north korea is a nation in mourning and much of the world is wondering right now what happens next. you're watching continuing coverage of the death of kim jong-il. the state run news agency says the 69-year-old died of a heart attack this weekend since coming to power in 1994 kim increased his country's nuclear might and isolation. his repressive rule also saw massive famines that killed hundreds of thousands of his own people. in a sign of the tensions over his dealt, south korea has put its military forces on emergency alert and convened an emergency cabinet meeting, and pyongyang is urging an increase in its own military capability. kim jong-il apparently died on saturday, but his death was not reported until monday morning on state-run tv. take a look at how north koreans the man known as their dear leader died. the news anchor visibly emotional saying he died of physical and mental over work. take a look at how north koreans reacted to that report. [ sobbing ] >> we have video giving us a rare glimpse inside the reclusive nation. you can see the outpouring of emotion over kim jong-il's death. the state-run news agency says some people were even writhing in pain. whatever you might think of kim jong-il, there was no denying he was an unusual head of state. john voss reports. >> reporter: with the buf font hair, oversized sunglasses and trademark jumpsuit, he looked every bit the nutty tyrant. >> the appearance made it a little more difficult to treat him seriously at least at first. >> reporter: he was the dictator with the reputation for indulge in fine wine and prostitutes. he held total power, developed nuclear weapons an forced the u.s. to negotiate. >> that is not necessarily the work of a womanizing booze-swilling individual drunk during the day. >> reporter: inside north korea it was all about kim, portrayed by his propaganda machine as a political, military, technological, artistic and cinematic genius, a renaissance man who has flown fighter jets and shot 11 holes in one at his first try at golf. his public appearances were breathlessly reported on state media. he was haled as the central brain and the morning star. he was a crazed ruler who loved to make people dance, a million of them all at once and all in step. he presided over a nation more cult than country. you chase away fierce storms and gave us faith they sing. his official biography says he was born in a log cabin in a sacred korean mountain under rainbows and stars. some say it was probably in siberia in a soviet camp where his father was training to fight. he loved movies. james bond was apparently among his favorites. he reportedly was unhappy with north korea's portrayal in "die another day." no word on what he thought about teen america. in the late 1970s it's believed he personally ordered the kidnapping of a south korean actress and her director husband. and for eight years until they escaped forced them to make propaganda films. kim did apologize for north korea's kidnapping of 13 japanese and allegedly approved the bombing of a korean airlines flight which killed more than 100 people. the apparent motive was to disrupt the 1988 olympic games in seoul. they were dubbed the soprano state for its role in organized crime including the production and distribution of heroin and methamphetamines. >> his legacy will be that he made some bad choicetion for his country. >> reporter: he was a man who every day seemed he had a bad hair day, who starved his people, threatened south korea with the fourth largest arsenal in the world. the certainty of his brutality is gone. in its place, the terrifying uncertainty of what comes next. john voss, cnn, beijing. beijing is paying its respects to kim jong-il as pyongyang's closest ally. the flag at the north korean embassy in the chinese capitol was lowered to half staff. china's state-run shin juan news agency reports beijing expresses deep kol condolences over the north korean leader. attention is shifting to the next leader kim jong un, state media referring to him as the great successor. we want to take a closer look at the heir apparent, the youngest son of kim jong-il believed to be 27 or 28 years old. he is the son of the elder kim's late third wife. now, because of his age and lack of experience, he's said to be a political novice. in 2009 he reportedly took a low-level post at the national defense commission and that's north korea's highest ruling agency led by his father. last year he was promoted to four star general, seen as a stepping stone to taking over from his father. he shares a physical resemblance to his father. like his father he may also have diabetes. it's believed as a boy he secretly attended boarding school in switzerland and then kim ill su military academy named for his grandfather. he reportedly is a big fan of basketball and michael jordan. our coverage on the death of north korean leader kim jong-il continues. stay with us here on cnn. e rock♪ [ both ] ♪ rocket man ♪ burning out his fuse up here alone ♪ burning out his fuse up here alone? ahh. [ male announcer ] crystal clear fender premium audio. one of many premium features available on the all-new volkswagen passat. the 2012 motor trend car of the year. ♪ and i think it's gonna be a long, long time ♪ welcome back to cnn's continuing coverage of the death of kim jong-il. reaction has been pouring in from around the world. south korea's defense ministry raised its national alert to the second of three levels. and president myung-bak asked that they remain calm. japan also called an emergency national security meeting upon learning of kim's death. a statement has since been issued offering condolences. japan's chief government spokesman says we wish the sudden news would not affect north korea negatively. china has also offered its deep condolen condolences. north korea and china are close allies. wire reports are now quoting the russian president sending his condolences on kim jong il's death. from the other side of the world, a u.s. official says north korea fatss extraordinary change and uncertainty and an insecure north korea could well be even more dangerous. earlier the white house press secretary issued a statement saying the president has been notified and we are in close touch with our allies in south korea and japan. we remain committed to stability on the korean peninsula and to the freedom and security of our allies. from britain, u.k. foreign secretary william hague says kim's death could be a turning point for north korea and urged the new leadership to