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China wants Iceland's energy

Posting in Energy

China's Premier, Wen Jiabao, is in Iceland to discuss partnerships on Chinese investment and trade of geothermal energy.

China's premier, Wen Jiabao, has started a tour in Northern Europe and Iceland turned out to be his first stop. His focus is on Chinese investment in a contingent eager for funds and trade and is looking for energy cooperation from the Arctic nation, Reuters reports.

That the premier of the world's most populous nation should stop first on a remote island of 320,000 has raised hopes for an injection of Chinese cash into an economy that was ravaged by the financial crisis in 2008. However, it also raises the question about Beijing's interest for natural resources.

A Chinese developer is currently fighting a government decision that last year stopped him from buying a vast tract of land which some had suggested might be a cover for a possible future naval base. Further, that this naval base is part of a wider strategy to gain a foothold in the region.

For the two days Wen, who is trained as a geologist, will spend on the island he will see volcanic geysers and electricity plants where Iceland captures geothermal energy.

Friday's meeting between Wen and Icelandic Prime Minister Johanna Sigurdadottir resulted in agreements to cooperate in the Arctic region in marine, polar science and geothermal energy.

Orka Energy Ltd., an Icelandic firm focused on producing geothermal energy, and China's Sinopec Group also signed a deal to develop geothermal energy in China for heating houses and the production of electricity. However, no figures have been provided.

Wen is also stopping by Germany at the annual Hanover trade fair with Merkel and Volkswagen. Next, his trip goes to Poland and Sweden, where he will visit the Chinese-owned Volvo car plant. Among discussions on investment and industrial projects, VW is expected to announce plans to build a new plant in China. The Chinese leader is also likely to hear pleas for Beijing to drop its resistance to Western efforts to impose U.N. sanctions on Syrian President Bashar al-Assad.

But by starting with a full-scale visit to Iceland, Wen has fueled European concern that China might be trying to exploit the country's economic trouble to gain strategic foothold in the North Atlantic and Arctic region.

"When it comes to the Arctic, we always have China on our mind," said one European diplomat from the Nordic region, who spoke to Reuters this week on the condition of anonymity.

[Via Reuters]

For more on Chinese investment in Europe, go to Chinese Investors Choose Denmark For New EU Hub

For more on geothermal energy in Iceland, go to Iceland's Volcano May Power the UK

Photo courtesy: Reuters/Ingolfur Juliusson

Ina Muri

Weekend Editor

Weekend Editor Ina Damm Muri is a multimedia journalist based in New York. Previously, she worked at Aspen Magazine, CBS4 Denver and the Daily Camera in Boulder. She holds two degrees from the University of Colorado at Boulder. Follow her on Twitter. Disclosure