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China's great games, in the North and in the South

China helps North Korea back off. Premier Wen chills India, thrills Pakistan. Obama administration goes forward with WTO case against China ahead of Hu visit. Taiwan-China deals. SOE reform. Tough times for journalists, and Catholics.


Top News: The year screeches to an end with jitters over an outbreak of war on the Korean peninsula, but also finally some optimism that China might have finally helped talk Kim Jong Il and his cronies off the latest precipice of threatening retaliation for a new round of South Korean live-fire drills.

China has been more vocal over the past few weeks in calling for all-sides to cool tension, and the double-play of joint U.S.-South Korea military drills and a recent visit to Beijing by top U.S. officials may have helped push China to shove Pyongyang into backing off a bit.

Late in December, China also urged North Korea to allow nuclear inspectors back into the country, another sign that Beijing is trying to coerce its neighbor in the hermit kingdom back to sanity.

China's President Hu Jintao will go to Washington on Jan. 19 as well, and most analysts see attempts by Beijing and the U.S. to ease any embarrassment — or catastrophe — between now and that trip.

On the opposite end of China other significant geopolitical moves have also been taking place. Chinese Premier Wen Jiabao visited India in mid-December to ease increasingly simmering tensions with its South Asian neighbor.

Yet it is uncertain if the pressure between the two developing giants of Asia will resolve any time soon without serious talks on a range of issues including their disputed border areas, rights to water in the Himalayas, and China's support for Pakistan's nuclear program. Serious talks on any of these issues though can be difficult without candid and open discussion, something that Wen has shied away from.

As Wen was in Delhi, India complained of frequent incursions from Chinese and Pakistani unmanned drone aircraft; likely to monitor Indian troop movements in the north. In late November, India acknowledged that it would move an extra 36,000 troops to the disputed Arunachal Pradesh region, which China calls "southern Tibet." In mid-December China broke a tunnel through the mountains in the Tibetan autonomous region that will link a county in the border region with the national highway system, according to a state-run Xinhua news agency report.

Wen visited Pakistan just following the India trip where he worked on signing rail-link agreements and around $35 billion in investment deals, and to further push nuclear energy agreements with India's arch-rival.

Money: The Obama administration decided to go ahead with supporting United Steelworkers in its case against China's subsidies to wind power equipment manufacturers at the World Trade Organization, which should give presidents Hu and Obama something to talk about during the Chinese leader's visit in January. Oh, that and the "currency manipulator" thing.

But does anyone really want to pull that trigger? The WTO case could be a stick to get carrots from China on further appreciation of the renminbi when Hu comes calling, with the threat looming that tagging China as a currency manipulator could unleash a fury of protectionism from the U.S. side.

Closer to home, China signed a healthcare and medicine deal this month, but failed to move forward on anticipated investment protection deals. The two sides will continue to talk over the coming months about this and other agreements to liberalize connections, though recent political turns in Taiwan with losses by the KMT have signaled to the Ma administration that it might not want to appear too cozy with Beijing at the moment.

Late in the month China also announced that it had launched a new agency to help restructure State-Owned Enterprises (SOEs) which could signal that Beijing plans to push SOE reform after several years of sluggish movement in that direction.

Elsewhere: It can be difficult being a journalist in China — difficult both for Chinese and foreign reporters. Though while most of the time foreign reporters have to face low-level harassment, or if they're from Hong Kong, maybe a few fists, attacks on China's increasingly aggressive investigative journalist have become more and more violent in the past year.

News came late in December that an investigative journalist in China's far west Xinjiang had been beaten by six men, leaving him brain dead. This is just the latest of several violent incidents against Chinese journalists.

And while it might be Christmastime in many parts of the world, the Vatican is becoming more vocal during this season about China's attempts to increase its control over Catholics in the country, saying it had adopted a "repressive attitude" following the ordainming of a bishop and the coercing of pro-Rome bishops and priests into attending a state-sanctioned assembly against their will.