The United States today announced new sanctions against North Korea, targeted against its leadership, and warned of serious consequences if it again attacked the South.

Relations across the divided peninsula have turned increasingly hostile after South Korea accused the North of sinking one of its warships in March, killing 46 sailors. US Secretary of State Hillary Clinton said Washington was ready to return to international talks over North Korea's nuclear weapons programme if Pyongyang sent a "positive signal", but that there had been none so far.

"We are aiming very specifically, after much intensive research built on what was done before but not limited to that, to target the leadership, to target their assets," Clinton told a news conference in Seoul with US Defence Secretary Robert Gates and their South Korean counterparts.

She insisted the additional sanctions were not aimed at ordinary North Koreans, who make up one of the world's poorest societies and whose stumbling economy is already largely sealed off from the outside world because of previous punishments over nuclear and missile tests.

China, the North's only major ally, expressed "deep concern" after the United States and South Korea said they would start large-scale joint military drills on July 25. State television yesterday showed the Chinese navy conducting its own exercises. "We urge relevant parties to remain calm and exercise restraint and not do anything to exacerbate regional tensions," Chinese Foreign Ministry spokesperson Qin Gang said in a statement.

Gates called for a resumption of military-to-military ties with China, suspended earlier this year over planned US arms sales to Taiwan. North Korea's economy is mainly subsistence in nature with few factories able to operate at even a third their capacity and farms lacking fertilizer and seed to grow crops. A disastrous decision to issue a new currency last year left many without their life savings and many North Koreans conduct illicit business by travelling to China.

"The sanctions announced by the US will not really affect the North Korean economy as all possible sanctions have already been imposed," said Paik Haksoon, a senior fellow at the Sejong Institute. "China is cooperating with North Korea economically because the stability of North Korea is a key national interest of China."

Paik said North Korea's leader, Kim Jong-il, was unlikely to change his policies or compromise with the United States.– Reuters