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China Signs Key Trade Deals In Australia

Australian Prime Minister John Howard shakes hands with Chinese Premier Wen Jiabao. Photo courtesy of AFP.
by Edward Lanfranco
Beijing (UPI) Apr 04, 2006
Chinese Premier Wen Jiabao signed an agreement with Australian Prime Minister John Howard clearing the path for sales of uranium and other raw materials to fuel its growing economy. Resource acquisition is a major component of Chinese foreign policy.

In Canberra Monday eight Sino-Australian inter-governmental accords were reached, including ones concerning cooperation on peaceful use of nuclear energy and the transfer of nuclear energy.

China promised that the uranium Australia sells will be used for energy purposes and not weapon development as part of the deal. Wen also took pains to say that China's deepening trade ties with Australia, an important U.S. ally, were not a threat.

Wen was quoting saying: "We believe that countries which are allied with the United States can also be China's friends, and Australia is one of them."

Easing restrictions on uranium is expected to be worth $71 billion dollars to the Australian economy. The country accounts for 40 percent of the world's known uranium deposits, but because of export controls, only 20 percent of global sales. Resource Minister Ian Macfarlane said exports to China may start within four years, according to media reports.

Kang Rixin, general manager of China National Nuclear Corp. told reporters in June 2005 that China had 19 nuclear facilities; nine that were operational and 10 under construction, including two coming on line in 2006. He said the PRC wants to double the country's use of nuclear energy by the year 2020.

Wen was pushing to lock in secure sources and prices for uranium and from Australia as China expands its use of nuclear energy, one of the steps the country is taking to diversify its power resources and clean up its environment.

The World Nuclear Association based in London says there were 441 nuclear reactors operational across the planet at the start of 2006. The association says China plans to build 28 power plants because of the country's rising energy demands.

Uranium prices have almost quadrupled during the last three years in response to more policymakers seeing the nuclear power generation option as viable compared with rising oil and gas prices and the environment costs such as global warming and greenhouse gases associated with coal.

According to a 2005 report from the U.N. Development Program, within the next 15 years China's gross domestic product is predicted to quadruple while its production of energy is expected only to double.

The PRC is already the planet's second-largest consumer of energy after the United States. Combined, the two economies account for nearly one-third of world energy consumption, with the United States using 21 percent and China 8.5 percent, a figure sure to climb in the years ahead.

Wen did not make much progress with his idea of fixing uranium or other raw material prices during his talks with industry officials. News reports from Australia indicated the move to allow exports of uranium yellow cake was applauded, but there was little support for price regulation.

Ian Hore-Lacy from the Uranium Information Centre was quoted saying resource deals are commercial contracts driven by market forces. Noting no customer wants to see high prices he said, "uranium is sold on individual contracts between the mining companies and the end user, the power utilities; if they agree on a price then they have got a deal."

"If they don't agree on the price, government policies or comments don't actually change that basic fact of life," he added.

Sales of natural resources accounted for 60 percent of Sino-Australian trade in 2005. Bilateral trade volume was $27.3 billion dollars last year according to Chinese data. China imported 112 million tons of iron ore worth $6 billion dollars in 2005.

The PRC is also a major customer for Australian coal, copper and nickel. The country will make its first deliveries of liquefied natural gas to China from its North West Shelf in the next several months.

A number of commercial contracts and deals on minerals, natural gas and electric power were also signed, as were several protocols concerning Australian exports of citrus fruit and edible deer products to China. The PRC market has become important to Australian farmers, tripling in value to over $2.1 billion dollars in the last decade.

The Chinese premier left Beijing April 1 for an eight day official visit to Australia, Fiji, New Zealand and Cambodia. Wen is accompanied by a high level delegation including foreign minister Li Zhaoxing, Bo Xilai, the head of the Ministry of Commerce, Ma Kai, minister of the policy shaping State Development and Reform Commission.

State-run media reported the other main members of Wen's entourage were Wei Liqun Director of Research Office of State Council (the national government cabinet) as well as You Quan Deputy Secretary-General of State Council, Vice-Foreign Minister Wu Dawei and Qiu Xiaoxiong, Director of the Premier's Office.

China and Australia also signed a treaty on mutual legal assistance in criminal matters, a statement of intent for agricultural technical cooperation, an exchange program for young scientists, plus three memorandums of understanding to establish a high-level economic dialog, cooperation in coal mine safety, and one for cooperation in education and training.

Source: United Press International

related report

Outside View: Green Light For Yellowcake
by John Elsegood
UPI Outside View Commentator Perth, Australia (UPI) Apr 04 - Chinese Premier Wen Jiabao's visit to Australia, as expected, led Monday to the signing of an agreement that will allow Australia to supply uranium to China as well as allowing for Chinese exploration of new uranium deposits and mine development.

