FM denies $3 billion North Korea investment deal

The foreign ministry Thursday denied a South Korean report that Beijing had agreed to invest $3 billion in North Korea's northeastern Rason special economic zone (SEZ) in exchange for leasing three piers for 50 years.

"The report was not true," the ministry said in a fax to the Global Times, but added that the two countries had agreed on how to co-develop the SEZ, without elaborating.

Citing unnamed sources in Seoul and Beijing, the Yonhap News Agency reported Wednesday that China and North Korea reached the $3 billion investment deal late last year.

Under the agreement, China would apparently build an airfield and a thermal power plant in Rason, as well as a 55-kilometer railway track between China's northeastern city of Tumen and Rason, Yonhap said.

The two sides broke ground for a joint economic zone in June on North Korea's west coast, on an island in the estuary of the Yalu River.

Also on Wednesday, the Tokyo Shimbun newspaper reported that in January, the North Korean government sent a 1,000-strong delegation of trade officials and technicians to China, but did not explain the purpose of the visit.

Choi Choon-heum, with the Korea Institute for National Unification, told the Global Times that these are signs that North Korea is continuing its economic opening-up.

"It is too early to judge whether North Korea will start its economic reform and become more open to the outside world, but the latest moves are definitely positive signs," said Choi, who remained cautious on any possible major policy changes in North Korea under young leader Kim Jong-un.

The Dong-a Ilbo reported Thursday that Pyongyang will allow companies operating in the Kaesong industrial complex bordering South Korea to set up new facilities or build plants there, lifting a ban set on May 24 last year.

According to the BBC, German, Russian, Indian and Thai companies are already trading with North Korea.

"There are reports of Australian interest in mining and British involvement in finance," BBC said.

"The North Korean government has stressed the need to develop the economy and to improve people's livelihoods. China is looking forward to seeing more reforms in the North and can offer advice on economic reforms," Lü Chao, a researcher with the Liaoning Academy of Social Sciences, told the Global Times.

"There are things North Korea is doing to be more pragmatic, certainly to open up, to court foreign investment - like ramping up their economic relationship with China, re-opening the SEZs, giving them more autonomy. These are arrows pointing in the direction of some sort of transition," John Delury, a North Korea specialist at South Korea's Yonsei University, told BBC.

Also Thursday, a huge military parade was held in Pyongyang to mark the 70th anniversary of the birth of late leader Kim Jong-il.

Battles can break out without warning, military chief Ri Yong-ho told the televised ceremony, vowing to "wipe out US imperialists and South Korean puppet traitors" and reunify the Peninsula in case of war, AFP reported.

"Kim Jong-un! Protect him with all our might!" roared thousands of troops from the army, navy and air force, state television showed.

Shortly before this, hundreds of top military and civilian officials paid tribute to Kim Jong-Il inside the main marble-pillared palace.

Soldiers in wide-brimmed caps saluted a smiling portrait of the former leader while civilians bowed deeply before the image as solemn music played.

Kim Jong-un, believed to be in his late 20s, led the commemoration inside Kumsusan, where his father's embalmed body will lie in state. Kim Il-sung's body is already on display there.

North Korean and US officials will hold talks in Beijing next week about a possible resumption of the six-party nuclear talks, a meeting which could provide some clues about Kim Jong-un's policy priorities, AFP reported.

The US has said that North Korea shutting down its uranium enrichment facilities under the monitoring of the International Atomic Energy Agency is a key condition for the talks to resume.

"China's nonproliferation stance is clear and firm. Beijing is willing to offer a platform for multilateral talks to help solve the issue, but a settlement still requires solid denuclearization moves from Pyongyang," Lü said.

Also Thursday, Yonhap reported that South Korea and the US plan to stage joint anti-submarine drills next week off the west coast of the Korean Peninsula.

The five-day drills to be held off the port city of Gunsan are aimed at enhancing the allies' defense readiness and deterring potential attacks by the North, the report said.

The two sides agreed last year to conduct anti-submarine exercises biannually.