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China set to secure uranium bonanza from Australia

Chinese Premier Wen Jiabao (溫家寶) 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 US 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 today for a three-day visit.

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

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

Australia has long battled to balance a strong alliance with the US 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.

A US 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 US nuclear fuel and technology -- is seen by some analysts as a US 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 US.

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

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.

The highest profile trade issue will be China's desire to buy Australian uranium so it can rapidly expand its nuclear power generation capabilities and lessen reliance on polluting fossil fuels. Canberra only allows uranium sales to members of the Nuclear Non-Proliferation Treaty once they agree on a separate bilateral safeguards deal.

A supplementary agreement is also expected to be signed allowing Chinese companies to directly explore and mine uranium in Australia, although Howard said such arrangements would be subject to regular foreign investment controls.

Wen said in the Australian interview that he would propose regular leadership meetings between Australian and Chinese officials in order to maintain a smooth bilateral relationship. Only the US currently has such an arrangement with Beijing.

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