China sent North Korea’s new special economic zone laws back to the drawing board for measures deemed insufficiently business-friendly, sources said Wednesday.

According to reports, Chinese authorities have rejected the new laws Pyongyang drew up in relation to two special economic zones ― Hwanggumpyong and Wihwa islands, that sit in the Yalu River along the border with China.

The special economic zones, based on similar projects in China, are designed as a means to breathe some life back into North Korea’s foundering economy.

“The Chinese government sent its views to Pyongyang, and a second round of arbitration is under way,” an unnamed source with knowledge of the matter was quoted as saying by a local news agency. The source also said that the Supreme People’s Assembly is likely to announce a new version of the economic zone act in the near future.

The Chinese government is said to have pointed out problems regarding taxation, accounting, investment security, freedom of management and transfer of funds.

North Korea announced the completion of the laws through the state-run Korean Central News Agency on Sunday. In its report, KCNA said that the economic zone act for Hwanggumpyong and Wihwa islands had been completed and that the act for the Rajin-Sonbong Special Economic Zone on the country’s northeastern coast had been revised and supplemented.

By Choi He-suk (cheesuk@heraldcorp.com)