The Chinese-born tycoon appointed by North Korea to run its new, capitalist free trade zone has been fighting to limit damage to his business empire from allegations of tax evasion.

The semi-official China News Service reported that Yang Bin has been ordered to settle tax arrears in China.

Speaking at his head office in the northern Chinese city of Shenyang, Mr Yang said his firm was in talks with local officials about the tax notice.

Since his appointment to head the Sinuiju zone, Mr Yang has faced a tide of press allegations of tax evasion and stock price manipulation, mostly from newspapers in South Korea and Hong Kong.

Small sum

Mr Yang also denied on Thursday that the tax notice involved his Hong Kong listed firm Euro-Asia Agriculture (Holdings).

Euro-Asia Agriculture's shares were suspended from trading on the Hong Kong Stock Exchange on 30 September, pending clarification of Mr Yang's decision to reduce his stake in the group.

Its shares had fallen 62% in the past month, partly due to press speculation about Mr Yang's finances.

Mr Yang said the tax request covered "mostly construction and real-estate taxes" from the Euro-Asia Group's investments in tourism and property.

He said the amount owed totalled about 10m yuan (�769,000; $1.2m).

Finding such a sum is unlikely to prove tough for Mr Yang, who is thought to be worth $900m and was ranked among China's richest men by Fortune magazine last year.

Mr Yang said his group has until 12 October to pay the tax arrears.

Shenyang tax office is closed for the week-long public holiday that follows China's National Day on 1 October, so officials could not be reached for comment.

Windmills

Mr Yang was born in China but left to study in Holland in the mid-1980s and took Dutch citizenship.

He made his fortune farming orchids in China using European agricultural technology.

His corporate headquarters in Shenyang has a Dutch theme, with windmills and a reproduction of Amsterdam's railway station.

Mr Yang says North Korean officials have appointed him to run the Sinuiju enclave because they have grown to trust him during dealings over his investments in the poverty-stricken country's agricultural system.

His promise that foreigners would be granted visa-free access to the development zone from 30 September led to an embarrassing climb-down - and more bad press - when journalists were turned away at the border.

North Korea created the Sinuiju Special Administrative Region on the border with China in September to attract foreign investment and emulate the booming preferential trade zones with which China kicked off its reforms in the early-1980s.