After some of the most heated confrontations since the Korean War ended in 1953, North Korea over the last two or three weeks has suddenly started to blow appreciably cooler. The question is why.

A sea change seems to have come after South Korea staged live-fire manoeuvres on islands adjacent to North Korea in the Yellow Sea, and North Korea answered back with artillery fire that took the lives of four people. In the North's annual New Year commentary, Pyongyang called for better relations with the South, warning that war could lead to a "nuclear holocaust."

It is widely assumed in Washington and elsewhere that Beijing, finally fed up with Pyongyang's continuing provocations including the sinking of the South Korean gunboat Cheonan last April, has told the North to back off. China has called for a return to the six-party talks over the peninsula.

One of the lessons of this episode is that despite professions of inability to control its client state, China appears now to have demonstrated unrivalled leverage on the North in terms of economic, political and military intervention. In addition to supplying substantial amounts of aid including 90 percent of the North's oil at sharply lower "friendly prices," China has co-opted and trained a pro-Chinese cadre of North Korean functionaries and elites in the hopes that they would become collaborators under the coming regime of Kim Jong-un, Kim Jong-il's son and presumptive heir. So Beijing is no longer hiding its solid hold over the North.

There is a certain amount of evidence of distrust of China on the part of the North as well, with the Jan. 3 disclosure of a US diplomatic cable by WikiLeaks, in which Hyun Jeong-eun, the chairwoman of Hyundai Group, returned from the North after a 2009 meeting with Kim. In the cable, Kathleen Stephens, the U.S. ambassador to South Korea, reported on a breakfast with Hyun in which she said that Kim Jong-Il was disappointed after the North's second nuclear test in May 2009, when China did not object to a UN Security Council resolution condemning the communist country for the test. China's foreign ministry also issued a statement expressing opposition to the test.

China appears to believe that in the case of a contingency plan for the collapse of the north's government, it could thus recruit North Korean military men, using them to virtually rule the Kim regime and its population faster than the US could move into place to support the South to take over. The Chinese leadership correctly judges that South Korea would find it difficult to synchronize with the US. Nor, it is thought, would Japan be much help.

There is also the question of South Korea's ties to China itself. Korea ranked fifth in the OECD in trade dependency last year. About 85 percent of the economy relies on exports and imports and China is now the South's biggest trading partner.

Much of the north's heightened provocations over the last year may well have stemmed from a misconception on the part of Kim Jong-il over the death of the so-called Sunshine Policy initiated by two previous presidents, Kim Dae-jung and Roh Moo-hyun. That period was the most exciting moment of the inter-Korean relationship, though South Korea's conservatives have called it the 'lost decade.' North Korea was economically remote but was ideologically closer than it had ever been, essentially because of the sunshine engagement policy.

These deliberate and thoughtful presidents believed the landmark policy would benefit not just the liberals in Seoul but mankind at large. Thus, they believed strongly that the broken regime had the ability to stand alone only if South Koreans could heal the scars through economic assistance.

Soon, however, the proponents of the engagement policy started to notice that once again they were minorities in the South's mainstream political and economic culture. The conservatives attacked the progressives with a viciousness that took their breath away, calling them 'sticky slime.' They were deeply angry at liberals' goal of national reconciliation, insisting that the language of the sunshine policy was not based on the reality of a bellicose North. In the 2007 presidential elections, South Korea returned to its traditional conservative stance, which certainly must have puzzled the Kim Jong-il regime.

Indeed, the progressives should have realized that there was an expiry date. The sunshine policy expired earlier than they expected, but Kim Jong-il himself appears to have thought the policy which had helped to sustain the hopeless regime, was continuing, without knowing that most South Koreans no longer had any interest in the poor neighbor to the North.

North Korea's continuing provocations were taken as prima facie evidence that there was something wrong with the engagement policy. The much-debated policy now serves as an unwanted baby for the right-wing Lee government, which is innately sceptical of the progress of any inter-Korean relationship.

The tragedy of the dynastic Kims is that they spent the sunshine days in relative -– for a poverty-stricken regime– glory and affluence but are now going through the hard times of 'strategic patience' adopted by Washington and Seoul authorities. They never dreamed that the Lee government would reverse the existing inter-Korean relationship in the name of demanding the denuclearization North Korea. Their predictions were wrong.

It's thus not a coincidence that, panicked, Kim and his cohorts strategically delivered up the marketing of local war to the Lee government, while attempting to break public morale in the South with spectacular, live TV displays that seek to expose the South's widespread confusion. The North's continued provocative actions, the sinking of the Cheonan corvette included, rekindled the height of hypocrisy.

Anyone who is familiar with the North knows that the brutal regime was well along in its clandestine program to acquire nuclear weapons and to upgrade ballistic missiles even during the unprecedented rapprochement days with the liberal governments in the past. People already saw the mendacity of peace and unification.

The world now views North Korea as in a pre-apocalyptic state and observes a culture that emphasized irrational military adventurism for the sake of the Kim family's hedonism. Likewise, the North's madness is not restrained by the old patterns of trite dialogue or negotiations. Critics of the North Korean threats argue that it is in South Korea's interest to attack North Korea in the hope of scuttling its nuclear program.

If the situation comes to the crunch, they complain, the US as the South's ally cannot not be relied upon to provide effective military support to protect the nation, despite whatever 'nuclear umbrella' Washington might offer. They find the umbrella fragile and useless given that Seoul, the metropolitan capital with some 10 million residents, is 10 to 15 minutes from the North's launching pads. Plus, South Korean pundits suspect that the US is seemingly shifting its policy stance to paint the proliferation of North Korean nuclear capabilities to other countries as a bigger threat than the existence of nuclear weapons themselves.

There are many factors – individually or, more likely, in combination – that could conceivably play a role in motivating North Korea to rethink its nuclear options, but the two that seem most salient are a guarantee of the Kim family's regime survival based on political stability and economic prosperity; the North Korea-China relationship and US policies toward the North.

Even if any future decision on the nuclear question will be made by North Korea on the basis of its own calculations of national interests, the US as one of the shapers of a unified Korea should encourage North Korea to return to a non-nuclear path in an audacious vision of peace and prosperity. The most important task for the Obama administration in Northeast Asia is to resume its broken negotiations with North Korea. That is America's smart power that an unregenerate and parochial China can never employ.

Byong-Chul Lee is a Senior Fellow at the Institute for Peace and Cooperation in Seoul.