China Economy - News & Updates

[Neo]

Thursday, March 29, 2007

China reports major offshore oil find

BEIJING: China has found a huge offshore oil field that could become the energy-hungry country’s biggest new oil source in a decade, a state news agency said Wednesday.

The scale of the discovery, if confirmed, would be welcome news to Beijing, which is struggling to reduce reliance on oil imports to fuel its booming economy. China is the world’s No. 2 oil consumer behind the United States and its oil imports rose 14.5 percent last year.

PetroChina, which found the field in Bohai Bay off China’s east coast, estimated its reserves at 2.2 billion barrels, the Xinhua news agency said, citing unidentified company sources.

“The newly found oil field is the largest China has discovered over the past 10 years,” the Xinhua report said.

PetroChina, China’s biggest oil company, said last week that it had found a new oil field in Bohai Bay but gave no details. PetroChina spokesmen refused Wednesday to release any information.

If the reported size is accurate, “China will have added a valuable upstream asset that can rival the country’s leading oil production centers in the future,” Steven Knell, an energy analyst for the consulting firm Global Insight, wrote in a report to clients.

Despite its size, it was unclear how the field would affect China’s need for imports. Daily production could reach 200,000 barrels within three years, Xinhua said. But that still would be equal to just a fraction of China’s imports of 2.9 million barrels per day.

China met its oil needs from domestic fields until the late 1990s, when it became a net importer. Demand is rising by about 7 percent a year, but domestic production in 2006 rose by just 1.7 percent. Imports accounted for 47 percent of consumption last year.

Economists say Chinese oil demand, driven by blistering economic growth that reached 10.7 percent in 2006, has strained world supplies and pushed up prices.

The biggest recent domestic oil discovery, also made by PetroChina, was a field found in the mid-1990s in the Tarim Basin in China’s desert northwest.

Chinese oil companies have been spending heavily on exploration in the northwestern and coastal areas, but results have been disappointing.

Elsewhere, state oil companies have spent billions of dollars to gain access to oil and gas supplies in Central Asia and Africa.

State-run Korea Oil has agreed to team up with Asia’s biggest oil producer, China National Petroleum, to cooperate in the hunt for overseas resources, South Korean officials said Wednesday, Reuters reported from Seoul.

The informal link between China and South Korea, Asia’s major energy consumers, will give both countries a competitive edge over major oil companies in securing stakes in oil and gas fields, the Energy Ministry said.

http://www.dailytimes.com.pk/default.asp?page=2007\03\29\story_29-3-2007_pg5_28

 

[Neo]

China starts assembly of regional jet, aims higher

30 March 2007

SHANGHAI - China launched production of a 90-seat passenger jet on Friday, its first home-grown regional jet and a major step toward creating a national champion that it hopes could challenge Boeing and Airbus.

“We are fighting a crucial battle now,” Li Yuhai, deputy general manager at state-owned manufacturer AVIC I, told a crowd of government officials and journalists at a grand opening ceremony for the ARJ21 jet’s assembly plant.

The company hopes its new jet, due for its first test flight next spring and delivery from September 2009, will compete with aircraft from Brazil’s Embraer and Canada’s Bombardier.

“We are fighting for our motherland and for the people,” Li said.

The jet’s success would pave the way for a multi-billion dollar project to develop large aircraft that could wean Chinese airlines from their reliance on Boeing and Airbus, industry executives said.

That project has been approved by the State Council, China’s cabinet, and is due to kick off soon, the executives said.

AVIC I, which also makes fighter planes and bombers, launched the ARJ21 project early in the decade, banking on growth in China’s aviation market.

Chuck Nugent, general manager for GE Aviation’s small engine division, forecast total demand for the ARJ21 jet at 500 to 700 over the next 20 years.

The General Electric unit supplies engines for the ARJ21.

Large aircraft

AVIC I has received 71 orders for the ARJ21-700, which can be configured with 78 to 90 seats.

The orders so far are all from domestic firms, but the company is targeting markets overseas and aims to get five orders from the United States this year, two company officials said.