recognize that engagement with the international community offers the best prospect of improving lives of the north korean people. china is north korea's closest ally and kim jong il's death is big news there. we'll get stan grant in beijing now. we've heard they've offered their condolences. are they saying anything else? >> reporter: just one statement. they took some questions at the min tri of foreign affairs briefing today, monita. those questions been taken to be answered at a later date. the statement says yes, they offered their condolence, praising kichl jong il as a great leader of socialism, calling on the north korean people to see this as an opportunity for unity and repeating a line, that china is committed to stability on the korean peninsula. that is going to be crucial. this relationship between the united states and china really comes under the microscope now. will they just take up cold war positions? will you see the united states firmly in south korea's core ner and china in north korea's? will they be able to work through this? that puts china very much in the frame. china, of course, brought together the parties for the six-party talks. russia, japan, north korea, south korea, the united states and china, all having various competing and contending relationshi relationships. china was able to bring those people to the table to try to advance their whole debate about china, that north korea's nuclear program. now china is going to have to use all its influence to ensure stability with the leadership transition. kim jong un is not unknown to china, brought by his factr in the past to get the tick of approval from the leadership. with kim jong il being in poor health, the situation north korea was anticipating. but also china anticipating, running various contingencies just for this event. the real question here is the potential for misunderstanding. we know when there's a heightened situation of alert, that the wrong thing said at the wrong time, the wrong action can lead very quickly toesque lags and all parties are concerned to ensure that that doesn't happen with so much uncertainty and potential in stability. monita? >> stan, what kind of opportunity does this present for beijing? >> reporter: it's a crucial opportunity for beijing. china's stated ambition is to become the pre pontd rant power in asia. we've seen china extending its reach, its relationship throughout the region, trade relationships in particular throughout the region. it wants to do that peacefully. china does not want to see itself dragged into a conflict that could interrupt its own growth and forestall those ambitions. at the same time, though, the united states has been very clear in recent months with the end of activity in iraq, the drawdown of troops in afghanistan, it's going to recommit to this region. barack obama on a recent trip through the region was talking about the u.s. commitment, even going as far as to organize for more u.s. troops to be placed on the ground in australia. some have interpreted that as an attempt to try to contain china's rise. right now all of that is in the mix. just how much influence does china have? how closely can the u.s. and china work together? how mature is the chinese leadership? how much influence and pressure it can bring to bear on north korea? you're right, this presents a real opportunity for china, an opportunity to show its leadership, but also the great potential for things to go awry as well. they're going to be well aware of that, monita? >> you mentioned that kim jong un, the heir apparent had visited china. what does beijing really know about this young man? do they hold him in much esteem? do they believe he's credible? do they even believe he has what it takes to lead this country into the next generation? >> reporter: we haven't heard anything, of course, publicly. of course, with his trips to beijing, the fact he was brought here by his father and met with the leadership here would give some indication of beijing's i'm pro mad da. at the same time we don't know much about him. that's the problem. how old is he? some say 27, 28, 29 reports of him having attended school in switzerland, a private school there, being exposed to the west, an interest in basketball, western movies, that he speaks several languages. this is still a very young man. a man that many are questioning now whether he even has the authority to be able to impose himself on north korea. let's not forget, these are the same questions posed about his father when kim jong il succeeded kim il sung. kim il sung is president for eternity. the questions were asked whether he would have the authority, those same questions being asked about kim jong un now. kim jong il had a long apprenticeship, 20 years by his father's son. his son only a matter of a few years. he's inheriting a country that is poor, that we know is cut off from the rest of the world where there's a hard line old leadership, military leadership in place, and how he's able to impose himself on that is going to be the real test as well as what sort of country he wants to lead, monita. >> stan, talk to us a little bit about the relationship between pyongyang and beijing and how they became these close allies? was it a case of keeping your friends close and your enemies closer? or was there some sense of genuine i guess commonality between them? >> reporter: an ideological unity certainly, if you go back six decades. that was at the core of this relationship. also, it was forged on the battlefield during the korean war. china sent tens of thousands of so-called volunteers, members of the military in plainclothes across the border to fight with north korea. that help north korea stave off the u.n. forces, the united states and south korea and others. it was crucial, a relationship that was crucially forged in the heat of battle. in the years since then, particularly after the collapse of other communist regimes around the world, notably russia, that really affected north korea. north korea had a sizable economic relationship with russia. during the 1990s it it saw north korea's xhe subtract nearly 50%. it was heavily in debt. at that point north korea was heavily invested in its military. there was that terrible famine that some say claimed millions of lives. china is the key economic benefactor as well. china has a big stake in this, monita. >> former cnn chief international correspondent christian amanpour tlavld to korea in 2008. she shares her memories with us. >> reporter: we were