08/13/2012 06:01 am ET Updated Oct 13, 2012

North Korea-China Trade: Jang Song-Thaek, North Korea Leader's Uncle, In China To Talk Business

* Visit could signal new North Korea interest in economy

* North Korea highly dependent on China but has resisted changes

* US urges North's leadership to change course

By Jack Kim

SEOUL, Aug 13 (Reuters) - North Korean leader Kim Jong-un's uncle -- the man seen as the power behind the young and untested dictator -- went to Beijing on Monday in the latest signal that the reclusive state is looking seriously at ways to revive its broken economy.

The official KCNA news agency said Jang Song-thaek was visiting China, the North's only major ally, to discuss setting up joint commercial projects. The news comes after leader Kim recently told Beijing that his priority is to develop his impoverished country's decaying economy.

In Washington, a senior U.S. official said Jang's visit, which follows a trip to North Korea earlier this month by a senior Chinese Communist Party official, also contained an important element of diplomacy.

It could be a prelude to a mission by new leader Kim to Beijing, said the official, speaking on condition of anonymity.

"It's also part of refurbishing the relationship, which was a bit dented" by North Korea's decision to go ahead with a rocket launch in April despite public warnings from China, the official said. North Korea said the launch failed in its mission to put a satellite in orbit.

North Korea is one of the world's most insular nations and there is little news available on its leaders and policies other than state media.

However, a source with ties to both Pyongyang and Beijing told Reuters last month that the North was gearing up to experiment with agricultural and economic reforms after Kim and his powerful uncle purged the country's top general for opposing change.

"A delegation of the DPRK-China Joint Guidance Committee Monday left here for Beijing, China to take part in the third meeting of the committee," KCNA said.

DPRK is short for the North's official name, the Democratic People's Republic of Korea.

"It was headed by its DPRK side Chairman Jang Song Thaek who is a department director of the Central Committee of the Workers' Party of Korea."

KCNA said the meeting is to discuss the joint economic projects in Rason on the North's east coast, and in Hwanggumphyong, an area on the border between the two countries that is yet to be developed.

The dispatch gave no details about the projects or who else was in the delegation.

The visit by Jang, who has long advocated economic reforms in one of Asia's poorest states, follows growing speculation that Pyongyang and its new leaders want to bring changes to the way the economy is managed.


The two countries have planned to develop a new industrial district on the Yalu River that runs along their border, but the construction of a new bridge that will be part of the project has been suspended because of disagreements on how to proceed.

China is believed to be wary of pursuing a major new commercial venture with North Korea amid its own leadership transition and as Pyongyang continues to defy calls to divert scarce resources away from its arms development program.

South Korea is the only other partner in commercial development in the North, with an industrial park just north of their heavily fortified border that is the site of factories where about 120 South Korean firms use cheap local labor to make goods.

But South Korea's Hyundai conglomerate has learned the risks of doing business with the North after assets it built in the Mount Kumgang resort on the east coast were frozen following the shooting death of a visitor in 2008 that led to the suspension of tours there.

North Korea already relies heavily on China to support its crumbling economy, but its leadership has in the past proven to be deeply suspicious of any changes, seeing them as a threat to its control over the country.

But Kim Jong-un, who took over the state's family dictatorship when his father died in December, has presented a sharply contrasting image to his father and is believed to be planning to carry out economic and agricultural reform.

"There is an element of explaining to China the reforms and opening that Kim Jong-un has been planning, and of seeking support by China, which will be crucial" said Yang Moo-jin of the University of North Korean Studies in Seoul.

The destitute, centrally planned North Korean economy has been on the decline for years and is unable even in years of good harvests to feed its 24 million people.

The problems have been compounded by United Nations sanctions imposed after Pyongyang's missile and nuclear tests in defiance of international warnings, including disapproval by its ally China.

U.S. State Department spokeswoman Victoria Nuland urged China to persuade the new North Korean government to take actions to end the isolation Pyongyang brought upon itself with those nuclear and missile tests.

"We're hopeful that the new leadership will consider changing course," she said.

"They can open their country, come back into compliance and live in a place that respects human rights, respects the needs of their people, or they can keep doing what they've been doing and continue to face isolation and continue to face misery," she told a news briefing.

In another sign that Kim may be looking to end international isolation, he has sent the country's nominal head of state Kim Yong-nam this month to Vietnam and Laos, where he was reported to have discussed economic development.