The government has also approved plans to develop and manufacture passenger jets with more than 150 seats and air freighters that could carry loads of 100 to 110 tonnes, Zhang Jiuen, head of the science and technology division of AVIC I, said on the sidelines of the ceremony.

China’s two state-run aircraft makers, AVIC I and AVIC II, would be involved in the project, which is also open to foreign investment, a senior government official said.

A prototype could be ready within 10 years, he added.

Several industry executives said on Friday they were in favour of the project, given the double-digit rate of growth in China’s air passenger traffic in recent years.

The country will need about 2,650 new passenger aircraft over the next 20 years, worth $289 billion, according to recent projections from Airbus, a unit of European aerospace group EADS.

But some analysts have expressed scepticism about the commercial prospects of a big passenger aircraft designed and manufactured entirely in China, given the country’s lack of experience in making large jets for civilian use.

“Competing with Boeing or Airbus is not an easy thing,” said a senior executive with a major European component maker. “I believe this is what will happen, but it could take at least 20 years.”

Many aviation executives, however, were optimistic about the future of the ARJ21, and several from AVIC I said they were confident it could become a major competitive force globally in less than 10 years.

“We have sent rockets into the sky. Why shouldn’t our ARJ21 take off?” said one Chinese aviation executive, who declined to be named.

http://www.khaleejtimes.com/Display...h/business_March826.xml&section=business&col=

 

[Neo]

US, Saudi and Chinese companies announce $5 billion energy deal

BEIJING (March 31 2007): US oil giant Exxon Mobil, Saudi Aramco and Sinopec announced here Friday two joint ventures worth about five billion dollars to operate 750 service stations and a petrochemical refinery in China.

The announcement of the project, Exxon Mobil's largest single investment in China, marked the culmination of 12 years of preparations, according to the American company. "It's our biggest project so far in China," Sarah Du, a Beijing-based Exxon Mobil spokeswoman, told AFP.

"Developing this type of joint venture is a very complicated process and Fujian is the most complex so far in China due to the nature of its integrated business," she said. In a joint statement, the companies called the two joint ventures "the first fully integrated refining, petrochemicals and fuels marketing project with foreign participation in China."

The refining joint venture, which will start operations in early 2009, will expand one that already existed in the south-eastern province of Fujian between Sinopec and the Fujian government. It will lead to a tripling of the production of refined Saudi Arabian crude to 240,000 barrels per day, the statement said.

A joint venture co-owned by Sinopec, China's top refiner, has a 50 percent stake in the venture, while Exxon Mobil and Saudi Aramco each have 25 percent. The second joint venture will operate some 750 service stations and a network of terminals across Fujian province, according to the statement.

Sinopec holds a 55 percent stake in the service station venture, with Exxon Mobil and Saudi Aramco each holding 22.5 percent. The partnership, which aims to meet China's rapidly growing demand for petroleum products and petrochemicals, also includes a long-term crude supply agreement with Saudi Aramco, the statement said. "The co-operation benefits all parties. All the three companies get what they need," said Qiu Xiaofeng, an oil analyst with Everbright Securities.

"Sinopec can take advantage of capital and refining technologies provided by Exxon Mobil, and Exxon Mobil gets access to China's wholesale oil products market." The three companies said the government had approved both joint ventures. A breakdown for the investment for each of the ventures were not provided.

http://www.brecorder.com/index.php?id=545059&currPageNo=3&query=&search=&term=&supDate=

 

[Neo]

Saturday, March 31, 2007

Exxon, Aramco China venture costs rise to $5b

BEIJING: Saudi Aramco and US giant ExxonMobil Corp’s first big Chinese downstream oil venture has grown to $5 billion, much more than planned, the firms said on Friday as they closed the books on 12 years of talks.

When the venture with top refiner Sinopec Corp was initially agreed in 2005, estimated investment for the refining and petrochemicals units in southeastern Fujian was $3.5 billion.

