09/02/2005, 00.00
CHINA – UNITED STATES
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Energy tops Hu Jintao's agenda in US visit

Beijing (AsiaNews) – For many economists, the main purpose of Chinese President Hu Jintao's visit to the United States, which starts on September 7, is to alleviate the pain caused by global shortages and price rises and work out a mechanism for co-operation and the promotion of joint ventures between the two nations in the energy field.

In his 13-day visit, which includes stops in Canada and Mexico, Mr Hu will meet political and military leaders, businesspeople and students—he is scheduled to give a speech at Yale University—but the highlight will be his meeting and private dinner with US President George W. Bush.

"I think the two leaders will talk about this topic and the main idea is to strengthen co-operation," said He Yafei, head of the Chinese Foreign Ministry's North America Department.

Hu's visit comes after a series of disputes between Beijing and Washington came out in the open over energy, textiles, Taiwan, and the yuan's exchange rate. But energy tops the list of priorities. 

Both if both China and the United States are under pressure from the world's energy politics and from speculation that have spiked energy costs, President Bush has a great stake in holding back Beijing's rush into the energy markets of Central Asia, South America and Africa. And the only way to stop Chinese expansion in these regions is for him to substantially open up the US and Middle Eastern markets to the Chinese.

The Chinese government, given its economy's relentless growth which it has been unable to slow down, is trying to find energy supplies through the acquisition of foreign oil companies.

The United States (the world's largest oil consumer) has opposed Chinese attempts at foreign takeovers. This has led to a direct confrontation between the two governments over a bid by the China National Offshore Oil Company Ltd (CNOOC) to take a controlling stake in California-based Unocal, which not only holds rights to important fields and reserves, but also owns advanced deep-sea oil exploration and drilling technologies whose transfer to China worries the US military.

US government veto on the Unocal deal raised international protests and left the situation in limbo, but for Beijing it is nothing new. Two years ago Shell and Exxon Mobil had stopped CNOOC from buying oil and gas in Kazakhstan.

Given US 'protectionism', China has recently developed a plan B that involves strengthening commercial ties with the rest of the world, with Iran and Venezuela for instance, countries that the US has tried to isolate by imposing limits on trade.

At the 5th summit of the Shanghai Cooperation Organization (SCO) attended by the leaders of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan e Uzbekistan— Pakistani Prime Minister Shaukat Aziz and Indian Foreign Minister Natwar Singh were also present as observers—President Hu Jintao said that collaboration among SCO members was desirable, adding that that there were strong chances that it would involve "all areas of interest to member states".

At the end of the summit the participants agreed to build pipelines to ship oil and natural gas from Central Asia to East Asia.

In June Beijing also sign a US$ 550 million deal with Chile to jointly run a copper mine.

Chinese companies are likely to consider overseas mergers and acquisitions in Indonesia and Australia, said Shang Ma, a Fitch Ratings oil analyst. These are seen as "less threatening to foreign governments and the world's major oil companies".

Given China's weight in areas of the world where the US has little influence, US leaders must be wary and understand the importance of the energy issue, Shang said. The US is bound to try everything to stop China from creating an anti-US block.

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