North Korea and China will start work on developing a river island on their border this month, a report said Tuesday, amid an international drive to coax Pyongyang back to nuclear disarmament talks.

The two countries plan to hold a groundbreaking ceremony on May 28 for development of the island on the Yalu River, the South's Yonhap news agency said.

Pyongyang has reportedly worked out a special law to set up a free trade zone on the island, which is separated by a narrow waterway from the Chinese city of Dandong.

The North's state media disclosed a deal last year to build a new cross-border bridge on the Yalu River as part of a major economic package announced by Beijing.

The two sides have agreed to turn the island into a base for logistics, tourism and manufacturing that would be linked to China's industrial complex to be built in Dandong, Yonhap said.

The isolated communist country has been cautious in opening its doors to the outside world. But it has strived to revitalise a free trade zone in Rason near its border with China and Russia through their cooperation

Rason became a special economic zone in 1991 but never fulfilled its proposed role as a transport hub.

Tough United Nations sanctions brought by the North's pursuit of ballistic missiles and atomic weapons have hurt its economy, restricting the communist state's access to international credit.

But China, Pyongyang's sole major ally, has actively explored investment opportunities in North Korea.