Located in Liaoning province in northeast China, Dandong is the country's largest border city with a population of 2.4 million, a third of them in the urban area.

But it has the misfortune to be next to North Korea, one of Asia's poorest countries, whose foreign trade last year was estimated at about US$2 billion, compared with more than US$20 billion for Liaoning, whose population is double that of North Korea's.

Over the past two decades, China's port cities such as Xiamen and Qingdao have boomed thanks to trade, tourism and investment from outside.

But, paired with the poorest country in northeast Asia, Dandong has lost out. Few tourists come from North Korea and they have little money.

It plays the same role as Hong Kong did for southern China during the Maoist era. Empty trucks cross the bridge over the Yalu each day from North Korea and fill up with apples, peaches, instant noodles, biscuits and other food and consumer goods not available at home.

Members of North Korea's nomenclatura who are able to obtain foreign exchange and exit permits come to Dandong to buy cars, televisions, VCD players, refrigerators and microwave ovens and enjoy its restaurants and night clubs.

All this is income, but a fraction of the dollars that Taiwanese, Japanese and South Korean tourists and businessmen spend in China.

There is so little traffic that one Russian-built bridge, with one lane for the railway and one for motor vehicles, is sufficient between Dandong and Sinuiju.

Next to it stands a bridge built by the Japanese during their occupation of Manchuria from 1931 to 1945. It was bombed by the United States during the Korean War (1950-1953) and has been left half-finished as a 'patriotic education base', complete with photographs of US soldiers surrendering to Chinese troops.

'The Americans not only bombed North Korea and this bridge, they also bombed much of downtown Dandong,' Yuan Bao Datai Property Development manager Wang Chenggui said.

Tourists walk to the end of the bridge, buy an ice-cream and a book of North Korean stamps and peer through binoculars at the strange country on the other side of the river.

Probably the real reason why the bridge was not rebuilt is there was no need for it. The city plans to build a new one downstream as part of an expressway that will link Dandong and Sinuiju. The Chinese side has approved this project but not North Korea.

The contrast between the two cities is astonishing. In Dandong, high-rise hotels and office buildings look over the river, with fishing and pleasure boats parked on the shore. On the other side, there are no boats to be seen and just a few low-rise buildings that house the customs staff and frontier soldiers.

The streets of Dandong are crowded with cars, people and goods, in addition to a mass of hoardings and advertisements, while the supermarkets overflow with boxes of fruit and packets of instant food. Everyone carries a mobile phone.

By contrast, the streets of Sinuiju are quiet and empty. There are few motor vehicles, no advertisements except political slogans and sayings of Kim Il-sung and Kim Jong-il, and only a small number of shops. Mobiles are banned.

The people of Dandong hope the establishment of the SAR will change all this and make Sinuiju a city such as their own, with a heavy traffic of goods and people across the river. Prices of building materials and real estate in Dandong have gone up since the announcement on September 20, in anticipation of an influx of people and a building boom in North Korea.

'We are all very excited about the SAR. We have been waiting for years for this to happen. I do not know about people in the rest of China but firms here are keen to invest over there,' Mr Wang said.

Most people think that with Mr Yang as chief executive, the SAR will become a Chinese foreign concession in which Chinese companies and people will play the main role and Sinuiju will become an economic extension of Dandong.

The city government is preparing an application to the central government to give it a status similar to that of Shenzhen, to bring its tax and tariff policies close to those in the SAR.

Many people in the rest of China regard the SAR with scepticism, saying North Korea's track record provides no guarantee that it will honour its promises and let the city develop as a capitalist enclave for 50 years without interference.

But, for Dandong, this is a gamble it has to take.

Graphic: dandocgbz