kim jong il always cast a slightly bizarre figure. his stature and characteristic hair were empowerment for some in the west, but for the democratic people of korea, kim was feared, loved, worshipped and his cultured personality was deeply entrenched. his father was kim il sue who

founded the people in world war ii. they invaded the american bats south. after fighting ended, kim became stee steeped in his father's reality, and they became exclusive. they remained technically at work separated by a tense demilitarized zone. gradually kim jong il was groomed for the top, making appearances in front of cheering crowds. when kim sung il died in 1974, his son became ruling secretary of the party of korea, and as head of the army, he resumed his position of power. >> he was the person who was

responsible for awful things. for the existence of one of the worst dictatorships probably not only in korean history but in war history the 21st century. he did not create his dictatorship, but he took the responsibility and he made sure it continued for many more years. >> he was known for his love of fine wines at odds in a country where food shortages and privation are common. he was said to indulge in the finer things, but his people were literally starving to death. the collapse of the soviet union hit korea hard, suddenly ending guaranteed trade deals. then devastating floods compounded the famine. estimates vary for the ones who died, but even the regime itself admitted almost a quarter of a million perished between 1995 and 1998.

some say it was ten times that figure. but the orifice of a successful presidency was maintained. kim jong il was well known as a film buff, here visiting the set of a north korean production. his personal video library was said to include 20,000 titles, with "rambo" and frid"friday th 13th" supposedly topping them as his favorite flicks. there appeared to be a fight between the north and south nations, with kim jong il and his neighbor to the south. but kim jong il pressed ahead with his nuclear weapons program. the use i.s. labeled it part of axis of evil in 2002.

weeks later, they withdrew from the proliferation treaty. in 2006, the north conducted a nuclear test and added six missiles. they added to the talks designed to deal with the program. they finally agreed to disable the nuclear reactor in return for fuel and better relations with the u.s. but despite dramatically blowing up the cooling tower, north korea seemed to backtrack afterwards. the deal appeared to be in jeopardy. the capture of two u.s. journalists sparked another crisis in 2009. it ended when former president bill clinton flew in and successfully negotiated their release, prompting hopes there would be further engagement. kim jong il will be remembered as an impossible man to bargain

with, stubborn, who kept a million people in a totalitarian nightmare, one of the most reclusive regimes in the world. >> reactions to kim's death has been flowing in from around the world. the defense ministry has raised its national alert to the second of three levels. as the people of south korea, quote, concentrate on economic activities and remain calm. meanwhile in washington, the official says north korea now faces extraordinary change and uncertainty, and that an insecure north korea could well be more dangerous. earlier the white house press secretary said this. we are closely monitoring reports that kim jong il is dead. the president has been notified and we are in close cusp with our allies in japan. we remain committed to the korean peninsula and the

closeness of our allies. a statement has since been issued offering condolences, and japan's chief governor spokesman says, quote, we wish the sudden news would not affect north korea negatively. finally, china offered its deep condolences on the death of kim. china is, of course, a close ally of north korea. now, in south korea, much of the region is concerned what might come next in north korea's leadership ranks once kim's personality is stripped away. we asked former south korean ambassador to the u.s. about that. >> i was the foreign minister when his father, kim sung, his son, died in 1994. and we had then, and i'm sure right now, we had plans to make

our military and security ready for any unforeseen and untoward provocations or events, and also we had to see what's going on. a very important part of the preparation would be to have very close consultation with other countries, particularly allies of the united states, japan, china, russia and so on. >> and so what do you think is happening inside pyongyang right now? >> well, han sung took two days to announce the death of kim jong il and also the makeup of what they call the funeral committee which consists of 232 members headed by kim jong un, the third son, and so they are trying to put up the face that

is both order and united. we're not sure that that looks natural or if there was any foul play, but regardless, they are trying to put up a best face under the circumstances. >> cnn's coverage of the death of kim jong il continues after the break, and we'll be looking at the next in line to lead north korea, kim's son, kim jong un. puck chinese takeout taco truck free range chicken pancake stack baked alaska 5% cash back. right now, get 5% cash back at restaurants. it pays to discover.

welcome back, and let's recap this breaking news story for those of you joining our coverage.

kim jong il is dead. they're saying he died at 8:30 in the morning on saturday. a tearful broadcaster reported that kim died after overwork from dedicating his life to the people. a news agency reported that kim suffered great mental and physical strain while on a train during a field guidance tour. she says kim suffered a heart attack and couldn't be saved despite every possible life-saving measure. his son, kim jong un, has already been called the great successor. he is 27 or 28 years old. he is the son of kim's late third wife, and despite lack of military experience, he was promoted last year.

