Chinese visit seals end of chilly ties with Australia

SYDNEY Wed Oct 28, 2009 10:01pm EDT

China's Vice Premier Li Keqiang (R) reacts to the audience during the opening ceremony of the 3rd International Tax Dialogue Global Conference in Beijing October 26, 2009. REUTERS/David Gray

China's Vice Premier Li Keqiang (R) reacts to the audience during the opening ceremony of the 3rd International Tax Dialogue Global Conference in Beijing October 26, 2009.

Credit: Reuters/David Gray

SYDNEY (Reuters) - The arrival of China's Vice Premier Li Keqiang in Sydney on Thursday and a glowing editorial in one of China's most popular newspapers this week seem to seal the end of diplomatic tensions between Canberra and Beijing.

Relations plummeted in June over a failed bid by China's state-owned metals firm Chinalco for a $19.5 billion stake in Anglo-Australian Rio Tinto and the arrest in China of an Australian executive with Rio over corporate espionage charges.

China canceled a high-level diplomatic visit to Australia and its media accused Australia of interfering in China's affairs when Australia granted a visa to an exiled ethnic Uighur leader.

But China's Ambassador to Australia, Zhang Junsai, said both countries had come to a consensus that they must manage their differences and that Li's visit to Australia reflected the long-term importance of Australia-China ties.

"The Chinese government sees it (Sino-Australia ties) from a strategic perspective. It is very comprehensive. It is very solid," he told The Australian newspaper on Thursday.

During his visit, Li will meet Prime Minister Kevin Rudd and sign agreements on education, the environment and telecommunications.

In a further sign of a thaw, China's Global Times ran an editorial on Tuesday, saying "a promising economic and strategic blueprint is shaping up" with Australia.

"Many are still worrying over when China-Australia relations will bottom out, but the reality is that bilateral ties between the two countries have already started warming," it said.

"The fundamental interest of the two countries lies in removing the conflicts that have complicated ties recently," it said. The two nations, it said, were indispensable to each other.

CHINESE INTERST IN MINING ASSETS

Chinese state-owned companies are eager to buy into Australian mining assets to secure supplies of raw materials in its rapidly growing economy, the world's third largest.

China is was Australia's second-biggest trading partner behind Japan in 2008, with two-way trade worth $61 billion.

The Global Times, which has a focus on foreign affairs and a nationalistic editorial outlook, called for greater understanding between Canberra and Beijing.

"China needs to understand the importance of Australia and its special nature," it said. "Existing somewhere between the East and the West, it is often seen as a white knight of sorts that assists China in breaking containment."

Australia's foreign minister this week also declared an end to Australian-Sino tensions, saying it was "business as usual".

A string of Australian ministers have visited China in recent months to help repair ties, with Australia keen to maintain trade levels and restart stalled free trade talks.

Deals have been struck since August in which Chinese firms have bought stakes in Australian resource firms and earlier this month military leaders from both nations held brief strategic talks in Australia.

Last Friday, Australia approved China's Yanzhou Coal's $2.9 billion takeover of Australian coal-miner Felix Resources Ltd. But concerns over losing control of Australian resources saw the deal made contingent on the firm's assets being run by an Australian company.

How long ties remain warm remains to be seen, with Australian mining executive Hu Stern still to face court and some 40 proposals, the majority Chinese state-owned entities, still before Australia's Foreign Investment Review Board.

(Editing by Ron Popeski)

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