The death of North Korean leader Kim Jong Il has kindled anxiety among the country’s neighbors and beyond about the unpredictable nature of the succession in the isolated, nuclear-armed country.

But China in particular has expressed hope that the sudden and unexpected leadership transition in Pyongyang might offer an opportunity for North Korea to pursue desperately needed reform of its dysfunctional economic system.

China sent troops to fight alongside North Koreans during the Korean War, and Mao Zedong once said that the two neighbors’ relationship was “as close as lips and teeth.” But although China remains Pyongyang’s principal ally and benefactor, its leaders have more recently pressed the North to embrace economic reforms.

In contrast to China, which since 1979 has pursued a policy of economic liberalization and opening to the outside world, North Korea has remained mired in a 1950s-style Stalinist system that has brought widespread poverty, food shortages and a shrinking industrial base.

“If the North Korean regime hopes to survive, they must make some changes,” said Zhu Feng, an international studies professor at Peking University.

Zhu said the transfer of power to Kim’s son Kim Jong Eun might subject the new leader to greater pressure for reform.

“Right now, North Koreans lack food and clothing,” Zhu said. “In such a society, the death of the old leader will have a huge impact on society and cause people to reflect and change their ideas.”

Other experts here said it would be wise for the United States and South Korea in particular to move cautiously and avoid provoking hard-line forces in the North.

“I’m optimistic about the future of North Korea,” said Shi Yuanhua, director of the Korean Studies Center at Fudan University in Shanghai. “Compared to his father, Kim Jong Eun has more motivation to reform, considering his background abroad and his age.

“But if the U.S., Japan and South Korea are still waiting for North Korea to collapse one day, then the opening and reform process will be more difficult,” he said.

In the hours after Kim Jong Il’s death was announced Monday, South Korea placed all its government officials on emergency-response status and called a National Security Council meeting at the Blue House, its presidential palace.

In Japan, Prime Minister Yoshihiko Noda canceled a speech minutes after receiving the broadcast news from Pyongyang, then called a meeting of his crisis-management team.

Stocks fell across Asia on Monday. Japan’s Nikkei closed down 1.3 percent, Hong Kong’s Hang Seng dropped 1.2 percent, and South Korea’s Kospi plunged 5 percent, then recovered slightly to close down 3.4 percent. The South Korean currency, the won, fell 1.6 percent against the dollar. Markets in Europe were trading in positive territory.

In London, British Foreign Secretary William Hague urged North Korea’s government to reduce the country’s isolation and return to the nuclear disarmament negotiations known as the six-party talks.

“The people of North Korea are in official mourning after the death of Kim Jong Il. We understand this is a difficult time for them,” Hague said in a statement. “We hope that their new leadership will recognize that engagement with the international community offers the best prospect of improving the lives of ordinary North Korean people.”

China has a vested self-interest in seeing Pyongyang reform, because Beijing provides North Korea with most of its energy, helps with food assistance, and is the isolated country’s principal trading partner and conduit to the outside world.

In the first 10 months of the year, Chinese imports from North Korea, mostly raw materials, grew sharply, up 124 percent over the same period last year, according to Chinese customs data. Still, total trade between the two countries amounted to just $4.6 billion from January through October, a mere 2 percent of China’s trade with South Korea.

China also shares a lengthy border with North Korea. A longtime fear here has been that a total collapse in North Korea could send a flood of refugees into China.

Kim made several trips to China, including three in the past two years, ostensibly to study the economic reforms that have propelled China’s economy over the past three decades.

At least one of the trips was for Kim to introduce Kim Jong Eun to Chinese leaders. Although Beijing’s leaders are believed to have taken a dim view of the hereditary transfer of power, analysts said those leaders are willing to work with the younger Kim, just as they did with his father.

China isn’t the only place where cautious optimism about the transition is being voiced. Australian Foreign Minister Kevin Rudd said Kim Jong Il’s death “presents an opportunity for the North Korean regime, the new leadership of the new regime, to engage fully with the international community on the critical questions of how to feed their people, how to open their economy and, more broadly, how to deal with the long-standing problem of North Korea’s nuclear weapons.”

The official statements that came throughout the day Monday reflected mostly surprise at Kim’s death.

“We believe the people of the DPRK will certainly turn their grief into strength, unify as one and continue to push forward the cause of socialism,” said Ma Zhaoxu, a Chinese Foreign Ministry spokesman, in a statement on the ministry’s Web site.

Correspondent Andrew Higgins in Hong Kong and staff researcher Zhang Jie in Beijing contributed to this report.