North Korea has announced it would pull all its 53,000 workers out the Kaesong joint industrial zone with South Korea and temporarily shut the complex down.
"We will pull out all our workers from the Kaesong Industrial Complex," Kim Yang Gon, a senior ruling party official said in a statement on Monday carried by the official Korean Central News Agency.
At the same time, Pyongyang "will temporarily suspend the operations in the zone and examine the issue of whether it will allow its existence or close it", Kim added.
Al Jazeera's Harry Fawcett, reporting from Seoul, said the North had pulled its workers due to the "warmongers", a reference to the US and its ally South Korea.
"So far, this is a temporary suspension. The North has said it is reviewing whether to shut it down. It should be said that even a temporary shutdown looks pretty permanent as the complex is difficult to start up again," Fawcett said.
"We have spoken to several business owners operating in [Kaesong joint industrial zone] and they have said they cannot meet their orders and they face ruin."
Also on Monday, South Korea's Defence Ministry denied suggestions that a nuclear arms test was imminent in North Korea, saying reported movements around the reclusive country's atomic site were routine, contradicting earlier government comments.
The reversal came amid mounting speculation that North Korea will launch some sort of provocative action in coming days - an arms test or a missile launch - after weeks of bellicose threats against the South and the United States.
The prospect of another test would have boosted tension, already driven up by Pyongyang's fury over the imposition of new US sanctions after its last nuclear test in February.
"We found there had been no unusual movements that indicated it wanted to carry out a nuclear test," a Defence Ministry spokesman said.
South Korea's Unification Minister, responding to a newspaper report, had earlier said movements did point to a test. "I can only say there are such signs," Ryoo Kihi-jae told a parliamentary committee, while declining to give details.
The JoongAng Ilbo daily, quoting a senior South Korean government official, had reported that movement of manpower and vehicles at the Punggye-ri test site was similar to that observed before the February blast.
Scarcely veiled criticism
North Korean statements have clearly irritated China, the North's sole diplomatic and financial backer. Leaders in Beijing, in scarcely veiled criticism of the North, have in recent days said they would tolerate no "trouble-making" on their border.
A Chinese Foreign Ministry spokesman on Monday said Beijing wanted to see nuclear-free peace on the peninsula and said it was the responsibility of all parties to work towards it.
Ministry spokesman Hong Lei told a Beijing briefing that China "believes that the only way to realise denuclearisation is
dialogue among all the parties concerned".
Warnings that the safety of foreign embassy staff could not be guaranteed after April 10 were mostly ignored.
North Korea, angered and threatened by UN sanctions following its own nuclear and missile tests in February and by South Korea-US military drills this month, has issued a series of apocalyptic threats of nuclear war in recent weeks.
It has also reportedly loaded two medium-range missiles on mobile launchers and hidden them in underground facilities near its east coast, raising speculation on its intentions.
On Monday, South Korea issued an appeal to the north to lift an access ban on the Kaesong Industrial Centre, which, access to which has been blocked by North Korea for a sixth day, disrupting operations in almost a dozen southern firms.
A US defence official said Defence Secretary Chuck Hagel postponed the test of an intercontinental missile at Vandenberg Air Force Base in the state of California until next month apparently to avoid further confrontation with the North.
China is the North's sole major ally, but its patience with Pyongyang is also showing signs of wearing thin.
Follow coverage of escalating threats in Northeast Asia
Foreign Minister Wang Yi said China opposed "provocative words and actions" from any party in the region and would "not allow troublemaking on China's doorstep," in a sharply worded comment on Saturday to UN chief Ban Ki-moon.
The North's mobilised missiles are reported to be untested Musudan models which are believed to have a range of about 3,000km.
That would cover any target in South Korea and Japan, and possibly even US military bases on the Pacific island of Guam.
The North has no proven intercontinental ballistic missile capability that would enable it to strike more distant US targets, and many experts say it is unlikely it can even mount a nuclear warhead on a mid-range missile.
Daniel Tudor, author of Korea: The Impossible Country, told Al Jazeera that the general mood among South Koreans is fairly calm.
"Back in 1994, when North Korea threatened to turn the South into a sea of fire, people were hoarding food, hiding in basements, etc... but now its 'just the way it goes'."