the success of SEZs. China's SEZs, especially the largest and earliest Shenzhen SEZ, have taken off because of their proximity to and easy connections with neighboring advanced economies, liberal initiatives by able local leadership, administrative and economic arrangements for reform, and a progressive national-opening strategy. In addition, economic freedom at home and peaceful external relations were also necessary for smooth marketization and opening. This lesson may be enlightening for North Korea should it promote SEZs and open up its economy. (Key words: China, economic development in Asia, SEZ, North Korea)

Security Relations and Community Building in East Asia

STRATEGIC "TRIANGULARITY" IN NORTHEAST ASIA: THE SINO-JAPANESE SECURITY RELATIONSHIP AND U.S. POLICY
- Camilla T. N. Soerensen (pp. 99 - 128)

The Sino-Japanese security relationship is in jeopardy of deteriorating further in the years to come, a development that will have strong implications for Northeast Asian security. Identifying factors that can push the relationship in a positive direction toward reconciliation and cooperation is thus an urgent task. This article argues that the worsened Sino-Japanese security relationship is primarily caused by three developments: the end of the cold-war bipolarity, the dramatic development of the Chinese economy and military, and the neglect or failure of the United States to ensure a balance in its security relations with China and Japan. The United States in many ways holds the key to moving the Sino-Japanese security relationship in a positive direction. Perspectives regarding the development of a more constructive U.S. role are discussed. (Key words: China-Japan relations, East Asian security, U.S. foreign policy)

THE RISE OF CHINA AND COMMUNITY BUILDING IN EAST ASIA
- Zhang Xiaoming (pp. 129 - 148)

The rise of China is certain to have a great impact on the direction East Asian regionalism takes. In that rapidly evolving process, China will play a major role in integrating with the region. Chin's rise is an opportunity for East Asian community building, because China has been a responsible participant in the community-building process. On the other hand, China's growing power and influence in East Asia could also arouse fear and anxiety, especially in China's neighborhood, which could hamper the process of community building in East Asia. (Key words: economic development in China, multilateral economic cooperation in East Asia, community building in East Asia)

Commentary

CHINA'S ROLE IN A NORTHEAST ASIAN COMMUNITY
- Ruan Zongze (pp. 149 - 157)

BEYOND THE "NEVER AGAINS"
- Milton Leitenberg (pp. 159 - 165)