Armitage, who met Chinese Premier Wen Jiabao Friday, said he was grateful for China's efforts to organize six-nation talks on the Korean issue, the first round of which ended inconclusively in Beijing in August.

"I think we're collaborating very well," Armitage said. "We're very grateful for the efforts of China."

Armitage Friday also met ranking Chinese defense and foreign ministry officials for talks, with the reconstruction of Iraq among top agenda items.

"On Iraq, there was a question of China's eligibility for subcontracts, which is something that we very much favour," he told reporters.

"There is plenty of work to be done and Chinese firms could be very excellent subcontractors," he said.

China, one of the five permanent veto-wielding members of the United Nations Security Council, was among the opponents of the US-led war in Iraq.

Armitage said Friday North Korea held the key to when new talks could take place on the nuclear crisis, while the regime's suspicious attitude posed an obstacle.

"The decision on the dates (for new nuclear talks) is in Pyongyang, not in Beijing, so you'll have to ask the North Koreans," Armitage told reporters early in the day.

A second round of talks involving the United States, China, the two Koreas, Japan and Russia was originally expected in December, but has since been delayed.

"Both sides expressed the hope that we have six-party talks soon," Armitage told reporters after his Beijing meetings, which also included talks with Chinese Vice-Foreign Minister Dai Bingguo, a top North Korea hand.

When he arrived in the Chinese capital a day earlier, Armitage had said he hoped talks could go ahead in Beijing next month, but he avoided mentioning a timetable on Friday.

He said the difficulty was to co-ordinate the efforts of all six countries while dealing with a "legacy of suspicion".

"On the North Korean side there's a great deal of suspicion about what we're all about, and we have to overcome that," he said.

Armitage, who travelled from Japan, met Defense Minister Cao Gangchuan and Chinese foreign ministry officials Friday before leaving for Mongolia early Saturday for the third and last leg of his trip.

China is North Korea's closest ally, and Beijing has been working closely with Washington to try to defuse tensions over North Korean nuclear plans.

The United States revealed last week that it had made a rare direct call to North Korea in a bid to convene a second round of the six-party talks.

North Korea offered recently to freeze its nuclear weapons drive in return for concessions, including an end to US sanctions and a resumption of energy aid.

Washington is holding out for a commitment from Pyongyang to scrap its nuclear program.

WAR.WIRE