Since then, the partners have added a marketing venture with 750 filling stations and a network of terminals, while refinery costs have risen worldwide because of a tight contractor market and escalating prices for raw materials.

Speaking after a ceremony to commemorate final approval of the deal, Sinopec Corp’s President Wang Tianpu told Reuters the cost difference was due entirely to the retail and wholesale operation. Aramco and Exxon Mobil declined immediate comment.

The deal is a coup for Exxon Mobil, the world’s biggest publicly traded firm, which gets a rare and coveted foothold in the second-largest oil market. It also gives the top oil exporter Saudi Arabia a guaranteed customer for its future output.

But it may also mark the end of an era of cooperation with major Western oil companies and clear preference for deals with major resource nations, leaving firms without any downstream ties like Chevron or ConocoPhillips in the cold. “This (deal) was one of the few survivors from China’s previous round of foreign cooperation,” said Yan Kefeng, of Cambridge Energy Research Associates (CERA). China, an oil exporter 15 years ago, is increasingly anxious about its dependence on imports, now near the halfway point.

http://www.dailytimes.com.pk/default.asp?page=2007\03\31\story_31-3-2007_pg5_20

 

[Neo]

Saturday, March 31, 2007

US may impose economic sanctions on China

WASHINGTON: The Bush administration, facing heavy pressure to deal with soaring trade deficits, is considering imposing economic sanctions on China in a dispute over government subsidies.

If the administration decides to take action, it would open up a new area in which American companies being battered by a flood of Chinese imports could seek protection and would reverse 20 years of US trade precedent.

Commerce Secretary Carlos Gutierrez was to announce the government’s decision on Friday in a case brought by NewPage Corp, which contends that imports of high-gloss paper from China represent unfair competition to US-made paper.

The government could impose penalty tariffs on Chinese paper imports on a preliminary basis subject to a final determination by Commerce later this year. The government of China suffered an initial defeat on Thursday when a US court ruled against its effort to stop Gutierrez from going forward with the case.

For two decades, the US government has held that American companies did not have a right to challenge government subsidies granted to their foreign competitors if those companies were in “nonmarket economies” such as China. However, last year, the administration let it be known that it was ready to consider reversing that the policy is facing heavy political pressure from Congress, now in the hands of Democrats, to deal with soaring US trade deficits, including a record $232.5 billion imbalance with China.

China asked the US Court of International Trade, a federal court which handles trade matters, to rule that the administration did not have the right to reverse established trade policy without legislation or a full regulatory hearing.

The court ruled Thursday that the government does have the authority to consider penalty tariffs against China in disputes involving government subsidies.

Judge Gregory W. Carman, who heard the case for the trade court, rejected China’s request to grant a temporary injunction to stop the US government from proceeding.

This trade dispute is being followed closely by a number of other American industries from steel to furniture that have been battered in recent years by a flood of imports from China.

US companies have always had the right to file dumping cases against China, which can result in penalty duties if Chinese companies are found to be selling products in the United States below cost.

But the ability to file subsidy cases could significantly expand the level of penalties that Chinese imports could face, giving American producers more protection.

The fact that the Bush administration made it known last year that it was now willing to consider cases against China involving government subsidies was seen as part of a new get-tough approach in the face of soaring US trade deficits.

Treasury Secretary Henry Paulson is leading an effort to pressure China to allow its currency to rise in value against the dollar. American manufacturers contend that China is devaluing its currency by as much as 40 percent to give the country unfair trade advantages.

http://www.dailytimes.com.pk/default.asp?page=2007\03\31\story_31-3-2007_pg5_26

 

[Neo]

Saturday, March 31, 2007

China bank sees slow economic growth in 2007

BEIJING: China’s economy is expected to grow 10 percent this year, slowing from 10.7 percent expansion last year, according to a new central bank forecast reported Friday by a state news agency.

That projection is line with outside forecasts and comes amid government efforts to curb a boom in investment in factories and other assets that Chinese leaders worry could ignite a financial crisis.

