China's Wen in Iceland, eyes on Arctic riches

Fri Apr 20, 2012 2:07pm EDT
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By Mia Shanley

REYKJAVIK (Reuters) - China signed accords on energy cooperation and the Arctic in Iceland on Friday as Premier Wen Jiabao started a tour of northern Europe that will focus on Chinese investment in a continent eager for funds and to trade with the rising world power.

Centrepiece of the trip will be a visit to Germany, where Wen and Chancellor Angela Merkel will on Sunday and Monday burnish industrial ties that have done much for both economies.

That the prime minister of the world's most populous nation should stop first, however, on a remote island of just 320,000 has raised hopes for an injection of Chinese cash into an economy ravaged by the bursting of a financial bubble in 2008 - but also suspicion of Beijing's hunger for natural resources.

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

Over two days, Wen, who trained as a geologist, will see volcanic geysers and electricity plants where Iceland captures geothermal energy.

Friday's meetings between Wen and Icelandic Prime Minister Johanna Sigurdardottir resulted in agreements to cooperate in the Arctic region, in marine and polar science and in 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, though no figures were provided.

As well as Germany, where he will open the annual Hanover trade fair with Merkel on Sunday and visit carmaker Volkswagen on Monday, Wen will also go to Poland and to Sweden, where the Chinese-owned Volvo car plant is on the schedule for Tuesday.   Continued...

Chinese Premier Wen Jiabao waves from a vehicle after he arrives in Keflavik April 20, 2012. WREUTERS/Ingolfur Juliusson