David McNeill: Diplomatic stand-off likely to drag in an unwilling Beijing

In the heart of the Korean capital, Seoul, close to the City Hall, the authorities have erected a memorial to the 46 sailors killed in what appears to have been an attack by the North.

Posted underneath photos of the sailors, who often clutch children or other family members, are hundreds of emotional messages from mourners that occasionally stray into angry calls for revenge.

Sabre-rattling and florid rhetoric have long been part of the political landscape on the Korean peninsula. Just over a decade ago, Kim Dae-jung, then the South's president, attempted to dram some of the heat from this potential bonfire by creating the so-called Sunshine Policy of rapprochement.

Critics, including former US President George Bush, say that policy rewarded North Korea for bad behaviour and turned a blind eye to its attempt to build a nuclear bomb.

North Korea says it had no intention of building a nuclear weapon until nudged into doing so by fear of US attack, following Mr Bush's famous declaration that it was part of an "axis of evil".

The current president, Lee Myung-bak, dumped the Sunshine Policy in favour of a tougher line after his election in 2008.

Both sides are now living with the consequences of that decision. Once burgeoning trade links are being scaled back, sanctions against the North have been stepped up and tensions have ratcheted back to levels not seen since the 1990s. President Lee has been under pressure to come up with a credible response to the March 26 attack. But the chances of a military option are slim, say most observers.

"South Korea's choices are limited," says Youngkwan Yoon, professor of international relations at Seoul National University. "It has everything to lose by going to war, and very little to gain."

For that reason, Seoul is likely to attempt a tricky diplomatic balancing act that deters but doesn't provoke Pyongyang. Only time will tell whether it is able to pull it off.

The diplomatic tug of war will likely drag in North Korea's key supporter, China, which would much prefer to stay out of the spotlight and focus on its conversion to an economic superpower.

China promoted South Korea to the status of "strategic partner" in 2008 and is moving economically closer to trading partners Japan and the US. But it remains stubbornly wedded to Pyongyang, much to the anger of the South Korean press.

"How would Beijing react if one of its own Navy ships had been attacked and a country that is supposed to be a 'strategic partner' simply kept trotting out some noncommittal mantra?" editorialised the mass daily Chosun Ilbo newspaper last week.

There is fresh evidence, however, that China is growing weary of its prickly ally. An article in the current edition of The Global Times, which is affiliated with the official communist mouthpiece, The People's Daily, says North Korea has repeatedly created diplomatic headaches for China and urges a rethink of the relationship.

China will be hoping for deep breaths once the fallout from the report settles down. But, like all heightened states of tension, the dispute always carries the threat of provocations that could spill over into outright conflict.

President Lee's new get-tough measures include restarting controversial "psychological warfare" against North Korea, meaning training loudspeakers and political fliers across the border.

North Korea responded to the report in typically full-blooded style: "If [South Korea] sets up new tools for psychological warfare such as loudspeakers and leaves slogans for psychological warfare intact, ignoring our demands, we will directly aim and open fire to destroy them," said a statement on the official news agency, KCNA.