The ban, effective immediately, came as Pyongyang launched three short-range missiles on Saturday according to the US military, reviving tensions days after President Donald Trump said the isolated regime was starting to show Washington some "respect".
Beijing has been under pressure from Washington to rein in its neighbour, which relies heavily on the Asian giant for its economic survival, and the ban is the latest attempt by China to dispel US concerns over its close ties with Pyongyang.
China, which is the recipient of some 90 per cent of North Korea's exports, earlier this month said it would suspend its imports of iron, lead and seafood from the country after halting its coal purchases in mid-February.
Under the new measures, North Korean nationals will not be allowed to establish any new company in China, whether it is a joint venture with a Chinese partner or a firm with foreign capital.
The ban also prohibits the expansion of any existing joint ventures involving North Koreans in China, while new Chinese applications to invest in North Korea or to increase existing investments in the country will be rejected, the ministry said.
Businesses established by Pyongyang abroad -- including restaurants and trading companies -- are a crucial source of foreign exchange for the Stalinist regime.
Pyongyang has recently faced a wave of international sanctions over its test-firing of two intercontinental ballistic missiles (ICBM) last month that apparently brought most of the United States into range for the first time.
In addition to sanctions adopted by the United Nations Security Council this month, Japan and the United States have imposed punitive measures against international firms, including those from China, for doing business with the hermit state.
The measures are aimed at disrupting the flow of cash funding North Korean weapons programmes, which are in violation of United Nations resolutions.
Trump has called on China to play a more active role in convincing North Korea to halt its weapons programme and stop threatening its neighbours and the US.
But China has so far been lukewarm on the idea, preferring to address the issue through long-stalled talks.