While North and South Korean officials hold rare talks this week, in a bustling Korea town in northeast China the rival communities have little to say to each other.

Although their nations are separated by a heavily militarised border, North and South Korean restaurants operate side by side in Xita, the Korean neighbourhood in the city of Shenyang.Billboards and signs in Korean script hang across the area, which boasts South Korean beer and fried chicken joints, cosmetics counters and clothing stores.

But North Korean businesses now face a Tuesday deadline to clear out as China enforces United Nations sanctions banning their presence following Pyongyang's nuclear and missile tests.

After months of tensions that raised fears of nuclear warfare, North and South Korean officials will hold their first dialogue for more than two years on Tuesday.

But in this corner of China, relations between Koreans are tense and show no signs of thawing.

"We're one ethnicity, a big family, but they have a different way of thinking than us," said a North Korean waitress who works at the Pyongyang Rungrado restaurant.

She has lived in Xita for three years but has never spoken to a South Korean. She declined to give her name.

Across the street, the owner of a South Korean restaurant called Number 8 Storeroom said she has never had any contact with the owners of the two North Korean eateries near her establishment.

"I don't want to talk to them," said Jin Meihua, 43, whose restaurant serves eel and steak barbecue to a mostly Chinese clientele.

- Caught in the middle -

Shenyang, a city of 8.3 million, is not far from China's border with the North and houses many of China's ethnic Koreans.

In recent years it became a destination for North Koreans privileged enough to travel overseas.

North Korean eateries and small hotels popped up to feed and lodge them. South Korean boutiques became popular for shopping.

But both sides of Shenyang's Korea town have become ensnared in international disputes.

South Korean businesses took a major financial hit after China imposed punitive economic measures on Seoul over its decision to host the THAAD US anti-missile defence system, which Beijing sees as a threat to its own security.

"The whole area is in a slump," said Lu Chao, director of the Border Studies Institute at the Liaoning Academy of Social Sciences in Shenyang.

"Last year there was the THAAD issue with South Korea. Then North Korea created problems with its nuclear testing. Chinese have lost interest in spending their money in Xita."

Many South Koreans packed up and went home as their businesses failed, locals say.

"Things haven't been good since then," said 27-year old Jin Zhenyou, an ethnic Korean waiter at a South Korean restaurant.

The North's own dining establishments are likely to be hard hit by dwindling visitors and a blanket order from China's commerce ministry to shut down North Korean businesses by Tuesday.

Some estimates put their number at around 100 across China.

In Xita, only one has apparently closed so far and waitresses at other establishments said they had no plans to close come Tuesday.

- Socialists vs capitalists -

China's ethnic Koreans could bridge the divide between the two sides, but even they say making friends with North Koreans can be difficult.

"They don't like South Koreans. They won't eat in our restaurants. There's no overlap at all," Jin said.

With the shifting geopolitical situation now hitting the North, South Koreans say they won't be sad to see them go.

South Koreans and North Koreans "don't share any special relationship", said a man surnamed Gong at the local Korea Society in Shenyang.

The citizens "don't hold any events for building friendly relations, they don't know each other and don't communicate with each other," Gong said.

In 2016 the South Korean embassy told citizens to avoid the North's restaurants for safety reasons, according to Chung Young-June, a scholar with the Institute for Sinology at Yonsei University.

The government warning filtered into North Korean eateries, further straining relations between the neighbouring restaurant owners.

"The South Korean government doesn't allow them to eat our food," said the North Korean restaurant waitress.

She had no interest in speaking with South Koreans.

"We are a socialist country, they are capitalist," she said.

"We work for each other, we work hard for each other. They are all for themselves, earning for their own lives. We are not like this."