he is described as ambitious and a take no prisoners type. the military has raised its alert status following the passing of kim jong il and it's causing a wave of uncertainty around the world. a professor joins us from seoul. a military in south korea raised their security alert. why? >> obviously, this is the moment of uncertainty, and south korea wants to so-called minimize that level of uncertainty and its operating procedure. however, we have not seen any unusual movement from north korea, so we'll have to watch and see. >> no unusual movement from north korea since the announcement of the death of kim jong il, but what is the thinking in south korea about the transfer of power to kim jong un, who is just 28 years old, the youngest, now a great

successor leading the country with nuclear weapons. how will the transfer of power proceed? >> i think, you know, it's a great moment of challenge to figure out what the future will look like for the whole region. if you look back at 1994, kim jong il was also made a leader. he went into the leadehip for 17 years, and i think kim jong un will be able to handle the situation. because nuclear is not only a very ultra dictatorship country, the state has gone through a lot of crisis for the last 20 years. so it's got a lot of knowledge, a lot of strong bureaucracy, and not to mention there is a strong military. so i think that north korea state as a whole will support kim jong un's leadership for a while. >> you said the state, the

military, will support kim jong un, but is kim jong un, will he be calling the shots, or will it be the supporters, the political advisers around him? >> right. i think that, you know, even if we had kim jong il as a leader for the last 17 years, i think that the state of north korea has been run by military committee, and kim jong il was running the country as head of the military committee, so i think that as long as there is a military committee headed by kim jong un, i think there is going to be a more collective decision made for the well-being of the country. i think kim jong un may be playing a figurative role, but we'll have to wait and see. >> you seem concerned about south korea. what happens with the main party

talks being suspended? do you see him starting out in the next year or two? >> we're approaching the end of 2011, and we used to enter space that in 2012, the goals changes. we have a lot of people in the united states and south korea, and they have been promoting the people. with the demise of kim jong il, things are a little bit uncertain. we'll have to wait a little while longer to see the reopening of six-party talks, because whoever gets power in pyongyang, i think he or she has to shuffle the party foundation. that means a lot more attention being paid to politics rather than six-party talks. that means we'll have to wait

six years more to see six-party talks. >> there is this party shuffling behind the scenes at pyongyang. just how vulnerable is kim jong un, who is very much a political novice? >> he might be a political novice, but he is supported by his long-time ally to his family. you know, some of the members in the funeral committee working with his father, kim il song. working party is north korea. they share the same faith symbolized by a successful succession from kim jong and kim jong il. i think he will get continued support and will be continuous which will remain pretty strong. so i think it's rather premature to assume that, you know, kim

jong's power base is rather not so late. >> some interesting insight there into the inner workings of north korea politics. thank you so much for joining us here on cnn. one of kim jong il's lasting g legacies should be the nuclear development. in 1994, they agreed to freeze and dismantle its nuclear weapons program. then four years later, the u.s. and korea held the first round of high-level talks about expected construction of an underground facility. negotiations with north korea became a back and forth of broken promises with kim jong il promising to give power. in january 2003, they withdraw from nuclear nonproliferation

treaty. in april, declares it has nuclear weapons. but in 2006, they claim successful nuclear weapons test. progress broke down after that. in may 2009, they conducted their second nuclear test. now kim jong il continues after the break, and we'll be looking at the impact his death has had on the markets. that after a break.

you're watching north koreans reacting to the news that they're dear leader, kim jong il is dead. kim died on saturday of a heart attack but it was not announced until a few hours ago. as one might imagine, this is the only story on north korea's

state-run tv station. let's take a look at it, and so far today, they've announced the tearful announcement we showed you earlier. they've also gone through a lot of time just showing kim's portrait. we'll keep monitoring that station throughout the day. we also want to take a look at the economic reaction to the news right now. to do just that, we're joining world business today's pauline sc -- chiou. paris is in negative territory by about three-quarters of a percent at the moment. here's what happened in the sessions here in asia as a result of the news of kim jong il passing away today.

