North Korea's 'first' family readies for succession

North Korea's iron ruler Kim Jong-il has anointed his youngest son as successor to lead the isolated State, whose collapsing economy and bid to become a nuclear weapons power pose major threats to the region.

After months of speculation, the state KCNA news agency announced early on Wednesday that the untested Kim Jong-un, thought to be in his late 20s, had been made second in command to his father at the ruling Workers' Party's powerful Central Military Commission.

Rising with him were the ailing Kim Jong-il's sister and her husband, creating a powerful triumvirate ready to take over the family dynasty that has ruled North Korea since its founding after World War Two.

"It is another step towards a new power structure which will consist of Kim Jong-un, a young and inexperienced dictator, and two people -- his aunt and her husband -- who will be making all real political decisions while mentoring the young leader," said Andrei Lankov, a North Korea expert at Kookmin University.

"A figurehead and a couple of powerful regents, if you like."

The young Kim, whose existence has been a secret even in North Korea until this week, was the previous day made a general in one of the world's largest armies. He was also appointed a Central Committee member at the biggest political meeting in the impoverished state for 30 years.

KCNA reported later on Wednesday that Jong-un was photographed along with other participants at the conference. Other than a photo, possibly two, of him as a child, the world has no idea what he looks like.

The meeting, attended by Kim Jong-il, also made the leader's sister and her husband members of the political bureau -- the second highest political body -- and elevated long-time loyal family aides to its supreme leadership body.

Kim Jong-il, 68, is believed to have suffered a stroke in 2008 and has looked frail in recent photographs. But he showed no sign of losing his grip on power and was reappointed on Tuesday as secretary-general of the Workers' Party.

A stable succession will be a relief to its economically powerful neighbours -- China, South Korea and Japan.

But regional powers will be watching for any signs of a change in the policies which have driven the North's economy to near ruin and potential collapse. That would put a huge burden on China and, especially South Korea, which would end up with much of the cost of absorbing a likely flood of refugees.

They will also be looking for any change in the reclusive state's efforts to build a nuclear arsenal that has been central to forcing aid out of the outside world even though it has meant sanctions have largely cut it off from the global economy.

Experts are sceptical of any new dawn.

"Even with a new leader, North Korea is not likely to give up its nuclear ambitions," said Anh Yinhay of Korea University. "But the North faces a dilemma -- while keeping the reins of power within the family, the North needs to find a way to overcome its economic crisis."

"They have no choice but to rely on aid from other countries, and they may try to use their nuclear weapons as leverage during negotiations."

Financial markets favour a continuation of the current system and relative stability.

"Externally, it's in everyone's best interest to support the status quo," said Shaun Cochran, head of research for brokerage CLSA in Seoul. "Internally it is simpler to avoid conflict.

"There is an argument that there is less political stability now but I would argue there is potentially more simply because we have a direction everyone is aware of."

But Mitsuhiro Mimura of the Economic Research Institute for Northeast Asia in Japan said that unless the new leadership reforms and opens up the economy the country will collapse.

"It will be a matter of life and death for the North Korean leaders," Mimura said. "Chinese leaders have also called on North Korea to open up its economy ... it will be a rocky road but it is a road that unavoidable."

China, its only powerful friend and main benefactor, said Beijing would "always handle, maintain and boost China-DPRK (North Korea) relations from a strategic height and a long-term perspective ... despite the ups and downs of the international situation".

KCNA said leader Kim's sister, Kyong-hui, was named to the Workers' Party Political Bureau. She has risen sharply in prominence in recent months and has been seen frequently at her brother's side.

Her husband and a key confidant of the leader, Jang Song-thaek, was named an alternate Political Bureau member, KCNA said. He is considered the likely principal regent until Jong-un has his own power base.

The country's cabinet premier, its parliament chief and two loyal army generals were named to the Presidium of the party political bureau.