NORTH KOREA: Indications by China that it is willing to play a role in resolving the growing crisis over North Korea will not be overly welcomed in Pyongyang. Jasper Becker reports from Beijing on a leader who has wrecked his country. China's leader looked at the statue and noticed with fury that it was covered in gold.

Every visitor is brought to pay their respects to the statue of the "eternal president" Kim Il-Sung on Mansu Hill which looms over Pyongyang.

In September 1978, it was Deng Xiaoping, fresh from winning power in China who arrived on a state visit to celebrate North Korea's 30th anniversary. China's diminutive leader looked up at the 70-foot statue and then noticed with fury that it was covered from head to toe in gold.

He complained to his hosts they had squandered the aid from the hard-pressed Chinese on a personality cult that has few parallels in history and now were demanding more.

Deng refused to grant more aid and within a few months the gold, worth $851 million, had been quietly removed and the statue repainted in the bronze colour visitors see today. Yet the incident provoked a strong hatred of the Chinese, and from then on the history of China's military sacrifices in the 1950-53 war was forgotten.

The monument, like the giant Juche Tower which dominates Pyongyang, is only one of the temples and sacred sites erected across the country by Kim Jong-il to honour his father's ancestor cult, and ensure his succession.

Despite the poverty into which Kim Jong-il's misrule has plunged the country, he remains unmoved by threats and inducements, dedicated to preserving his father's Stalinist policies and ambition to unify the country by force.

Refugees fleeing to China said they were often promised by Kim that when once the South was conquered there would be plenty to eat. Despite his manifest shortcomings to lead such a heavily militarised country including the absence of any military service, Kim's demonstrations of filial piety ensured that at a 1980 party congress his father handed him control of the party and government. It was the last time such a congress was convened and within the next 10 years the younger Kim went on to bring ruin to the economy.

Reports on North Korea such as those by the UN put forward face-saving excuses that North Korea is a victim of years of "natural disasters" or the drop in subsidies after the Soviet Union's collapse.

Yet the evidence for his mismanagement is overwhelming. Until the late 1970s, the North Korean economy had grown so fast, albeit by relying largely on 1950s Soviet technology that some thought it was a far better model of industrialisation than the South's.

So confident were the North Koreans that in 1977, they officially proclaimed that they had raised living standards so much they had succeeded in creating the first "paradise on earth".

The country's planners said the country could triple its grain output to 20 million tonnes by 1990 and encouraged families to have as many children as possible.

After he took charge of the economy in 1980, the younger Kim bled the country's resources by investing in useless economic projects. By 1984 the country stopped publishing economic plans or basic data in a bid to cover up successive failures. Kim rejected Deng's advice to break up collective farms and boost farm output. Instead he mobilised the country's manpower to labour on massive engineering project to create Dutch-style polders along the west coast by damning 40 salt water tidal flats with a series of barrages.

At a cost of over $4 billion, a series of dams and locks were built to add 300,000 hectares of prime farm land. The project, like many others, failed, although visitors are still brought to see the five-mile Nampo barrage because it proved impossible to grow crops on the saline soil, even after it was flushed with fresh water.

It was not just the failure of North Korea's ambitious land reclamation projects but many others, the reservoirs that silted up and the hydro-electric plants that broke down. By the mid-1980s, the country was still reporting huge harvests but in reality there were food riots and uprisings in key towns like Sinujiu and the east coast industrial centre of Hamhung. Soviet diplomats stationed in the country reported that in the latter, the disturbances lasted three days and were put down when loyal troops turned anti-aircraft guns on the roofs onto the crowds below.

Even visiting Pyongyang in 1986, it was already clear to me that North Korea was broke. Young people were a good six inches shorter on average than their counterparts in the South and the city was littered with giant projects like the 105-storey Ryugyong Hotel, the Yongdae funfair, the 10 theatre halls - all abandoned.

The money had run out and ambitious plans to attract tourists or foreign investors to special economic zones were never going to happen.

Yet the extravagance did not stop. After the South prepared to host the Olympic Games, the North tried to compete by building costly modern stadiums, several eight lane motorways, an Olympic village and even a press centre, all to host a poorly attended Youth Games festival. In 1990, it was obvious even to Kim Jong-il that people were starving and the food deficit was growing he refused to tell his father whose eye-sight had deteriorated so much he relied on his son to keep him informed.

While the elder Kim continued to be told the country was still harvesting 10 million tonnes a year, when it was less than four million tonnes, his son decided to appeal to the UN for food aid in 1991. UN officials came to make an assessment but the scheme was aborted after Kim Il-Sung came to hear of their mission. With or without aid from Moscow or Beijing, North Korea has continued to find lenders and donors and debts have piled. It now owes over $11.5 billion set against total annual trade that has shrunk from $3.5 billion to perhaps $780 million.

To find hard currency the country exports opium, counterfeits dollars, and detains visitors and demands ransoms. Nothing so far has dented the vanity of Kim and his family.

In 1998, for instance, Kim shipped in 200 of the latest and costliest S-500 class Mercedes, costing $20 million, to add to the collection of 7,000 already in a country where few people even have bicycles.

Until 1992 Kim Jong-il's voice had never been heard in public but then when he took charge of the military the radio carried one phrase - "glory to the people's heroic military".

Since then he has consistently advocated only one policy summed up as a "military first revolution" and the need to "endlessly strengthening the fighting power of the people's army".

To counter the South's growing strength, he drained the economy of useful investment by pouring money into the military. He doubled the number of troops in the 1980s and extended the length of compulsory military service to seven years.

His greatest handicap in modernising the army has been resistance to any economic reform. Ignoring all friendly advice, the younger Kim has been inflexible in rejecting any proposals to abandon his father's economic system. North Korea is the last country to stick to the pseudo-scientific theories of Trofim Lysenko, one of Stalin's pet scientists from the 1930s who rejected genetics, and recommended the close planting of seedlings and massive inputs of chemical fertilisers. Chinese visitors say that even at harvest time, the fields consist of shrivelled and stunted plants.

The chief official in charge of foreign trade and the Najin-Songbong Free Trade and Economic Zone, Kim Jong-u, was dismissed after Kim Jong-il toured it in 1998 and was appalled to see eight commercial billboards overshadowing his father's slogans. Later he was said to have been shot or at least "resting in a sanatorium" while the word "Free" was removed from the name of the zone. The biggest investment in the zone, heavily supported by the UN was a Hong Kong-backed casino. Even when in 1998, the UN's Development Programme tried to organised an international aid package worth $2 billion to put the economy on its feet, he rejected it because it came with conditions such as the introduction of larger private farming plots and a free markets for surplus produce.

He repeatedly ordered existing markets closed saying they "would create egoism" among the people, and in 1996 warned that "our party's class basis may collapse" if they are tolerated.

He hoarded food for the army and cut off grain shipments to deficit areas in the north east leaving people there to fend for themselves.

To find something to sell, people stole scrap metal even if it meant dismantling factory machinery or pulling down telephone wires.

Although there are few if any reliable acts about opposition in North Korea, many of those who have sneaked across the border into China speak of him with a deep fear and hatred, rarely expressed about his father.

"We all hate him," said one man, a former military officer I met in Yanji, in China's Jilin province just days after he had sneaked across the Tumen river. "If he died then everything would be alright."

Refugees told terrifying stories of public executions of those caught stealing food, trying to escape, and even studying the Bible, as officials followed his orders to keep control.

"In political study sessions we were told that he is prepared to let 70 per cent of the population die and 30 per cent survive, it will be enough to rebuild the country and achieve victory.

"I believe him that is why I fled," claimed another refugee.