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Australia-China ties set to grow with uranium deal

Written by: Staff

CANBERRA, Mar 31 (Reuters) Chinese Premier Wen Jiabao hopes to sign a uranium trade deal with Australia on Monday that some analysts say will test Canberra's skills at juggling growing ties with Asia's emerging power and its strong U S alliance.

Resource-rich Australia has been eager to boost its ties with energy-hungry China's expanding economy and the two countries will further cement their relationship when Wen arrives in Australia n tomorrow for a three-day visit.

But Canberra's willingness to embrace Beijing has highlighted a divergence with a wary United States, which has questioned China's military and economic ambitions and chosen to pursue a nuclear energy deal with Asia's other growing power, India.

''Australia's trying to tread a tightrope between our various trading interests and our strategic alliances,'' Monash University political analyst Dennis Woodward told Reuters.

Australia has long battled to balance a strong alliance with the United States with its geographical location in Asia, home to its two largest trading partners, Japan and China. Canberra and Beijing are also negotiating a free trade agreement.

An American deal with India this month -- under which New Delhi will separate its military and civil nuclear facilities, and open civilian plants to inspections in return for U S nuclear fuel and technology -- is seen by some analysts as a U S bid to build India as a regional counterweight to China.

''We particularly appreciate Australia's view that China's development presents an opportunity, not a threat,'' Wen told the Australian newspaper in remarks preceding his trip, which some analysts have interpreted as a veiled swipe at the United States.

Wen said he had ''closely followed'' recent security talks between Australia, Japan and the United States, during which U S Secretary of State Condoleezza Rice voiced concern about China potentially becoming a ''negative force'' in the Asia region.

''STARRY EYED'' Australian National University strategic and defence analyst Robert Ayson said Australia had been concerned by the strong U S language on China, while Washington was worried by Canberra's more optimistic approach to the Asian giant.

''The question is, can the two countries find a middle ground on China that is consistent, that doesn't exaggerate the challenge from China, but also doesn't completely ignore it,'' Ayson told Reuters.

Australian Prime Minister John Howard has said that he is not ''starry eyed'' about Wen's visit and that while Canberra and Beijing enjoy ties envied by other world leaders, the two countries still have differences.

Australia and China hold annual talks on Beijing's human rights record and the growing ties between the countries were tarnished briefly late last year when Canberra gave residency to a former Chinese diplomat, who initially sought political asylum.

Wen's visit to Australia is the first by a Chinese premier since 1988 and follows one by Chinese President Hu Jintao in 2003, a day after U.S. President George W. Bush came to Canberra.

The focus of this visit is the likely signing of a safeguards deal to allow China to import Australian uranium. Canberra only allows uranium sales to members of the Nuclear Non-Proliferation Treaty once they agree on a separate bilateral safeguards deal.

Australia holds about 40 per cent of the world's known uranium reserves but has limited production of the mineral since the early 1980s when the then centre-left Labor government restricted mining to three operating projects.

Howard's Liberal/National party abandoned this policy when first elected in 1996, but five of the country's six state and its two territory Labor governments remained opposed to further uranium mining.

Only the government of South Australia, home to the world's largest uranium deposit, favours uranium mining.


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