Australia has 41 percent of the world's uranium reserves and this deal will add considerably to the already burgeoning trade with China which last year grew by more than 30 percent to almost $27 billion.

However, the deal also has the potential to create tension with Australia's long-standing strategic partner, the United States, as China continues to play an increasingly important role in the Australian economy. China is now second only to Japan as Australia's most important trading partner.

U.S. President George Bush's decision last month to provide nuclear fuel and technology to India -- seen as support for a regional power to counter China -- pits the ANZUS (Australia, New Zealand, United States) partners in opposite camps.

Australia has not previously provided such assistance to India because that country is not a signatory to the Nuclear Non-Proliferation Treaty, whereas China is.

In a veiled swipe at the United States, Wen said that Beijing was particularly appreciative of Australia's view "that China's development presents an opportunity, not a threat."

Not everyone in the region, or in Australia, is convinced by that assertion. Concern has been voiced that although China is a signatory to the NPT it has not always lived up to its responsibility -- having supplied nuclear technology to Pakistan and North Korea as well as having ties with Iran. The latter two are regarded as rogue states. India, by contrast, has never engaged in proliferation activities or given technological assistance to third parties.

It was interesting to note the different approaches by Washington, Tokyo and Canberra at a ministerial meeting in Australia last month. China's increasing influence in the Pacific region was the subject of the first Trilateral Security Dialogue between the foreign ministers of Australia, Japan and the United States.

It was here that U.S. Secretary of State Condoleezza Rice described China as a potentially negative force on the international scene. Japan's response was muted, but Tokyo is clearly concerned over Chinese expansionist plans in the region and the contemptuous attitude Beijing displays toward its neighbors. Australia, on the other hand, sees China as a golden market opportunity.

But there are signs that Australia may change course on India, with Prime Minister John Howard conceding that India had an "impeccable record" on nuclear weapons -- and clearly Australia does not want to be seen ignoring the world's second largest country, a fellow democracy -- and also a significant potential market for Australia.

Perhaps that is why Wen was careful not to gloat too much over recent divergences between U.S. and Australian foreign policies. In an interview with The Australian newspaper preceding his visit, the Chinese premier said he was happy for Australia to also support eventual sales of uranium to India for "peaceful purposes."

However, there are concerns in the region that Canberra has been too interested in pushing the Chinese trade deal through at all costs, without attempting to temper China's behavior with regard to human rights abuses, the persecution of religious groups and continued saber-rattling at democratic Taiwan, which in no way represents a military threat to the mainland communist regime.

Such concerns are heightened by the on-going scandal involving the Australian Wheat Board, which allegedly paid bribes to the former Iraqi regime of Saddam Hussein and appears to have involved Department of Foreign Affairs and Trade officials. Given the looseness of that deal there is little confidence that Canberra can monitor Beijing's compliance toward acceptable practice on uranium.

While Prime Minister John Howard has expressed confidence in China's ability to uphold nuclear safeguards, the fact is that safeguards are notoriously difficult to monitor. Dr. Jim Green of Friends of the Earth has questioned whether Canberra can be absolutely sure that Australian uranium will not end up in Chinese nuclear weapons.

There is no independent verification that Beijing is not currently producing fissile material, and even if such production has been suspended there is no certainty it will not be resumed. China is concerned about the U.S. missile defense program and justifies its non-ratification of the Comprehensive Test Ban Treaty by referring to the American program.

Taiwan is increasingly nervous about this matter. An editorial in the Taipei Times on April 1 complained about the "near silence that reigns in Australia over the proprietary of the uranium deal." The newspaper has a point.

Opposition to the deal in Australia comes from a few environmentalist groups and radical fringe parties, like the Greens.

The Labor Party, which is in power in all of the states and territories and is the official opposition in the federal parliament, has traditionally been opposed to developing the uranium industry beyond the original "three mines policy," abandoned by the conservative Liberal-National coalition government when they took over the federal government in 1996. With other players wanting to be involved, plus added pressures from the impact of global warming from fossil fuel, there are now cracks appearing within the party over this policy, and state governments have the power to license new mines.

Labor's federal shadow resources minister, Martin Ferguson, has called on the party to review its limited policy, but Western Australia's new state premier, Alan Carpenter, is standing firm, for now.

However, the vision of more wealth from a larger cake -- a yellowcake in this instance -- seems certain to ultimately cause a change in Labor policy, thus resulting in little friction in state-federal relations regardless of the political mix in Australia's federalist system.

The green light for red yellowcake seems certain.

John Elsegood is a writer and political commentator based in Perth, Australia.United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.

Source: United Press International

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