there with a team in 2008. it was around the time when there were negotiations going on between north korea and the united states. they came to fruition in june of 2008 when, you're right, we saw the nuclear tower, the water cooling tower at the plant blown up. but it was a moment of hope then which rapidly came to an end in the summer of 2008 because apparently at about that time most people suspect that kim jong il suffered a stroke. as his health deteriorated, negotiations fell apart, and basically there have been none since then except for there are reports that over the last several months the north koreans and the united states have been talking. there were reports of potentially a food deal could be announced, a nutrition deal between united states and north korea this week potentially. there were reports, not completely confirmed, but that there might be some deal, some movement on a nuclear deal with north korea again agreeing to suspend their enrichment activities. again, this has not yet been announced. but that was something that certainly united states negotiators who met several times with north korean negotiators over the past several months both in geneva and beijing had hoped to be able to bring to fruition. >> christian, everyone is now looking to the heir apparent, kim junk il, a man who we know very little about. we think he's in his late 20s. he likes basketball. we heard he is a quiet, polite man. is this the young man with very little experience, the man who can essentially create the cult of personality as his father and his grandfather did? >> reporter: well, it's probably unlikely that he will be able to do that. even kim jong il wasn't able to maintain the cult of personality that his own father did. certainly when he nominated his young son to take over, people were very concerned. he's yoing, hasn't got that much experience that we know of. and he's going to be taking over, we presume, a nuclear nation. we will have to wait and see. the issue here the whether it will promote more hard line policies from some of the old guard, whether they will sort of circle the wagons around this young man, and whether it will put a stop to some of these negotiations that were going on with the united states or whether they will be able to go through nonetheless. >> christian amanpour speaking with john vause. cnn's coverage of the keth of kim jong il continues after the break. we'll take a look at the effect on business and the stock markets in the region. north koreans there reacting the the news that the man known as their dear leader is dead. stayed media say kim jong il died on saturday of a heart attacks. his death wasn't announced until just a few hours ago. after kim jong il's death, south korea says peace and stability on the korean peninsula is more important than anything else. a funeral for the long-time north korean leader reportedly is planned for december 28th following a week of mourning. revered at home, kim jong il taunted south korea and the west with his country's nuclear weapons program. his regime also witnessed mass famines that killed many of his own people. cnn's pauline choiu has been looking into the state of the north korean economy. she joins us from hong kong. to talk about the state of the economy, there really isn't much of one. >> there isn't much of one, monita, because their economy is very, very fragile. the her mitt kingdom is very isolated and lags behind other countries. its 2009 gdp was estimated to be $28 billion. in comparison, south korea's gdp is more than 30 times that size. north korea relies heavily on food aid from china since it can't afford to feed most of its population. north korea depends on china for most of its trade. the korean trade investment agency based in seoul says china accounted for 83% of north korea's $4.2 billion worth of international commerce in the year 2010. now, while north korea isolates itself, the regime has partnered with south korea in a complex called kaesong which is on north korean territory north of the dmz. this complex combines south korean investment and technology with cheap north korean labor. 123 south korean companies work out of the complex. they mainly manufacture things like clothes, electronics and utensils. 707 south koreans work at the kason complex. they did leave work early today after the news came out. south korea says the north has assured that the facility will remain open and operating normally tomorrow. as for everyday life in north korea, i was very curious about this. i spoke with the director of "daily nk" that covers north korea. he said the monthly wage of a family in north korea is between $3.00 to $20 per month, and there's also something called the informal market where mostly women sell products like appliances, clothes, electronics from china, south korea and japan. it's these women who bring in most of the money to an average household because 80% of workers in government-run factories and facilities actually don't even get paid. it's very clear it's a difficult life in north korea and very much an economy that has a long way to go. >> we also talked about the isolation. you mentioned there, pauline, of north korea. interestingly enough, westerners have been doing business there. tell us about their experiences. >> yeah. that's very interesting. it's mostly europeans and chinese business people who are doing business there, not americans because of u.s. sanctions there. last year i spoke with a german entrepreneur who set up an i.t. outsourcing company in pyongyang about three years ago. i asked him why did you decide to go to pyongyang. he said because labor is cheap there. labor in north korea is cheaper than labor in china. he also said it was fairly easy to find north korean workers skilled in high tech because many worked in chinese factories and many spoke english, so it was easy to train them he said. he said that he believed there were about 100 westerners in pyongyang that do business there. for example, there's a british company that makes dvd players there and also a french company that makes cement. so it's a pretty interesting look at what's going on behind the scenes in pyongyang and some of the western businesses there trying to actually help the economy there. monita? >> pauline, thank you. pauline choiu in hong kong. we'll be right back. stay with us. if you're not satisfied with 50% more cash, send it back! i'll be right here, waiting for it. who wouldn't want more cash? 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