Obama says China agrees on Iran nuclear transparency

BEIJING (Reuters) - China and the United States agree Iran must show its nuclear program is peaceful and transparent, President Barack Obama said on Tuesday, but Chinese President Hu Jintao was more guarded on the dispute at a summit in Beijing.

Iran's nuclear program, which Western powers have said appears to be for the production of nuclear weapons -- a charge Iran denies -- was among the issues on the table during Obama's trip to China, one of Iran's strongest trade partners.

"We agreed that the Islamic Republic of Iran must provide assurance to the international community that its nuclear program is peaceful and transparent," Obama said at a news conference with Hu.

"Iran has an opportunity to present and demonstrate its peaceful intentions but if it fails to take advantage of this opportunity it will face consequences."

Hu's remarks on oil-rich Iran were more measured than Obama's and stressed the need to keep diplomatic channels with the Islamic Republic open on the nuclear dispute.

"We both stressed that to uphold the international nuclear nonproliferation regime and to appropriately resolve the Iranian nuclear issue through dialogue and negotiations is very important to stability in the Middle East and in the Gulf region."

The United Nations' nuclear watchdog is concerned that Iran's belated revelation of a new uranium enrichment site near the holy city of Qom may mean it is hiding further nuclear activity, a report by the International Atomic Energy Agency said on Monday.

"We hope all sides increase their diplomatic efforts, push the process of resolving the Iran nuclear issue diplomatically, and make progress," Chinese Foreign Ministry spokesman Qin Gang told reporters on Tuesday, adding China had noted the IAEA report.

LIMITED PATIENCE

Western powers have urged Tehran to accept a draft deal in which it would send most of its low-enriched uranium (LEU) abroad by the end of the year for further enrichment to turn it into fuel for a medical reactor in Tehran.

Iran has held off from giving a firm response. Western powers have signaled that their patience is limited and fresh sanctions are a possible recourse.

While China has backed past U.N. resolutions pressing Tehran to cooperate with international demands about its nuclear activities, it has also resisted any sanctions that could impede its oil imports from Iran and trade between the two countries.

Jeffrey Bader, a top adviser to Obama on Asia, told reporters the administration was sure China would maintain a united front with the other members of the U.N. Security Council, plus Germany, who have been leading the Iran talks.

"I am confident that whatever direction we choose to go -- we need to go -- toward the end of the year, that the Chinese (will) remain part of the unified P5 + 1 front," he told reporters in Beijing.

(Additional reporting by Chris Buckley, Ben Blanchard and Lucy Hornby; Editing by Ken Wills)