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North Korean soldiers stand guard near Chinese trucks as labourers work for the preparation of the ground breaking ceremony of an industrial complex on Hwanggumpyong Island, near the North Korean town of Sinuiju and the Chinese border city of Dandong, on Tuesday, June 7, 2011. The island is planned to be developed by the joint efforts from China and North Korea into a center for tourism, logistics and manufacturing.


China has broken ground on two economic development zones in North Korea, in a tentative sign that the secretive Leninist state is warming to Chinese-style economic reforms.

China's commerce ministry said on Thursday the countries would develop two "government-led, enterprise-based and market-oriented" economic zones close to the Chinese border.

There have been numerous attempts by Chinese entrepreneurs, provincial officials and even the UN to promote cross-border economic co-operation, with limited results. Thursday's announcement marked the first time the two allies had jointly launched such an initiative.

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After ceremonies attended by Chen Deming, China's commerce minister, and Chang Sung-taek, administrative director of the Korean Workers' party, the two sides said the zones would provide "a platform to promote economic and trade co-operation with the rest of the world". Mr Chang is also the brother-in-law of North Korean dictator Kim Jong-il.

Mr. Kim has visited China three times in the past year, fuelling speculation the two countries are discussing closer economic ties. China already provides extensive aid to prop up its communist neighbour.

One economic zone will be located in the North Korean border city of Rajin-Sonbong (Rason). The other will be built on the undeveloped islands of Hwanggumpyong and Wihwa. Projects include the planned rebuilding of a road from China to Rason, a new cement factory, electricity infrastructure and modernisation of Rason's port.

At the outset of its "reform and opening" process in the early 1980s, China established its flagship Shenzhen special economic zone on the border with Hong Kong, then a British-run capitalist enclave.

The Rason Economic and Trade Zone will include an area that North Korea designated as an investment zone in the 1990s, but which has not managed to attract any serious investment.

South Korea already runs a small investment zone in the border enclave of Kaesong. South Korean officials admit Kaesong, while of little economic importance to Seoul, is intended to sow the seeds of free market reform in the North. However, there is scant evidence that most North Koreans know anything about the South Korean-run factories in their country.

Despite interest from Chinese entrepreneurs and enterprises, Beijing has also been reluctant to promote extensive economic ties with its erratic neighbour.

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