Sudan has "declared war" on its new neighbour, the President of South Sudan announced on a trade trip to China this week. The truth is that the two countries have effectively been at war almost since the South voted for independence from the North last year. Now China, which buys oil from both countries, must consider its options as peacemaker.

Put simply, the Comprehensive Peace Agreement that ended decades of war between the two regions appears not to be comprehensive enough. Under the accord, 75 per cent of the region's oil reserves are retained by the South, and the North can enforce tariffs on use of the pipeline to Port Sudan on the Red Sea. So far, so good. Indeed, the split into two countries that came into effect last July was surprisingly smooth, following a voluntary offer of secession from the North and a referendum in the South. But after such positive beginnings, the two sides have been squabbling, with increasing intensity, ever since.

When Khartoum recently impounded oil from the pipeline after a dispute over transit fees, South Sudan shut down production. The North seized the disputed border area of Abyei, launched a crackdown on former southern allies inside its new borders and eventually provoked the South into occupying the contested oil field of Heglig, from which it later withdrew under international pressure.

Taken together, such actions look much like war. Even more so given the 35,000 refugees already on the move around Heglig, the 115,000 northern refugees in South Sudan, and the 30,000 more in Ethiopia. But there may yet be worse to come. The South's cut in oil production has struck a major blow to Khartoum's economy and the main oil processing facility in Heglig, which provides half of the North's crude, has been severely damaged. The North's President, Omar Hassan al-Bashir, has called the southerners "insects" and is becoming ever more belligerent.

There is a clear role for China here. Beijing's success in Africa in the past decade has been based on its refusal to interfere in the internal affairs of the countries which supply its raw materials. But the situation in Sudan may stretch the principle to breaking point, given that an escalation in the conflict will both have dire humanitarian consequences and cause long-term economic damage. As a key trading partner with both North and South, China has considerable leverage; and it must do all it can to pull the two sides back from all-out war. Ultimately, however, the compromise must come from Khartoum.