Westinghouse wins massive China nuclear deal

BEIJING, Dec 16 (Reuters) US-based Westinghouse Electric Co. has won a two-year battle for a multibillion-dollar nuclear power deal with China, edging out French and Russian rivals to secure a contract that may help Beijing smooth ties with Washington.

The deal, estimated in the past at some 8 billion dollar, should warm relations between the world's top two energy consumers, who have clashed lately over a range of issues from the yuan currency to the Chinese bid for US independent oil firm Unocal.

It will also reaffirm China -- now a laggard in the nuclear sector -- at the forefront of a global trend towards increased use of atomic power, touted by many nations as the cleanest, cheapest solution to the world's strained energy industry.

''(The agreement) represents a major step forward in our relations and will advance our bilateral trade relationship and the energy security of both our nations,'' US Energy Secretary Samuel Bodman said in a statement after signing the memorandum with Ma Kai, the chairman of the National Development and Reform Commission (NDRC), China's powerful energy policymaking body.

He said it would help the US balance of payments and create more than 5,500 US jobs. The United States had a record 202 billion dollar trade deficit with China last year.

Westinghouse, based in Pittsburgh but now owned by Japan's Toshiba Corp., had been pressing to win tenders to build China's third generation of nuclear power plants since 2004, and offered a significant technology transfer to secure it.

Other suitors included France's Areva, with French President Jacques Chirac lobbying Beijing on an October visit, and Russia's Atomstroiexport.

China said it chose Westinghouse partly because of technology transfer and issues of self-reliance and localisation of technology, it said in a statement.

But given Toshiba's presence, the deal may have also been eased by a thaw in ties with Japan after Shinzo Abe took over as Prime Minister earlier this year promising to patch up a relationship that had sunk to its worst in decades.

Analysts say China hopes to use the deal, which came after a two-day visit to Beijing by the US's top economic policy-makers and amid fears of a surge in protectionist sentiment, to soothe more than just energy ties.

''This is all relationship driven,'' said David Hurd, energy analyst at Deutsche Bank in Beijing.

''The US is putting pressure on China at the moment so China's response is 'let's throw them a bone','' he added.

More Reuters MS GC1520