North Korea has been placed under martial law and may be experiencing a power struggle, according to diplomatic sources in Beijing. The sources said nationwide military exercises which began on March 12 in the North were different from usual annual war mobilisation rehearsals. One Western diplomat said: 'It is rumoured [North Korean leader] Kim Jong-il has deployed the Army to carry out a purge.' Another source added: 'There are now people in uniform all over the country.' Soldiers have reportedly occupied some government buildings. Foreign residents in Pyongyang reported hearing shooting between police and soldiers in an unexplained incident on March 5. It was followed by the imposition of a night curfew. Sources said Mr Kim was recently in the Rajin-Songbon special economic zone in the north of the country. He is rumoured to have arrested Kim Cong-u, chairman of the Committee of External Relations, who was in charge of the project and other efforts to open up and reform the economy. The rumours were fuelled further this week when the United Nations Development Programme abruptly cancelled a tour of the zone, organised for Beijing-based foreign media and scheduled for next week. No new date has been scheduled. Observers believe Mr Kim Jong-il staged the purge because he fears being overthrown by reformers as the famine-stricken country nears collapse. Other senior leaders responsible for policies dealing with South Korea are rumoured to have been arrested. Diplomatic sources said there had been growing unrest in the North. A source said there had been a brief protest by students in Pyongyang last year and some protesters were executed. Diplomats say the power struggle may have been the real reason four-party talks in Geneva failed last week. They believe North Korea is about to suspend its tentative steps towards reforming the economy and normalising relations with the outside world. Suspicions have also been heightened by China's apparent change in attitude towards North Korea. Newspapers in China have started describing in detail both the scale of the famine and the military exercises for the first time. 'They could be distancing themselves from North Korea and preparing the Chinese public for a shift of policy,' a Western analyst said. The North Korean Government has banned foreigners leaving Pyongyang. The World Food Programme complained famine relief efforts were being hindered by the ban on movement outside the capital. Talks between the Red Cross organisations of North and South Korea resumed in Beijing yesterday. Spokesman Johan Schaar said the talks centred on how to ship about 50,000 tonnes of maize, cooking oil and blankets to North Korea.