China and South Korea are both quite uneasy about the prospect of the North Korean government collapsing. This is by both as a question of when not if as the economy and public support for the hereditary dictatorship in North Korea continues to decline. Unless the North Korean leadership makes some fundamental, and long opposed, changes the government control of the country will collapse. Both China and South Korea say they should take over but neither is enthusiastic about actually doing so. According to opinion surveys more South Koreans are agreeing with letting China take over up there. That’s because since the 1990s South Korean reunification planners have been studying what happened in Germany after the communist East Germany was absorbed by the democratic West Germany in the 1990s. That cost the West German taxpayers over two trillion dollars. Estimates of what it will cost South Koreans to absorb North Korea are now over five trillion dollars. Then there was the fact that Germany had a GDP four times that of South Korea, meaning that the average South Korean will have to pay ten times what the average West German paid to rebuild their lesser half. This could cost South Koreans up to ten percent of their GDP for a decade or more. Many South Koreans fear that rebuilding the north could wreck the South Korean economy. No one knows, and everyone is scared. But someone will have to pay, and the most likely candidate is the South Korean taxpayer. Unless, of course, China is allowed to take over. This is something China is not only willing to do but is kind of insisting on.
China would not spend as much as South Korea would to absorb North Korea but it would still be in the multi-trillion dollar range. Since China is still a communist police state they could use lots of force to maintain order until the economy was revived and people had reason to tolerate Chinese rule. Historically Koreans have always resisted Chinese domination and fought Chinese direct control. China could get around this by offering North Korea some form of autonomy, like Hong Currently enjoys. Most North Koreans would, initially at least, welcome the Chinese as it would mean an end to the constant and worsening shortages (especially of food). But soon the ancient anti-Chinese attitudes would resume.
The key to implementing control in North Korea might be how China handles the North Korean bureaucracy and security forces. The bureaucracy could easily be absorbed into Chinese service, even if hundreds of thousands of the less effective and reliable North Korean bureaucrats were cut lose. Absorption is more of a problem with the North Korean security forces, which currently employs about ten percent of the population. This force includes the regular police, the military, the secret police and the vast intelligence apparatus that spies on everyone, including the security services and foreigners. About a third of these people are conscripts in the military who would be glad to be set free. Most of the regular police would be retained, especially in the first years after China takes over. Many of those in the secret police would be retained, but some would not because of loyalty (to the old dictatorship) or corruption issues. China has worked with the North Korean secret police and intelligence agencies and knows a lot about them. That means China probably has a list of who can be trusted and who should be fired, jailed or executed. The average North Korean would not care if anything bad happened to anyone in the secret police. About a third of the military are career professionals and China might be able to absorb some of these and would have to be careful in how they handled those they did not need. China knows from the Russian experience that cutting loose well trained killers (especially special operations types) simply improves the lethality of criminal gangs.