PYONGYANG, North Korea — A Chinese-born entrepreneur will head North Korea's first major experiment in capitalism -- a walled-off region designed to draw foreign investment to the insular communist country.

Yang Bin, an orchid exporter and property developer, said Monday that the 130-square-kilometre oasis of capitalism near the country's northwestern coast would be free of the staunch ideology that has been North Korea's hallmark for half a century. It reflects the government's willingness to open up to world, he said.

"The special zone is totally capitalist. It is separated from the socialism," said Yang, speaking in Mandarin Chinese at a news conference held in the capital to unveil his appointment.

He said his appointment as chief executive of the "Sinuiju Special Administrative Region" by North Korean leaders "shows their willingness to be involved in the international community and international politics."

The Presidium of North Korea's legislative Supreme People's Assembly issued a decree Sept. 12 setting up the region.

The northwest city of Sinuiju is the country's main gateway to China, North Korea's last remaining major ideological ally and trade partner. It has chemical, metal and food factories, and has often been cited as a potential candidate for a free-trade zone as the North experiments with elements of a market economy.

The government intends to remove the zone's current residents and replace them with North Koreans from elsewhere, Yang said. He didn't give a reason or details, but said it would take place over the next few years.

North Korea's economy is in deep trouble after losing its Soviet trading partner and aid sources in the early 1990s. Floods and other natural disasters later pushed the country toward famine that killed hundreds of thousands and forced it to rely on outside aid to help feed its 22 million people.

In 2001, North Korean leader Kim Jong Il visited Shanghai, touring auto and computer chip plants and the stock exchange. Since July, North Korea has raised wages and eased price controls - moves outside observers find significant because they include elements of a market-based economy.

Yang said the North Korean government was committed to not interfering in the Sinuiju experiment, which it said would use Chinese yuan or U.S. dollars as currency and Korean, Chinese and English as official languages.

He said a wall would separate the region from the rest of the country and that part of the work force would be imported from China. A major port also will be constructed, he said.

Yang also said Pyongyang wanted to recruit a legislative council of 15 people, half from China, Hong Kong, Taiwan, Europe -- and even the United States.

Foreign investment in the North so far has been restricted to a few industrial parks, including the 11-year-old Rajin-Sonbong free-trade zone in the northeast, widely regarded as less than successful. Only a few empty hotels remain.