UPDATE 1-North Korea's Kim tells China, economy a priority
* Kim emphasises economy, people's living - Xinhua
* Remarks in contrast to father's focus on military
* Expectations grow Kim may be preparing reform packages
By Chris Buckley and Ju-min Park
BEIJING/SEOUL, Aug 3 (Reuters) - North Korea's new young leader has told chief backer China that his priority is to develop the decaying economy and improve living standards in one of the world's poorest states, the latest sign that he may be planning economic reforms.
Kim Jong-un, who took over the family dictatorship last December, has presented a sharply contrasting image to his austere father. He was shown most recently in public at a Pyongyang theme park with his young wife on his arm and riding a roller coaster in the company of a man reported to be a British diplomat.
"Developing the economy and improving livelihoods, so that the Korean people lead happy and civilized lives, is the goal the Korean Workers' Party is struggling towards," he was quoted by China's Xinhua news agency on Friday as telling Wang Jiarui, visiting head of the Chinese Communist Party's International Department and Beijing's key interlocutor with the North.
Though the report offered no details, there has been mounting speculation that Kim's one-party state is looking at reforms to help lift an economy dragged down by decades of mismanagement and international sanctions, and rarely far from famine.
Those economic problems have been compounded by drought and then, last month, torrential rain and widespread flooding left nearly 120 people dead, damaging some 46,000 hectares of crops.
That is equivalent to 2 percent of the North's arable land, according to World Bank data, and the damage is certain to lower this year's harvest, which even in good years is not enough to feed the population.
In the face of broad sanctions over its missile and nuclear weapons programmes, the North has been forced to rely heavily on aid from its giant neighbour China, the nearest ostracised state has to an ally.
Any suggestions of strain in relations were brushed aside by the young leader, who was quoted a saying: "It is the unswerving will of the North Korean (ruling) party and government to continue (his father) Comrade Kim Jong-il's teachings of constantly deepening the traditional friendship between North Korea and China across the generations," Kim told Wang.
It appears to be the highest level diplomatic meeting Kim has held since taking power over 7 months ago.
In a sign he may be looking to emerge from such isolation, he has dispatched his head of parliament, Kim Yong-nam, to Vietnam and Laos, the North Korean KCNA news agency reported.
Kim, in his late twenties, has sought to impose his own stamp on the top leadership of North Korea, and recently ousted Vice Marshal Ri Yong-ho, the country's leading military figure, who was seen as close to Kim Jong-il.
Kim Jong-un was named marshal of the army in a move that cemented his power. He already heads the Workers' Party of Korea and is First Chairman of the National Defence Commission.
He is gearing up to experiment with agricultural and economic reforms after purging Ri Yong-ho for opposing change, a source with ties to both Pyongyang and Beijing told Reuters.
Experts in Beijing say their government fears that economic malaise in North Korea could give way to damaging instability and torrents of refugees across the border in China, and Chinese leaders have long nudged Pyongyang to draw lessons from their own route to market economic reform.
Analysts in Seoul said Kim was probably preparing for a package of reform measures on the economy and Wang's visit could be seen as a public show of support from China.
"By emphasising the importance of food and civilised living conditions, I think he wanted to request for China's support," said Yang Moo-jin, professor at University of North Korean Studies in Seoul. He said he expects Kim to unveil his reforms early next year after the scheduled government changes in China, South Korea and the United States.
But to date, Pyongyang has resisted any dramatic changes in its traditional top-down management of the economy.
China has also hosted now moribund s talks among regional powers to coax North Korea into abandoning its nuclear weapons programme. Xinhua reported that Kim said he was committed to "peace and stability" on the Korean peninsula, but did not mention those talks.
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