China Australia deal on track

August 19, 2009

, BEIJING, Aug 19 – The massive energy deal signed by China and Australia shows that relations are on track between the Asia-Pacific economic powerhouses despite recent political tensions, analysts said Wednesday.

China\’s biggest oil and gas producer PetroChina ordered 2.25 million tonnes of liquefied natural gas (LNG) a year over 20 years from ExxonMobil\’s share of Australia\’s Gorgon plant — a deal totalling 41.3 billion US dollars.

The news came shortly after Australia\’s Fortescue Metals offered China discount iron ore prices, breaking a months-long stalemate in talks complicated by Beijing\’s arrest of a Rio Tinto executive on suspicion of bribery.

"The (PetroChina) deal proves that Rio Tinto is just an individual case… and the close trade ties between China and Australia will not be affected," said Han Xuegong, a professor at CNPC Managers Training Institute in Shanghai.

"Mutual cooperation between the two countries will just get closer and closer in the long run.

Wang Yong, a professor of international relations at Peking University, agreed, saying the timing of the deal showed that China was willing to work with Australia to resolve inevitable disagreements.

"China will deal with disputes emerging between the two countries in a cooperative way," he told AFP. "China values economic cooperation with Australia and hopes to maintain the momentum of that cooperation."

China is Australia\’s second-most important trade partner, with the relationship worth 58 billion dollars last year, according to official figures.

Energy-hungry China has increasingly turned to resource-rich Australia in recent months to keep its economy — the world\’s third largest — growing, investing heavily in oil, gas and mining firms.

But the arrest last month of Rio Tinto executive Stern Hu, following Rio\’s rejection of a proposed 19.5 billion US dollar investment from China\’s state-owned metals giant Chinalco, raised fears that trade ties would suffer.

Canberra\’s decision to approve the recent visit of exiled Uighur leader Rebiya Kadeer — blamed by Beijing for orchestrating last month\’s deadly ethnic unrest in China\’s Xinjiang region — compounded those concerns.

But analysts said the economic interdependence of the two countries would eventually overshadow diplomatic spats.

"While there\’s been a few hiccups over the last few months, at the end of the day, the business relationship\’s still very solid," said Shane Oliver, chief economist with AMP Capital Investors in Sydney.

"The bottom line is that both countries are still well and truly open to doing business with each other."

Niu Li, an economist at China\’s State Information Centre, a top government think tank, described ties as "healthy", adding: "Australia really needs the Chinese market and China needs to go abroad to secure its energy supplies."

Officials in both countries also sought to downplay the frictions between them.

Australian Resources and Energy Minister Martin Ferguson was quoted as saying the ExxonMobil-PetroChina deal was "testimony to the strength of Australia\’s continuing trade and investment relationship with China".

Chinese foreign ministry spokesman Qin Gang, asked whether a Chinese minister had cancelled a visit to Australia over the Rio case and Kadeer\’s visit, said Wednesday both sides were "clear" about Beijing\’s concerns.

He added in a statement sent to AFP that he hoped both sides would work together to "maintain the correct direction of the development of bilateral relations and properly handle the sensitive issues."

For Peking University\’s Wang, the events of recent months were nothing unusual.
"Cooperation and friction are likely to continue in China-Australia relations in the future," he said.


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