North Korea's interlocutors all hope that Kim Jong-eun's emergence will bring a measure of clarity and stability to the country's foreign policy, which in the past two years has become even harder to decode than before. It remains puzzling why in 2009 North Korea greeted the incoming US president, Barack Obama, with missile and nuclear tests, and it is hardly less clear what sense it made for the North to sink a South Korean naval vessel, the Cheonan, in March 2010 or in the following November to shell Yeonpyeong, an island long held by South Korea although sited in disputed waters off the peninsula's west coast. Suggestions that these moves were designed to promote somehow the succession process appear to be the most plausible. But the moves also illustrate an extreme degree of recklessness.

Both China and North Korea argue that the best way to resolve tensions is to return to talks. The urgency of doing so was highlighted in late 2010 as new revelations highlighted previously unsuspected aspects (ostensibly peaceful) of the North's nuclear capabilities. Some form of the nuclear six-party talks-involving the two Koreas, Japan, China, Russia and the US-that have been stalled since 2008 will probably resume in 2011. Bilateral talks with either the US, South Korea or both are also possible. Yet the outlook for progress is bleak.

The North seems unlikely to make any commitment to abandoning its nuclear weapons programme fully-it seems to be hoping instead for recognition of its existing capabilities. But unless it gives up its programme, the key western parties will be reluctant to offer any substantial economic incentives. Public opinion in the US, Japan (which is still grappling with the issue of past North Korean abductions of its citizens) and, since the Yeonpyeong incident, South Korea, would be fiercely opposed to any concessions that "rewarded" the North's aggression. The US could attempt to engage North Korea on non-nuclear issues, as the administration of a former US president, Bill Clinton, did over missile proliferation (his successor, George W Bush, abandoned this effort). However, the nuclear issue will most likely remain the main focus of attention.

Given this background, China's diplomatic and economic clout in the North is set to increase. China's enforcement of the UN sanctions regime that is in place on North Korea is already lax. Recently, there have been signs that by drawing the US into a more active military partnership with the South, the North's aggression has actually strengthened the Chinese government's willingness to do whatever it takes to prop up its neighbour in order to stem US influence. Investments made by Chinese state-owned enterprises in North Korea have long been discussed but not acted on, owing to reservations among Chinese firms and lenders about the North's volatile political and economic climate. Many projects now appear to be moving forward, particularly in mines and infrastructure, thanks to more vigorous backing from the Chinese leadership. Demand in China for North Korea's minerals remains as strong as ever.

However, it is far from clear whether the North will simply become a satellite of China. The scale and extent of Chinese investments are likely to fall far short of the heady figures, sometimes of billions of US dollars, mentioned in press reports. Moreover, Kim Jong-il is wary of overdependence on China, and as his government's concerns are manifested, Chinese projects will come up against the same sorts of administrative obstacles that have deterred past investors. China's calls for market reforms will also be met with stonewalling from North Korea.

The North's wariness of becoming reliant on China's support may open the door for rival powers. Russia could step in to play a more active role, although its leaders seem to have lost interest in the region. More likely, South Korea's next president-the incumbent, Lee Myung-bak, cannot run again once his term ends in February 2013-may well reconsider the country's hardline policy. The risk of "losing" North Korea to China, coupled with concern about the perceived ineffectiveness of the current approach in reducing the risks associated with the North, could prove to be an important factor.