N.Korea promotes new economic zones

North Korean officials on Wednesday promoted a number of preferential policies aimed at attracting Chinese investors, many of whom were concerned over the experience of a Chinese mining company that apparently had a contract unilaterally nullified by North Korea a month ago.

The officials told Chinese investors attending a seminar in Beijing that North Korea will allow the Chinese yuan to be used in business transactions, offer tax incentives to targeted industries and ease visa requirements.

North Korea is hoping to spur development of the Hwanggumpyong and the Wihwa Islands, two special economic zones on the Yalu River, which also runs through the Chinese border city of Dandong, Liaoning Province, reported the Beijing News. Favorable policies regarding the Rason Economic Trade Zone, which is closer to Jilin Province, were also discussed.

A North Korean official told the seminar that his country hopes to transform the economic zones into "world-class business districts."

More than 200 Chinese companies, including State-owned enterprises and private corporations, participated in the seminar.

China's Vice-Minister of Commerce Chen Jian said cooperation between China and North Korea on the development of the new economic zones is going smoothly.

Despite the enthusiasm from officials on both sides, entrepreneurs expressed concern over the veracity of the country's legal framework needed to protect their investment.

"North Korea has significant iron ore and coal reserves, but I wouldn't rush to invest unless I am sure it can be protected by their law," a Chinese mining entrepreneur who requested anonymity told the Global Times.

The business person was referring to the experience of the Xiyang Group, a Chinese mining company, which reported early this month that North Korea unilaterally cancelled a contract costing $38.08 million.

The North Korean government denied that it was responsible for ending the contract saying the Chinese company was "chiefly to blame," reported Bloomberg.

LüChao, director of the North and South Korea Research Center at the Liaoning Academy of Social Sciences, told the Global Times that investors must be cautious and need to put more effort in forging good government relations.

"However, we cannot jump to the conclusion that Xiyang Group was cheated by the country without a thorough investigation," said Lü, adding that what happened to Xiyang was an isolated case and the country is making changes.

Over 100 Chinese entrepreneurs and 50 North Korean business representatives attended a follow-up trade fair Wednesday, at which investment projects involving mining and mechanical equipment were presented.