the kosbi ended today about 3.5%, the others also in negative territory. let's look at the timeline of what happened to the kospi today. the news of kim jong il's death came around lunchtime, and you can see the market there in seoul plunged dramatically, then picked up a little, came down and regained some footing later on in the session. i do want to take you to the currency charts here to give you a taste of what happened with the korean wan, if we can pull that up. the korean wan lost some ground after the news came out, and there was a big selloff here, as you can see. the selloff happened as this graph goes up, and it hit a high of 1179 close to 1:00 local time. the u.s. dollar gained strength as a result of this and it also

gained against the euro and the yen throughout the session. interestingly enough, many stocks declined because of the news of kim jong il. the defense stocks in south korea actually gained as a result of this. this reflects that sense of uncertainty of what could happen. take a look at some of these stocks. speco is up 14.91%. victek up 14.73%. and huneed technologies up 15%. there was a limit at how much these stocks could go up and that limit was capped at 15%. because of this question of uncertainty of what happens with the passing of kim jong il, will there be a smooth transition, there is a sense of uncertainty, and will the region be destabilized, and then that begs the question of what happens with south korea and south

korea's credit rating? we asked several credit rating agencies about their view of south korea's credit rating, and both fitch and s&p came out and said their rating won't be affected because of this news, but it does raise security risks potato nins peninsula and if those don't raise, that could affect north korea. some interesting effects after this news came out, and in about 20 minutes, i'll have an in-depth look inside north korea, what daily life is like and how much people make in north korea. >> we're looking forward to that. now the continued coverage of kim jong il's death when we get back, and we'll be looking live in seoul as to what his death could mean to the region.

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let's recap our top story for you. if you're just joining our continuing coverage, north korea kim jong il is dead. they reported his death at noon local time today. they said kim couldn't be saved despite the use of every possible first aid measure. let's take a closer look at the circumstances around kim's death. the media says that he died 8:30 a.m. on saturday but they did not report his death to the world for another 48 hours. kcna says kim suffered a heart attack due to the mental and

physical strain serving the nation. he died on a train. he wasn't your typical head of state, there's no denying it. let's get a look at the man and his life now from john voss. >> reporter: with the platform shoes, oversized sunglasses and trademark jump suit, kim jong il looked every bit the mighty tyrant. >> the appearance made it a little more difficult to treat him seriously, at least at first. >> reporter: he was the diminutive dictator who held diplomatic weapons and forced the u.s. to negotiate. >> that was not necessarily the

work of a womanizing, booze-swilling individual drunk during the day. >> reporter: inside north korea, it was all about kim, betrayed by his propaganda machine as an artistic and cinematic genius. a renaissance man who has flown fighter jets, loved operas and shot holes in one. his attempts were breathlessly reported. he was hailed as the central brain. 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 fear storms and give us faith, they say. he was born in a log cabin on a sacred korea mountain under rain

bows and stars. they said it was probably in siberia at a soviet camp where his father was training to fight. he loved movies. james bond was apparently among his favorite, and he reportedly was unhappy with north korea's portrayal in "die another day." no word on what he thought about this one. he reportedly 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 1100 people. the idea was to disrupt the olympic games in seoul. they dubbed north korea the state for its role in organized crime, including the distribution of heroin and

methamphetamines. >> his legacy will be that he actually made some pretty bad choices for his country. >> reporter: he was the man who, every day, it seemed, had a bad hair day. he starved his people and threatened his career with the fourth largest military in the world and built missiles that could reach japan and perhaps beyond. the brutality is gone. in its place, the terrifying uncertainty of what comes next. john voss, cnn, beijing. >> china is north korea's closest ally, and the news of kim jong il's death is being reported there. to get a closer look at reaction in china, let's go to stan grant in beijing now. stan, china has expressed its condolences. give us a reaction from beijing. >> reporter: absolutely. one statement put out from china, and that's all they're saying at the moment. other questions were asked. this was at a ministry of foreign affairs briefing. they've put those questions on

notice for later. what they're officially saying right now is they're extending condolences to north korea, saying kim jong il had done great things for the cause of socialism, saying also they want to work for stability in the area, and that is going to be the key here right now and really put china in the fray. china is the closest ally to north korea, the one that seems to be able to exert the most influence, although it has been questioned at times in the past, and try to bring stability. with kim jong il's passing, it leaves a lot of questions being asked for kim jong un, the successor. just how much authority will he be able to impose? just how streamlined will this succession process be? and how much instability will we see in north korea during this vacuum, if you like. china, of course, is going to be crucial to that. what's really going to come to the fore here is the relationship between china and

the united states. if you take all the other parties out, that emerges really as the critical relationship here. do the two sides just adopt mutual quarters? the united states backing south korea or north korea. they need to be able to find the path of stability during this time of so much uncertainty. >> kim jong un is a known figure in china. he was introduced to chinese leadership when he traveled there with his father. what will north korea look like under kim jong un? >> this is really not answerable right now. if you put your mind back to when soon passed away and kim jong il had taken over, they were speculating then exactly how we're speculating now. will he be able to assume authority? will he just be a puppet later? will the hard lines general take

control? all of those questions are being asked now by kim jong un. last year he was being made a four-star general. he said his fingerprints have been on the attack for pyongyang island. we're asking questions about this man that we don't really know his exact age. it could be 28 or 29. we know he's young. some spec lalt that the couch of personality may be passing and now facing a new reality of a man who is being faceless to the west, does not bring that same sense of all authority that his father and grandfather have had, and, of course, it's yet to be seen just how he's able to express himself and impose himself in the days to come.

