Nuclear test no bar to economic zone, says North Korea

China appears to be pressing ahead with plans to invest in a North Korean free-trade zone in a sign that its recent nuclear test has not soured economic ties with its only major ally.

Beijing has not made it clear if the test will disrupt its investment plans for the Rason economic zone. But an official at the zone's joint management office said all previously announced Chinese projects for the zone remained on track, including a power line from China to ease acute electricity shortages there.

"All the people of the management office are still here working as usual. If there is any major impact [from the nuclear test], do you think we would still be here?" he said by phone from Rason, which lies near where North Korea, China and Russia converge.

He said there were about 60 Chinese and North Korean people working at the management office, and the number could rise with the launch of more projects.

China and North Korea jointly set up the Rason management committee in October to handle the planning, construction and development of the zone, also known as Ranjin-Songbong, one of the country's highest profile economic projects.

North Korea conducted its third nuclear test last month, drawing global condemnation and a stern warning from the United States that it was a threat and a provocation. It prompted warnings from Washington and others that more sanctions would be imposed.

North Korea's isolated and small economy has few links with the outside world apart from China, its major trading partner and sole influential diplomatic ally. While Beijing appears to be exasperated with the isolated state's belligerent behaviour, it has stopped short of abandoning all support for Pyongyang.

"China has normal relations with North Korea. We will conduct normal trade and economic exchanges with North Korea," a Foreign Ministry spokeswoman, said when asked whether China would continue to work with North Korea to develop its special economic zones.

"At the same time, China opposes North Korea's nuclear test and its position on promoting denuclearisation of the Korean Peninsula is firm."

Led by China's Commerce Ministry, Chinese firms, including State Grid Corp, Jilin Yatai (Group) and China Railway Construction Group have indicated interest in investing in power, building materials, transport and agriculture projects in the zone.

Yatai, a Shanghai-listed cement and coal producer, signed a framework agreement last year with the North Korean government to construct a 500,000-square-metre building materials industrial park, including a cement plant, in Rason.

State Grid has finished the final review of a feasibility study of a 98-kilometre power line, but has not started construction as it has not yet won all approvals.

The planned line would reportedly cut through a Siberian tiger natural reserve, and State Grid is awaiting a green light from China's National Development and Reform Commission and co-ordinating with various other authorities.

There is no timetable for the project as State Grid is unsure when it will receive approvals.