China Calls on U.S., North Korea to Avoid `Head-on Collision'

(Bloomberg) -- China's foreign minister urged North Korea to halt its nuclear activities and the U.S. to suspend nearby military drills, as a way to quell growing tensions and get Kim Jong Un back to the negotiating table.

“The two sides are like two accelerating trains coming towards each other, with neither side willing to give way,” Foreign Minister Wang Yi said Wednesday in Beijing. “The question is, are the two sides really ready for a head-on collision? Our priority now is to flash a red light and apply brakes on both trains.”

Wang's push for revived North Korean talks came during an annual news conference on the sidelines of the National People's Congress in which he also praised his new U.S. counterpart, Rex Tillerson, and reaffirmed China's opposition to protectionism. China has come under pressure to help stop Kim's pursuit of more powerful nuclear weapons, with the U.S. setting up a missile-defense system in South Korea that Beijing views as a threat.

“This is the usual approach from China,” said Andrei Lankov, a history professor at Kookmin University in Seoul and author of “The Real North Korea: Life and Politics in the Failed Stalinist Utopia.” “China wants to show that it is neutral and both sides are to blame for the situation in North Korea.”

Read: North Korea Defies the World With Nuclear Ambitions

After Wang's remarks, the South Korean won reversed course to strengthen 0.2 percent to 1,143.54 against the dollar as of 12:34 p.m. in Seoul.

While the U.S. military has said its Terminal High Altitude Area Defense system is aimed solely at stopping North Korean missiles, Wang said “everyone knows” its deployment was intended to endanger China's security. China has suspended the operation of around 40 Lotte Mart stores after the South Korean retail conglomerate agreed to sell land for the system, and ordered travel agents to stop selling tour packages to South Korea.

Wang called on South Korea to “step back from the precipice and stop the deployment.”

Kim has accelerated his efforts to acquire the ability to hit the continental U.S. with a nuclear warhead since six-party talks collapsed in 2009. North Korea warned this week that U.S.-South Korea war exercises were leading the region to the brink of a “nuclear disaster.”

‘Suspension for Suspension'

Wang said there was a chance for a breakthrough, if both the U.S. and North Korea halt moves seen as aggressive. “This suspension for suspension can help us break out of the security dilemma and bring the parties back to the negotiating table,” he said.

The U.S. has pushed China to implement sanctions against North Korea, and has ruled out talks until Kim halts provocations.

“Given North Korea's recent behavior, we're not at the point where we're looking at direct engagement with them,” State Department spokesman Mark Toner told reporters in Washington on Tuesday. “We're not rewarding that behavior in any way, shape, or form.”

Shi Yongming, an associate research fellow and Korea specialist at the China Institute of International Studies in Beijing, said China's role would be limited if the U.S. and North Korea refuse to budge. “If the U.S. shows the willingness to downscale its military drills with the South, China can be in a better position to persuade the North back to the negotiation table,” Shi said.

Trump, Tillerson

Wang touched on range of topics during the almost two-hour-long news conference. Here are some highlights: 

• Relations with the U.S. are moving in a positive direction after “close communications,” including a phone call between U.S. President Donald Trump and counterpart Xi Jinping. The two sides are preparing for a face-to-face meeting between the two heads of state
• Tillerson, Trump's secretary of state, appears to be a good listener and interested in in-depth communications. Wang predicts they can establish a good working relationship
• China wants to see a more united, stable and prosperous European Union. The region's current challenges could present an opportunity for it to mature
• China will continue to uphold multilateralism and economic opening in the face of rising protectionism.

--With assistance from Justina Lee Peter Martin and Ting Shi

To contact Bloomberg News staff for this story: Ken Wills in Beijing at kwills3@bloomberg.net, Keith Zhai in Beijing at qzhai4@bloomberg.net, Andy Sharp in Tokyo at asharp5@bloomberg.net.

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Brendan Scott, Andy Sharp

With assistance from Andy Sharp, Ken Wills, Keith Zhai