christy? >> on this story live from beijing, thank you. chief international correspondent christmas amanpour traveled to korea in 2008, and she shared her memories with us a short time ago. >> we were there with a team in 2008, first with the new york philharmonic, and it was around the time when there were negotiations going on between north korea and the united states. and they came to fruition in june of 2008 when, you're right, we saw the nuclear tower, the water cooling tower at the yard blown up. but it was a feeling of hope which effijy could come around. none since then, except that

there are reports in the next several months, but north korea and the united states have been talking. lrp reports that potentially a food deal, a nutrition deal between the united states -- north korea, intentionally -- but there are reports that there might be some movement on a nuclear deal with north korea, expecting not to enrich his other activities. we met with several times, both in beijing. had hoped to be able to bring to fruition. >> christiane, everyone is now looking to the heir apparent. we think he's in his late 20s, he likes basketball, give me some more details. he is a kwaul et, the young man

with very little experience, the man who can create the personality as his father and grandfather did. >> it's probably unlikely that she will be able to do that. even kim jong il can express the same when he nominated his young son to take over. he's very young, doesn't have much experience that we know of, and will provide this notion. the issue here is whether it will promote more hard-lines from the old guard, whether they will circle the wagons around this young man, and whether it will be because of a stop with knees negotiations going on in the united states or will they

be able to go through nonetheless. cnn's coverage of the death of kim jong il will return after a break. and we'll talk about the economy and how her tiara could have been affected.

it's a busy news day. we want to recap our day for

those of you joining our breaking coverage. kim jong il is dead. a broadcast reporter said that kim died from overwork after dedicating his life to the people. they said kim suffered great mental and physical strain while on a train during a field guidance tour. there were more tears in the streets of pyongyang earlier today. kim, who is believed to have been 69, was in power since 1994 when his father died of a heart attack. his funeral is expected to be held on december 28. now, our pauline cchhiou. >> as you know, they lag behind other countries. its gdp was estimated to be $29 million. in comparison, south korea's gdp

is over 30 times that size. north korea relies heavily on food aid mainly from china since it cannot afford to feed most of its population. now, according to the korea trade investment promotion agency, which is based in seoul, china accounted for 83% of north korea's $4.2 billion of international commerce back in 2010. while north korea does isolate itself, the regime has partnered with south korea in an industrial complex called kasong, which is on north korean territory on the dmz. this combines technology with cheap korean labor. they mainly manufacture things like clothes, electronics and utensils. as for everyday life in north korea, people wonder about this because it's such a mysterious place. we spoke with the director of

daily nk which is a reporter in north korea. he says the average salary in north yoor is between $3 and $20 per month. there's something called the informal market where mostly women sell things like clothes and products. they bring in most of the money to the household because 80% of workers in government run factories or facilities actually don't get paid, so it's interesting to note that it's these women who are bringing in that very small salary. it's an interesting snapshot at daily life there. >> they're making the economy a very isolated one, yet there are reports of western businessmen working and conducting deals in north korea. you spoke to a german businessman. what was his story? >> this was very interesting. i spoke with him last year, and he decided to go to north korea because basically labor is cheap there. and he started an i.t.

outsourcing firm. and he hired north koreans who had good high-tech skills to make video games for western companies. this man would not tell me which western companies he was producing these games for, because obviously those western companies don't want that type of publicity that their products are made in north korea. but it was really interesting. he set up shop there about three years ago. he said labor in north korea is cheaper than labor in china, so he also makes a lot more money. and he said he believes there are 800 westerners doing business there in pyongyang, and there is a british company making dvds there, dvd players, and also a french company manufacturing cement. so some pretty interesting insight into what's going on in. many flee across the border. journalist and documentary

filmmaker ashad gets everything in north china. it could lead to an influx of refugees in china. >> part of the reason these refugees have problems getting into china because there is money over the heads of these people. they get several hundred dollars for turning in these refugees. i think the top concern for china over the next few months is trying to stabilize that situation and trying to prevent any massive influx of north koreans across the border. >> have you been able to contact those you interviewed for your documentary film, the north korean defectors to gauge their reaction to the death of kim jong il? >> i had spoken to the