The central bank also expects inflation to be higher this year than it was in 2006, hitting 2.3 percent, up from the 1.5 percent rate for last year, the Xinhua News Agency said.

The Asian Development Bank said this week it expects China’s annual growth rate to decline gradually to about 9 percent through 2011.

In a separate report, the Chinese government’s State Information Center forecast economic growth of about 11 percent for the first three months of this year, Xinhua said.

http://www.dailytimes.com.pk/default.asp?page=2007\03\31\story_31-3-2007_pg5_27

 

[Neo]

Hainan Airlines venture to buy 100 Embraer jets

SHANGHAI: Hainan Airlines Co, China’s fourth-largest air carrier, and its parent have set up a regional airline which will buy 100 commercial jets from Brazil’s Embraer by 2012, the Xinhua news agency said on Saturday.

Grand China Express, which was launched in the northern Chinese port city of Tianjin on Friday with a 29-strong fleet of 32-seat, Dornier 328-300 jets, will purchase 50 ERJ145s and 50 EMB190s aircraft from the Brazilian plane maker, Xinhua said.

Embraer in August won its biggest order in the region when Hainan Airlines and its parent signed a deal for the planes worth $2.7 billion at list prices before potentially heavy discounts. Xinhua said Grand China, now the country’s largest regional airline, will initially operate on 78 routes linking 54 cities. And by 2012, it will fly on more than 450 routes linking at least 90 cities, taking more than 90 per cent of the domestic regional aviation market, it quoted Hainan Airlines chairman Chen Feng as saying. Regional aviation, also known as feeder-line services, operates between small cities, with routes typically ranging from 500 to 1,000 km. The services usually use aircraft which seat less than 100 passengers, according to Xinhua.

http://www.thenews.com.pk/daily_detail.asp?id=49244

 

[Neo]

China to build 12 new cross-border highways

BEIJING (April 06 2007): China plans to build 12 new cross-border highways to improve the road links with Pakistan and Central Asia. All the new roads will start in Northwest China's Xinjiang Uygur Autonomous Region and will stretch to neighbouring Russia, Kazakhstan, Tajikistan and Pakistan, China News Service reported, citing an official of the Department of Foreign Transport.

The longest of the 12 will link Xinjiang's capital Urumqi, Ilkshtan, Tashkent, Mashhad, Teheran, Istanbul and some European countries. This road, of which 1,680 kilometres will be in Xinjiang, is scheduled to be built before 2010.

http://www.brecorder.com/index.php?id=547255&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

No signs of overheating in China: WB

BEIJING: China will see “very strong” growth in 2007, but the government does not need to be too concerned about bottlenecks and other signs of overheating, the World Bank said on Thursday.

While domestically the world’s fourth-largest economy seems to have few problems accommodating fast expansion, there are, however, vast external imbalances, the World Bank warned.

“We continue to think that growth in China will remain very strong this year, and we think that it’s OK,” said Louis Kuijs, senior economist with the World Bank in Beijing.

“We don’t think the government needs to be overly worried about that,” he told a briefing in the Chinese capital, as the World Bank released its six-monthly report on East Asia’s economic and social health.

China’s central bank said last week it expects the economy to expand by 10 per cent this year, marking the fifth consecutive year of double-digit economic growth following a 10.7 per cent rise in 2006.

The World Bank officially forecasts 9.6 per cent growth in the Chinese economy this year, but suggested on Thursday that it will probably be more than that, based on macroeconomic data released so far in 2007.

“Growth is high, but it’s not obvious that the economy is overheated from the macroeconomic perspective,” said Kuijs.

An overheated economy usually shows up in soaring inflation or bottlenecks such as goods piling up in the ports, he said.

“We don’t observe those kinds of tensions, and we think the macroeconomic situation is quite benign,” he said.

But the World Bank economist pointed out there were growing imbalances between China and the rest of the world, in the form of a huge Chinese trade surplus.

“A lot of the demand that we see in the Chinese economy is actually not coming from Chinese households and Chinese companies, it’s coming from foreign households and companies,” he said.

