China calls for new era with Australia after crisis

TRADE WARS

Australia approves Baosteel stake in Aquila
China's largest steelmaker Baosteel Friday won approval to take a 285.6 million dollar (261.5 million US) stake in Aquila Resources, the Australian mining company said. Aquila said Australia's Foreign Investment Review Board (FIRB) had approved Baosteel to take up to 19.99 percent of shares in the company, up from the 15 percent initially agreed under the deal. "Subject to receipt of relevant Chinese regulatory approvals which have been sought by Baosteel, the company anticipates completion of the transaction in the latter half of November," Aquila said in a statement.

The deal comes after Australia last week approved Yanzhou Coal's 3.5 billion dollar takeover of miner Felix, its biggest by a Chinese firm, as the Asian superpower seeks to secure raw material supplies to support its growth. Australia's vast mineral resources - particularly iron ore and coal - are keenly sought by Chinese companies and accounted for much of the 74 billion Australian dollars in trade between the countries last year. But the government has wrestled with the national security implications of foreign ownership of the resources industry, and has a preference for foreign state-owned companies to take minority stakes in domestic miners.

Under the latest deal, Baosteel will be given preference to directly invest in most of Aquila's projects and will provide support in sourcing financing from Chinese institutions. The deal, under which Baosteel vice-president Dai Zhihao has been nominated to join Aquila's board, was approved by the Australian miner's shareholders on Wednesday. "Aquila looks forward to working closely with Baosteel and to fast-tracking the company's significant coal, iron ore and manganese projects," it said.

Protectionism threatens global recovery: Chinese official
A top Chinese central bank official warned Sunday that rising trade and investment protectionism remains one of the major threats to the global economic recovery. "We have noticed that major risks threatening (the) global economic recovery still remain," Li Dongrong, an assistant governor of the People's Bank of China, said in a speech at Kuwait Financial Forum. These included "rising trade and investment protectionism, prolonged dysfunction of the financial system and inadequate coordination in macro-economic policies," he said. Dongrong stressed the most pressing task of the international community was to "strengthen global cooperation, prevent protectionism of all kinds and support stabilisation of financial markets and economic growth." "China, as always, will cooperate closely with the various parties to establish a new world financial order that is fair, just and inclusive," he said. Dongrong said despite recent positive indicators pointing to a global economic recovery, it was "not yet solid due to multiple uncertainties at home and abroad. "We will continue to implement an active fiscal policy and relatively loose monetary policy and improve the stimulus package to incorporate short-term policy measures into long-term restructuring efforts," he said. (AFP Report)

by Staff Writers
Sydney (AFP) Oct 30, 2009
China on Friday called for a sweeping new era in ties with Australia including a free-trade deal, marking a dramatic turnaround in relations which reached crisis-point this year.

Visiting vice premier Li Keqiang vowed to work for the long-awaited free-trade agreement and urged a "new level" in contacts beyond massive, multi-billion dollar iron ore and coal exports.

"We should seize and look at the general picture and we should ensure our bilateral relationship is brought to a new level and greater depth consistently," Li told the Australia-China Business Council.

Li, widely tipped as China's next premier, is his country's most senior official to visit since the arrest of an Australian passport-holding mining executive shattered relations in July.

He spoke glowingly of ties with Australia, citing "enormous" development opportunities and calling for greater people-to-people contacts between the two countries.

"China and Australia have extensive common interests and a solid basis for cooperation in many areas," he said, adding "the bilateral relationship has become more strategic in nature."

Chinese media were incensed in June when Anglo-Australian miner Rio Tinto snubbed a huge cash injection by state-run Chinalco. Weeks later, senior executive Stern Hu was arrested and charged with industrial espionage.

Australia and China also clashed over a visit by exiled Uighur leader Rebiya Kadeer and over a documentary about her life which Beijing tried to have withdrawn from the Melbourne film festival.

Li, who departs on Sunday, has already signed agreements on forestry, education, telecommunications and cultural relics.

A spokesman for Australian Prime Minister Kevin Rudd said the premier and Li had agreed that the bilateral "momentum of co-operation" was growing and that the relationship "has great potential", the national AAP news agency reported.

"While it was natural that Australia and China would have different views from time to time, relations had been growing recently," the spokesman said in a statement cited by AAP.

"They agreed that current co-operation, including in resources and energy, formed a good basis for the future.

"China was very important to Australia's future, and Australia was very important to China's future."

Participation in the recent G20 summit has "given a new dimension" to the relationship, the prime minister's spokesman was quoted by AAP as saying.

Two-way business hit 74 billion dollars (67.7 billion US) last year and is averaging 22.5 percent growth over the last five years, putting China on course to outstrip Japan as Australia's top trading partner.

In August, PetroChina and ExxonMobil struck the biggest deal in Australia's history, worth 50 billion Australian dollars, to supply liquefied natural gas over 20 years from a major new plant in Western Australia.

Yanzhou Coal's 3.5 billion Australian dollar bid for Felix Mining was approved by Australian regulators last week, clearing the way for China's biggest ever Australian takeover.

And on Friday, Australia's Foreign Investment Review Board also approved Chinese giant Baosteel's 286 million dollar offer for a 20 percent stake in local miner Aquila.

John Lee, research fellow at Sydney's Centre of Independent Studies, said Li's visit showed Australia's importance to China, which relies on its resources to fuel its breakneck growth.

He added that China was also trying to make amends for the Hu saga, which had gone down as a "diplomatic blunder" in Beijing.

"Australia actually has a lot more leverage over China in trade relations and their diplomatic relations than we sometimes give ourselves credit for," Lee told AFP.

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TRADE WARS

Chinese vice premier set for ice-breaking Australia trip
Sydney (AFP) Oct 29, 2009
China's Vice-Premier Li Keqiang will arrive in Australia late on Thursday for a fence-mending visit following months of trade and diplomatic tension. Li will touch down for talks with Mandarin-speaking Prime Minister Kevin Rudd seeking an upturn in relations which plummeted after China's arrest of Rio Tinto mining executive Stern Hu. Analysts said Li's four-day visit was to repair ties ... read more

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