missionaries this morning who helped them escape, and they said the refugees in general, they have not spoken to the specific refugees that i followed and filmed, one of them is still in bangkok while they apply for asylum in the united states. but the two in seoul, they were in prostitution, were sold as sexual slaives in china, have returned to prostitution, but the missionaries i followed in filming said many of these refugees will be reluctant to speak out, because still, even after they've escaped to south korea or the united states, they still are very scared. they're scared for their family members back in south korea. they'll be reluctant to say anything negative about ret jeem. but judging from my interviews and experiences with them, i believe they hope desperately that north korea will change to the extent that people have enough food to eat, that their families will not be dying of starvation, that people do not face executions from watching

banned television shows. these are all experiences the refugees described to me. >> i want to hear more about that, just the reasons why they risked their lives to leave the country. what kind of conditions they were facing that forced them to make this harrowing journey from north korea to china and to their ultimate destination. >> sure. two of the refugees i interviewed were teenagers. one was a 19-year-old girl. they was sold into sexual slavery in china, and she went across the border with human smugglers at a chance of a better life in china primarily so she could feed her family. her mom was unable to get out of bed because she didn't have enough food to eat. her parents were incredibly sick, and all she wanted to do was feed her family. that was her only goal coming into choina, and that was still her goal when she made it into seoul. they desperately want their family members, their parents to be okay and have food to eat. the members i had interviewed,

they were sold in china, and they were defected back, caught by police, and the conditions they described in those camps were absolutely horrifying. they had scars on their legs because they were eaten by leaches. they had to live in a place with bugs and leaches with maybe 80 people in the room. they had to do back-breaking labor, and one was only 19. the conditions they described were unimaginable. the third refugee i interviewed was a 16-year-old boy. his family was not dying of starvation, but he said they basically had only potatoes to eat, and a family would be considered well off if they could afford a bowl of rice. >> now, cnn's coverage of the death of kim jong il continues after the break, and we'll hear more about kim's rein from a man who has visited north korea many times. snakeskin boots sequin costume under things

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you are looking at the last known image of kim jong il released by north korean state media. we don't know when it was taken or where, but kim is said to be inspecting an army drill here. the media said kim died due to the great physical and mental strain of a field guidance tour. let's get some insight on what kim's death means for pyongyang for someone who has been there multiple times, senior field producer tim schwartz. he joins me now. tim, good to see you, and we have been working on these glimpses from inside korea today, looking at the reaction

of north koreans there of the death of kim jong il. they're crying, they're wailing. is what we're seeing the reaction of the nation? >> they're shocked for sure. they're used to having a strong leader to run their country. a change like this is going to cause huge shocks throughout the system, and naturally people pouring into the streets, expressing grief. a lot of it will be genuine because of the huge loss to their life. also it is expected of them. they don't know what's expected of them in any political situation. they know they're expected to show grief because this is a huge political event. will it match the huge out poergz

pourings of grief when kim jong il's father died? we don't know. he obviously would have been held on high, and that was when they were actually doing quite well. under kim jong il, he's had a more difficult time in this country. they suffered famine, they suffered deprivation, and they also had a look at the outside world from the people of north korea fleeing the country and then coming back. so they now know that north korea is not the paradise that they were told in earlier years, but it is a country undergoing hardship and their life is real hard. so there isn't so much blind abatance. you have reported multiple times from inside north korea, and you were in north korea when kim jong un was named the successor.

what was that like? >> he was named successor as a special party conference -- he wasn't named successor, he was thrust into the party limelight in a special conference last year. everyone in north korea knew what this meant. there was a rumor the previous year that someone would take over, and when he was named a very prestige is political body. in november i was at a light army parade where kim jong il came onto the pavilion with his father and took the applause of the public and the soldiers there. and that was one of his major first public appearances. >> quickly, your gut reaction, did you feel this was a man who could lead north korea next? >> the infrastructure is all there and the precedent is set. there is no indication at the moment that he cannot lead north korea. he's going to have a lot of support from the power structure that exists in north korea who

have a vested interest in maintaining their monopoly on power in the country. so he's going to need powerful support and powerful allies, but for the leadership in north korea, it's their only option. their only option is to carry on the path they're going and keep a strong man of their own persuasion in power, or else in their eyes, the country will disintegrate. >> thank you very much for sharing your thoughts with us. cnn's coverage continues in the next hour. we'll look at the international reaction with reaction from beijing and seoul next.