China's commerce ministry said on June 9 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. The announcement marked the first time the two allies had jointly launched such an initiative.

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".

DPRK President Kim Jong-il 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 DPRK 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.