International and Bilateral Issues:

China, North Korea's closest ally and biggest source of financial support, on Monday said it was “shocked” by the death of Kim Jong-il and pledged to continue “consolidating and developing” ties with its troubled eastern neighbour.
A concern is that South Korea, Japan and the United States may all be worried now [about stability in North Korea], but China will continue to cooperate with those countries.
China has already indicated it will continue supporting the North, which it views as a crucial strategic buffer, with financial and food aid.
Officials were thought to have assured Kim Jong-il earlier this year that they would back his son and designated successor, Kim Jong-un, when they both reportedly travelled to China on a secretive visit.
The real worry for China now, analysts said, was whether the North would be able to stave off a looming financial meltdown, with increasingly frequent reports of widespread food shortages.
China has, in recent months, been pressing North Korea to consider adopting a Chinese-style “reform and opening up” policy.

South Korea responded to news of Kim Jong-il's death by placing its military on high alert on Monday, with renewed fears of regional instability as a new North Korean government under Mr. Kim's son Kim Jong-un looks to assert control.
While South Korean officials reported on Monday that the North had test-fired a short-range missile shortly after announcing Mr. Kim's death
Mr. Kim's death, analysts fear, could derail recent moves to kick-start the stalled Six-Party talks — involving China, Japan, the United States and Russia, besides the Korean neighbours — to get the North to abandon its nuclear programme and move the Korean peninsula towards denuclearisation.
April 2012 also marks the centennial birthday of Kim Il-sung — Kim Jong-il's father and the founder of the Democratic People's Republic of Korea — which will be grandly celebrated, even as the nation struggles with food shortages and economic uncertainty.
“Looking at the importance of 2012, there was a feeling that there would be an important development in relations between North and South,” said Ms. Gong. “But after Kim's death, we will now have to wait and see.”