For China, Iran uranium plant no game changer

BEIJING (Reuters) - China's distaste for sanctions and appetite for Iran's oil may hamper Western efforts to ramp up pressure on Tehran after disclosure of the country's second uranium enrichment plant.

The United States and Western European powers want greater force behind demands that Iran come clean on its nuclear plans, following last week's revelation of the new nuclear facility.

China may be persuaded to back some sanctions, especially if Russia joins U.S. and European calls for action, experts say.

But Beijing is likely to flex its power as a permanent member of the U.N. Security Council to dilute any proposed resolution that could threaten its ties with Tehran.

"On the one hand China knows that relations with the United States and Europe are very important, but on the other hand it has substantial diplomatic, strategic and energy interests in Iran," said Shi Yinhong, professor of International Relations at Renmin University in Beijing.

"China is in the middle ground so it will go some way to meet the West, but less than half way. It will make some criticism and censure of Iran, but this will be very soft."

The United States and its Western allies have made clear they will focus on Iran's nuclear program at rare talks with Iranian officials in Geneva on Thursday, which China will attend.

Iran has offered wide-ranging security talks but says it will not discuss its nuclear "rights." Adding to tensions, Iran test-fired mid-range missiles on Monday.

Iranian President Mahmoud Ahmadinejad says the new nuclear facility was legal and open for inspection by the International Atomic Energy Agency -- the U.N. nuclear watchdog.

U.S. officials said work began on the covert plant as an alternate site for possible weapons development as scrutiny at a first plant made it hard to conduct such activities there. Iran says its nuclear work is for peaceful power generation purposes.

The news has triggered calls from Western capitals for additional "sanctions that bite" if Tehran does not come clean on its nuclear plans and address international concerns.

Even Russia -- previously reluctant to go along with further penalties -- showed greater willingness to consider such action.

Yet for China, which has long insisted it does not interfere in other nations' affairs, there has been no change in stance beyond a hint of frustration with Tehran.

Even with neighbor North Korea, which poses a more immediate security threat because it has exploded two nuclear devices, Beijing has been consistently wary of tightening sanctions.

"A political solution to the Iranian nuclear issue is in the interests of the world," said the popular Global Times tabloid, owned by Communist Party mouthpiece the People's Daily.

"China does not deny that it has certain interests in Iran, but China is certainly not, because of its interests, going to act like certain Western nations that use double standards," the paper added in an editorial.

ENERGY, RUSSIA KEY

China's energy officials worry about the prospect of tighter sanctions on a country that last year provided over 10 percent of its crude oil imports, and is only likely to become more important as Chinese reliance on foreign energy grows.

The world's No. 2 crude oil consumer has made longer-term investments with an eye to developing deposits in Iran, which holds the world's second-largest crude oil reserves.

"The international community is paying close attention to this and we are also a bit worried, as several state firms like CNPC have taken on resource projects in Iran," said Liu Qi, deputy head of the National Energy Administration, referring to China National Petroleum Corp, parent of Asia's largest oil and gas producer PetroChina.

"The central issue when it comes to our energy security is secure (supplies) of oil and gas."

The ultimate key to China's response may be Russia's position on sanctions, and Moscow appears to be taking a tougher line.

Beijing wants to be seen as a responsible international player, perhaps in part to counter worries about its economic rise, and may be reluctant to be seen as the sole obstacle to a sanctions deal.

But its diplomats would almost certainly demand an agreement weaker than the West would like to bring to bear on Tehran.

"If Russia is lining up near the West, Beijing may repeat past practice and reluctantly sign up. But (any sanctions) must be limited and diluted and leave room for a future diplomatic solution," said Renmin University's Shi.

Russian President Dmitry Medvedev said on Friday that if Iran does not cooperate at the Thursday meeting with world powers, other methods should be used to deal with its nuclear program.

Beijing might also be more amenable to sanctions if presented with firm evidence that the plant is part of a weapons program -- or a weak explanation for the new facility from Tehran.

"China has already supported two or three rounds of sanctions on Tehran; if there is evidence that these facilities are being used for weapons, then the Chinese government won't rule out supporting the next stage of sanctions," said one Iran expert at a government-run think tank, who was not authorized to speak to the foreign media and declined to be identified.

(Additional reporting by Eadie Chen in QINGDAO, Editing by Dean Yates)