Two events Thursday illustrated Beijing's ambitions: collaboration with Africa and managing a potential rivalry with India on securing energy resources.

The Ministry of Foreign Affairs issued policy paper on Africa in the run-up to minister Li Zhaoxing starting a five-nation tour of the continent. The paper states the government will "adopt more effective measures to facilitate African commodities' access to the Chinese market."

It also said China will support "competent enterprises to cooperate with African nations in various ways on the basis of the principle of mutual benefit and common development, to develop and exploit rationally their resources, with a view to helping African countries to translate their advantages in resources to competitive strength, and realize sustainable development in their own countries and the continent as a whole."

The paper addressed other economic issues, including infrastructure development, debt reduction, finance and possible aid, all of which were incentives China used in the 1950s and 1960s when Mao Zedong ruled the country with the strategic ambition of spreading Communist revolution.

Markets, not Maoist Marxism, fuel the revolution in China today. Energy deals will be high on Li's agenda, which takes him to Senegal, Cape Verde, Liberia, Mali and Nigeria. Earlier this week, China National Offshore Oil Corp. signed a $2 billion dollar deal to take a 45 percent stake in the Nigerian offshore Apko oil and gas field after the Indian government decided not to go ahead with its bid.

There are substantial financial risks in China's willingness to secure African energy resources. In its annual report issued last October, Transparency International, a coalition monitoring government corruption worldwide, said while Nigeria had made progress between 2004 and 2005, it still ranked as the sixth most corrupt government on the planet.

David Hurd, a Beijing-based analyst with Deutsche Bank, told United Press International Friday while corruption had made many energy companies hesitant to do business there, "China was pursuing opportunities Western firms won't attempt in Africa."

During a news conference held at its embassy in Beijing Thursday, India's Minister of Petroleum and Natural Gas Mani Shankar Aiyar was asked what perception Indian companies had on working with China in light of losing the Nigerian deal.

"I don't think there are any inhibitions in India about working with China," Aiyar said. He stated the Nigerian bid "was actually the government of India not authorizing the conclusion of a commercial agreement that had been arrived at," otherwise "China would not have got that property."

Aiyar told reporters: "China has had to pay a higher price than was initially indicated to match the Indian bid."

The minister said the Chinese were discovering that when the two countries bid against each other the ultimate price was "substantially higher...amounting to billions of dollars over the course of 2004 and 2005."

The minister's comment that "we should be able to work out rational arrangements amongst ourselves to be able to make rational bids which do not overprice properties that are to be acquired in the interest of energy security," touched upon the crux of his reason for being in Beijing.

China and India are in similar positions: rapidly growing developing nations acutely aware of their need of secure diverse energy resources at affordable prices. After nearly a year of preparatory work, the two countries signed five memoranda of understanding to manage their mutual modes of competition and collaboration in the quest for energy security.

"We appear to have taken the significant steps required to place India-China cooperation on the launch pad," Aiyar said in opening remarks at the briefing Thursday night.

Aiyar said the MoUs signed with Ma Kai, chairman of the National Development Reform Commission, set "fundamental principles on the basis of which we will proceed" and "also identifies, very broadly the areas of cooperation and provides for a dialog mechanism the joint working group which will be meeting at least once a year and more often as necessary."

Another element was to establish high-level contacts between the principal oil companies of the two countries, both upstream and downstream in the petroleum value chain. Aiyar's delegation includes chairmen and managing directors of India's leading gas company GAIL (India) Ltd., India Oil Corp., Oil India Ltd., Hindustan Petroleum Co., Prize Petroleum Co., ONGC Videsh, and Bharat Petroleum Co. Meetings were held with China's Sinopec, CNOOC, and China National Petroleum Corp.

"It would appear that everyone concerned is just raring to go," Aiyar said.

Deutsche Bank's Hurd was less optimistic. "The devil is in the detail, but there's not that much in prospects for substantial progress on the whole," he told UPI.

Hurd believes the two sides had some opportunities to work together on "natural gas as an export hub as well as pipeline cooperation in LNG more than anything else." He noted India's hope for joint marketing of petroleum products faced difficulties on a national basis because of China's practice of limiting the number of gas stations and offering minority shareholding structures.

"Prospects are limited without a national chain," he said.

Aiyar made reference to the recent successful joint Sino-Indian bid made with Syria "as an example of the path down which we should proceed."

"Broadly speaking it would appear that the main priority in respect to cooperation, with respect to third countries," he said. "The form that cooperation will take depends largely on relevant information being exchanged between companies, sufficiently well in advance, for commercial decisions to be taken well in time."

Aiyar said it would be crucial to build mutual trust and confidence during cooperation with third countries.

"We will see through practical experience what advantages there are in going together rather than separately," he noted.

He said energy security wasn't a zero-sum game between the two countries.

"This is economics in the 21st century where players have learned that cooperation can render even greater benefits than mindless competition."

China and India have proclaimed 2006 as a "friendship year." The Chinese lunar calendar "Year of the Dog" which begins Jan. 29 will be an important test of whether competition or collaboration emerges as a dominant theme in the geopolitical economy.

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