North Korea attack on island causes international alarm (from the BBC):
"North Korea's shelling of an island in South Korea near a disputed sea border has drawn international condemnation..."
I suspect that the power transition to Kim Jeung-Un isn't going as smoothly as hoped by his father and so, he is resorting to more brazen acts to keep potential dissenters/internal threats in line. The problem with this kind of escalation is that it becomes a game of chicken where anyone hoping to assume the mantle of ruling the country must pass through a crucible of military aggression against ROK. And each new candidate will likely ratchet up the violence to gain their street cred's.
All this might explain why PRC is reluctant to chastise DPRK publicly (or even, as it appears, privately for that matter). PRC would like to see a smooth transition of power. Mainly because they know that any type of unrest in DPRK, even if the regime doesn't collapse completely, would mean an influx of refugees into its restive ethnic Korean region, and worse, possibly a deployment of the PLA on foreign soil to maintain order. Second, it would like to see the younger Kim in power because they hope that he will be able to help transition the state towards more openness and stability; never-mind the fact that they're also thinking that a young neophyte leader may be more malleable to PRC's interests. Finally, the central party apparatus is dependent on the PLA to maintain its power. It already has a shaky hold on the loyalty of its citizens (yes, there is growing nationalism, but this can turn towards a fascist type mentality which can easily swing against the communist party if provoked). And the old guard in the PLA is absolutely resolute on its support of DPRK. PRC Vice President Xi Jinping's* recent comments on the Korean War demonstrate the degree to which the central party will appease the PLA to distort facts (even PRC's own internal research concluded that its engagement in the Korean War was a mistake).
ROK has little to gain and a lot to lose if it retaliates. Unfortunately, DPRK knows this. If ROK gets a condemnation of DPRK at the Security Council (unlikely with PRC's veto power), DPRK will just thumb its nose at it. If it retaliates militarily and DPRK doesn't escalate beyond control, the South would jeopardize the power transition going on in the North. If North does escalate, at best it shells other ROK civilian areas and would send ROK's and Japan's markets into a tailspin. At a worst, DPRK will shell Seoul, then ROK's and Japan's wouldn't just rachet down, they would collapse. DPRK will certainly lose any direct military confrontation, but if ROK's economy is severely damaged in process it will only make an integration of the two countries more difficult if not impossible.
Personally, I think ROK should go ahead and announce that it will escalate until the DPRK regime collapses if the DPRK doesn't cease in it belligerence. And the cost of rebuilding DPRK fall on the PRC since after an all out conflict, ROK would certainly not be able to afford a reunification or rebuilding of DPRK. Further if DPRK doesn't stop its development of nuclear weapons, ROK will bring US nukes onto its soil and will fire up its centrifuges, which would allow it to fuel and stockpile nukes at an alarming rate. All this should put enough fear into PRC that it will intervene in DPRK.
* In fairness to VP Xi, he is the heir apparent to Hu Jintao and was recently elevated to VP and Vice Chairman of the party's military committee - a necessary notch in order to rise to President. As the new guy on that powerful committee, he needed to make a speech that praised the PLA and cemented his ascendancy. Xi is an interesting candidate and it looks like his rise was carefully orchestrated by close allies. His father was involved in Shenzhen, a political power center within the party, and he was also the one picked to clean up Shanghai's corrupt local gov't, a former power center. He is also more closely associated with reform leaning members of the party, so he may have felt it necessary to smooth over his relationship with the hardline PLA leadership.
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