OPINION: The crisis on the Korean Peninsula presents China with an enormous opportunity.
The previous serious crisis in east Asia was in 1997 and that was economic not military. As currencies in the region plummeted in value, China held firm and did not devalue the yuan, for which the world was enormously grateful.
If China had devalued its currency this would have led to a series of competitive devaluations that would have not only damaged the region but also everybody else.
China paid a high price in lost export earnings for providing this regional leadership. But it was a price well worth paying, as for the first time it positioned China as the natural regional leader.
To earn moral authority, leaders need to be seen to at times act in the interests of others and at a cost to themselves.
Today, China holds the keys to the Korean crisis. As matters stand, the US would face a terrible dilemma if North Korea attacked South Korea. It would either have to abandon its ally or, by going to its defence, risk retaliation from China and the descent into a Pacific war.
There is an alternative. China could speak out publicly, disavow North Korea's aggression, and say it will not support Pyongyang should it launch an attack.
Of course China may be saying this privately but by doing so publicly it would earn the gratitude of the region and advance its agenda of assuming the mantle of regional leader.
In the years since 1997, China's ascension to this leadership role has not proceeded as smoothly as many had expected.
The territorial disputes in the East and South China Seas with Japan, the Philippines, Vietnam and others, have done much to erode China's moral authority.
The region's nations trust China less than they did five years ago. The crisis on the Korean Peninsula is China's opportunity to put this right. But there is more at stake than peace in the Pacific, significant though that is. What is also at stake is east Asia's contribution to the rules by which global commerce is governed.
The deliberations of the G20, the Financial Stability Board and the other international organisations which set the rules of the global economy, never hear east Asia speaking with a unified voice.
Whatever position China adopts, Japan and Korea reflexively oppose it. Consequently, rules of the international economic order continue to be set by the US and the European Union, while the region that is supporting growth globally through its superb economic performance has very little real input into the rules of the game. The Korean crisis affords China, and the region, the chanced to change that.
If China acts clearly and forcefully to renounce North Korea's aggression, it will reap the rewards of a big increase in regional influence.
The goings on in the Korean Peninsula may seem remote from Australia. However, in Seoul, less than 60 kilometres from the border with North Korea, or in Tokyo, where Patriot anti-missile systems are being erected in parks, the crisis must seem very real indeed.
In these places, China acting to diffuse this crisis would seem like the actions of a benevolent and wise regional leader.
Ross Buckley is Professor of International Finance Law at UNSW.
This opinion piece was first published in The Sydney Morning Herald.