China to invest US$10 billion in N. Korea to improve talks

The news came one week after North Korean leader Kim Jong Il told a visiting high-level envoy from Beijing that he was committed to a nuclear-free Korea. Kim subsequently dispatched his top nuclear envoy to Beijing for talks on the resumption of six-nation negotiations on ending its nuclear program in return for aid.

Several state-run Chinese banks and other multinational companies neared an agreement to invest about US$10 billion to build railroads, harbors and houses in North Korea following their negotiations with Pyongyang's official Korea Taepung International Investment Group, according to Seoul's Yonhap news agency.

More than 60 percent of the US$10 billion investment would come from the Chinese banks, Yonhap reported citing an unidentified source it described as knowledgeable about the situation at the North Korean investment agency.

The investors and the North's State Development Bank plan to sign the deal next month, Yonhap said. The news agency didn't identify the investors.

Calls to Beijing's Finance Ministry and Seoul's Unification Ministry and Finance Ministry rang unanswered on Monday, a national holiday in both countries.

China, the North's key ally and biggest aid provider, is widely seen as the country with the most clout with Pyongyang. Its influence is seen as key to getting North Korea to return to the six-party talks involving the two Koreas, the U.S., China, Russia and Japan.

North Korea quit the talks and conducted a second atomic test last year, inviting tighter U.N. sanctions. The regime has called for a lifting of the sanctions and peace talks formally ending the 1950-53 Korean War before it returns to the disarmament talks. The U.S., South Korea and Japan have responded the North must first return to the negotiations and produce progress in denuclearization.

The news agency also said the North could help resolve its chronic food shortage and economic difficulties with the investment. The North's gross domestic product for 2008 was estimated at US$24.7 billion, according to Seoul's central bank.

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