In a telegram to Kim Il-sung in 1958, Mao Zedong famously assured his ally that "the Chinese people and the Korean people depend on each other like lips and teeth and will stand together through thick and thin." These sentiments are rarely uttered with conviction these days. China's loyalty towards its provocative neighbour has been stretched to the limit in recent years, as evidenced in its punitive responses to Pyongyang’s nuclear tests in 2006 and 2009. With North Korea now in the throes of a leadership transition that could yet divide the Party and the military, the key determinant of the regime's survival will be whether or not its closest ally and chief benefactor is willing to stay the course.

Washington and Seoul are both entering an election year with incumbents facing uneasy economic times and sliding approval ratings. Despite alarm about North Korea's currently unchecked nuclear and missile programmes, neither government has the political capital to lay the necessary grand bargain – namely one that includes a peace treaty to end the Korean War – on Kim Jong-un’s table. Instead, as US diplomat Kurt Campbell indicated in Beijing on Thursday, both will be looking to China to urge restraint and a return to talks on denuclearisation. And with Beijing itself gearing towards a major government reshuffle in October, there are no guarantees. North Korea promises to be the first major foreign policy headache confronting the new set of leaders.

Beijing's reaction to the news of Kim Jong-il’s death gave an indication as to what to expect. The condolence message sent to Pyongyang was ostensibly one of reassurance, Kim Jong-il being described as a "close friend" of the Chinese people, and "Comrade Kim Jong-un" endorsed as his long-term successor. Significantly, when President Hu Jintao took the unusual step of visiting the DPRK embassy in Beijing to pay his respects in front of a national television crew, he was accompanied by, among others, the man who looks set to succeed him in October, Xi Jinping. And on the day of the funeral, a foreign ministry spokesman revealed that the Chinese ambassador to Pyongyang would be attending the funeral and memorial ceremony, despite North Korea's prior assertion that it would not receive foreign delegations for the event. For now at least, China and North Korea still stand together, albeit these days through gritted teeth.

China’s position is shaped primarily by fear of instability at home; regime collapse next door would bring a surge of refugees over the border into northwest China. More alarming still, it would almost certainly lead to a dangerous loss of control over North Korea's stockpile of fissile materials, and could ultimately result in a permanent US military presence on China's border in a unified Korea. A failure to back Kim Jong-un at this critical moment could upset the apple cart, leaving the inexperienced leader isolated and unable to control the military or contain a complex and inevitably disastrous leadership struggle.

"The dear respected Kim Jong-un," read the Joint New Year’s editorial from North Korea’s top three newspapers, "is precisely the great Kim Jong-il." But the young Kim's credentials do not stand up to those of his father; amongst the plethora of titles bestowed on him in recent days, chairman of the National Defence Commission is not yet one of them. Inexperienced and ill-qualified he may be, but for the sake of stability Beijing will continue to throw its support behind him. Significant efforts to urge Pyongyang down a path of economic reform and denuclearisation will surely have to be put on hold until his position looks more secure.

There is a further factor behind Beijing’s continued commitment to Pyongyang which should not be overlooked. Whilst North Korea has long been dependent on China for food, energy and industrial assistance, the transactions these days are no longer one-way. A recent study found that China imported 8.42 million tons of minerals from North Korea between January and September last year to the tune of US $852 million, a threefold increase from 2010. With an estimated $6 trillion worth of untapped coal, iron ore, gold, and magnesite in the North, and resource-hungry China currently one of the only countries doing business there, commercial interests are now of real relevance in Beijing’s strategic calculus.

As in North Korea, the new leadership in China will be unlikely to deviate from the script set by its predecessors, at least not in its first year or so. With a swelling public debt problem, increasingly frequent and large-scale demonstrations against everything from labour laws to land reform, and elections due over the coming year in Taiwan and Hong Kong, Xi Jinping’s government will have plenty to keep it busy at home. Chastised for failing to publicly admonish the North for torpedoing a South Korean naval ship killing 46 sailors in March 2010, Beijing will be loathe to defend further North Korean provocations, such as a third nuclear test.

Should the North retain unity and cement Kim Jong-un's leadership in the eyes of the military and the people, a degree of normality might prevail. Under this scenario, Pyongyang and Beijing’s focus on their respective regime transitions, coupled with a lack of appetite in Washington for any politically risky deal-making, will mean that in 2012 we will see little progress towards a return to the six-party talks, as all sides retrench into stalemate. But, as usual, if the ground begins to shift in Pyongyang, all bets are off.