North Korea is playing with fire.
It has torpedoed a South Korean warship, fired artillery shells at the island of Yeonpyeong and showed off to a former US nuclear scientist its latest - and apparently impressive - uranium enrichment capability.
Last week, Pyongyang threatened to "wage second and even third rounds of attacks without any hesitation" if the US and South Korea went ahead with naval exercises. In response, for the first time since 1995, the US deployed an aircraft carrier into the Yellow Sea, between the Korean peninsula and China.
Beijing has expressed "concern" about these military exercises but it steadfastly refuses to blame the North for any provocation. All Beijing proposes to do to calm the situation is to restart the six-party talks, which the US, Japan and South Korea have rejected as not being productive in the current circumstances.
The question that now arises is whether North Korea is going to keep on escalating its military provocation. Is it going to cross the point where the US and South Korea have to respond?
The dangers here are acute. North Korea has an unknown (but small) number of nuclear weapons, an army of more than one million, and thousands of artillery guns capable of raining destruction on the National Capital Area, centred on Seoul, which has a population of more than 24 million.
The key issue is can North Korea be deterred? There are two schools of thought: one considers that the North's leaders are rational and that deterrence will work; the other believes that the leadership is cut off from reality and may well think the US does not have the stomach for war. The fact that Washington has deployed an aircraft carrier off the peninsula without provoking a response from Pyongyang supports the first school. But the North's escalating rhetoric and reckless military actions suggest ominously the second school may just be right.
Nuclear deterrence theory has it that North Korea will be deterred from the pre-emptive use of nuclear weapons against the South because of the certainty of a US nuclear retaliation. If the US did not respond in this way the entire fabric of extended nuclear deterrence that applies to its other allies - including Japan and Australia - would be destroyed.
It may, however, be time for Washington to indicate more clearly - perhaps through Beijing - what would happen to North Korea if it did something really stupid. The US has the capability to decapitate the leadership of the North, destroy its much-prized military forces and take out its nuclear weapons facilities. Beijing must ensure Pyongyang understands this.
Then there is the other nightmare that the North's leadership will snap and carry out a massive artillery barrage on Seoul. What should Washington's response be to that? Damage to the conurbation containing almost half of South Korea's population would be devastating. It would maim the South Korean economy (which is Australia's third-largest export market). The US response would have to involve an overwhelming conventional attack on Pyongyang, much like the "shock and awe" destruction of Baghdad. Again, logic tells us that Pyongyang is effectively deterred by this knowledge. But we cannot be sure, unless it is conveyed to them.
Short of these extreme scenarios, a more likely future is that North Korea will continue to indulge in reckless but well-calibrated, lesser military adventures - as it has done recently. It is in these contingencies that some new form of intermediate deterrent policy is needed, short of the apocalyptic all-out war examples set out above. Thus, if Pyongyang thinks that it can get away with sinking a US warship - without retaliation - it may just be tempted. So the US needs to have a more inclusive declaratory strategy that might - for example - involve strikes on North Korean naval bases. If it does not, there is a risk that Pyongyang may think that it can get away with ever-increasing escalation.
All this is thinking the unthinkable. But it is simply not good enough to argue - as diplomats are wont to do - that the current situation is just an unstable moment in the leadership transition in Pyongyang, and that everything will settle down peacefully.
In this regard, it is about time Beijing took its responsibilities more seriously. China is now a major power and it is North Korea's only ally and major source of economic support. It is not good enough for Beijing to pretend that this is not a dangerous situation. And Beijing needs to understand that its unquestioning support of the North has hurt its strategic reputation in the broader region.
