Audio Transcript:

The Secretary of State Hillary Clinton says the US is working hard to avoid an escalation after a report blamed North Korea for the sinking of a South Korean warship. After talks in China, Clinton urged countries in the region to contain ?the highly precarious situation created by North Korea?. China is the only country with any real leverage over North Korea and so far Beijing has refrained from criticizing its neighbor. Marco Werman talks with The World's Mary Kay Magistad in Beijing.

MARCO WERMAN: I'm Marco Werman and this is The World. Tensions on the Korean peninsula are about as high as they've been since the Korean War. The reason is the sinking of a South Korean warship, apparently by North Korean in March. South Korea today announced sanctions against the North, but the only country with leverage over North Korea is China and so far China has refrained from criticizing its neighbor. U.S. Secretary of State Hillary Clinton is seeking a tougher stance from Beijing. She's in the Chinese capital and The World's Mary Kay Magistad is following her mission. Mary Kay, what does the U.S. need from China to be able to get tough on North Korea?

MARY KAY MAGISTAD: Well at the very least the United States would like to hear rhetoric from China. Today President Hu Jintao did not even mention North Korea specifically. He said that the U.S. and China should strengthen coordination on regional hotspots and global issues, which doesn't exactly get to the critical issue at hand. I think what the U.S. would like to see is for China to even consider its own sanctions against North Korea. It is North Korea's main supplier of oil and one of its main suppliers of food aid. So if it were to decide to impose sanctions on North Korea, it would make an impact. However China doesn't really want to do that because there would be implications for China as well in terms of possible refugee flows coming in and geopolitical considerations as well that might be against China's own interests.

WERMAN: Secretary Clinton is in Beijing today. How would you assess her urgency at her meetings with the partners there?

MAGISTAD: Well she actually had some pointed things to say today about this issue.

SECRETARY OF STATE HILLARY CLINTON: Today we face another serious challenge provoked by the sinking of the South Korean ship. So we must work together again, to address this challenge and advance our shared objectives for peace and stability on the Korean peninsula. We asked North Korea to stop its provocative behavior, halt its policy of threats and belligerence toward its neighbors and take irreversible steps to fulfill its denuclearization commitments and comply with international law.

WERMAN: Mary Kay, are Secretary Clinton's counterparts hearing this?

MAGISTAD: Well they're certainly hearing it, but China has its own geopolitical concerns when it comes to North and South Korea. They do want to see a denuclearized Korean peninsula. They have hosted talks of six different countries including North and South Korea, the U.S., Russia, China and Japan over several years to try to get this to happen. They lose a little bit of diplomatic credibility in the sense that nothing really has happened that has had a lasting effect. But also, China doesn't really want a unified Korea on its border. It neither wants North Korea to implode and to have a flow of refugees to China, but nor does it want a unified Korea that would be friendly to the U.S. on its border. So it's playing a fairly complicated diplomatic game in how it's dealing with North Korea and it's not really prepared to cut off all assistance that it's giving at this point.

WERMAN: What are some of the sticking points in the U.S.-China relationship right now that Secretary Clinton is presumably talking about with the Chinese in Beijing today that may get in the way of these North Korea talks with China?

MAGISTAD: Well from the U.S. side there's concerned about increasing Chinese protectionism and how that's affecting U.S. investment and U.S. trade. From the Chinese side, they say well we would like to see export controls lifted of high tech equipment that we would like. We want to have cutting edge equipment coming in; cutting edge technology and you're not letting us get a hold of it. And in fact, at news conferences over the last week at gatherings where, for instance, U.S. Secretary of Commerce Gary Locke spoke, question after question after question about this specific issue. So it seems that this is a bit of a campaign that the Chinese government is doing. But then there's also the point of just the bigger relationship and what it means as China continues to grow and China's place in the world continues to grow and China feels that it has the right to challenge what has, for a long time, been the U.S. position in the world as being the predominant power. And there is a certain, aggressiveness would be perhaps a little too strong, but there is a certain assertiveness that China seems to be feeling these days that it has a right to question the U.S. position in the world and I think just sort of finding a new footing, finding a new balance in the relationship is a big part of what's going on in this dialogue.

WERMAN: The World's Mary Kay Magistad in Beijing. Mary Kay, many thanks.

MAGISTAD: Thank you.