“If there is one macroeconomic tension it is this external imbalance.”

In February, the last month for which data are available, China posted a near-record $23.8-billion trade surplus, almost 10 times the year-earlier figure.

China’s surplus last year soared 74 per cent to hit a record $177.5 billion but some economists are pencilling in $230 billion for 2007.

http://www.thenews.com.pk/daily_detail.asp?id=49782

 

[Neo]

April 06, 2007
Chinese economy

BEIJING, April 5: China will see “very strong” growth in 2007, but the government does not need to be too concerned about bottlenecks and other signs of overheating, the World Bank said on Thursday.

While domestically the world's fourth-largest economy seems to have few problems accommodating fast expansion, there are, however, vast external imbalances, the World Bank warned.

“We continue to think that growth in China will remain very strong this year, and we think that it's OK,” said Louis Kuijs, senior economist with the World Bank in Beijing.

“We don't think the government needs to be overly worried about that,” he told a briefing in the Chinese capital, as the World Bank released its six-monthly report on East Asia's economic and social health.

China's central bank said last week it expects the economy to expand by 10 per cent this year.

http://www.dawn.com/2007/04/06/ebr24.htm

 

[Janbaz]

China major refineries to keep run rates steady

BEIJING: China’s top oil refineries will keep run rates mostly steady this month despite a full shutdown at one major plant as refining margins stay firm and fuel demand picks up.

Twelve plants, mostly on the eastern and southern seaboard and accounting for more than a third of China’s capacity, will process 2.3 million barrels per day (bpd) of crude in April, only marginally lower that the 2.317 million bpd in March, a Reuters survey found.

Southern China’s Guangzhou refinery plans to lift its runs by a fifth to near full rates after it completed an expansion late last year.

Guangzhou, a unit of Asian top refiner Sinopec Corp, early doubled its primary crude run capacity and added severe refining units to process higher sulphur crude oil.

In March, Guangzhou refinery raised its rate by 28 per cent.

Export-oriented refiner WEPEC halted its crude processing this month according to a plan that will last the whole of April.

Sinopec’s Zhenhai refinery, the country’s largest as measured by capacity, will moderately increase processing later this month after it finishes some regular maintenance, but runs for the whole month will remain flat from March, said a source close to the plant.

Overall, runs are expected to stick to current levels, barring any surprise overhauls in refineries, analysts said.

With the plowing season in spring coming and the week-long May Day holidays approaching, demand for diesel and gasoline is set to rise, said Qiu Xiaofeng, an oil analyst at Everbright Securities in Shanghai.

Qiu said healthy gross margins will also encourage refineries to keep their facilities humming. US rude has retreated from a spike last week when geopolitical jitters centered around Iran sent prices above $68 a barrel.

“The profit Sinopec earned in the first quarter of this year might be higher than it got for the whole year of 2006,” Qiu said.

Sinopec’s Chairman Chen Tonghai was quoted months ago as saying the firm’s refining business could break even if benchmark crude prices fell to about $55 a barrel.

“But some of the oil Sinopec imported is cheaper than the international benchmark, as they contain higher sulphur content,” said an industry analyst in Beijing, who declined to be named.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=49929

 

[Neo]

China bank says reserve hike to have little impact

SHANGHAI: China’s third increase in bank reserve requirements so far this year will have little impact on the lending business of Bank of China as market liquidity remains ample, a senior executive said on Saturday.

The increase, announced by the central bank late on Thursday as part of Beijing’s effort to slow economic growth, will take the reserve requirement to 10.5 per cent for big banks and to 11.0 per cent for smaller lenders from April 16.

“From a macroeconomic perspective, the reserve hike is a good thing for China,” said Zhu Min, group executive vice president of Bank of China, the country’s second largest lender.

“In January and February, loan growth in the banking system was still too fast,” he said on the sidelines of a financial meeting in Shanghai, China’s financial hub.

Zhu expects that the central bank can soak up about 180 billion yuan ($23.32 billion) from the banking system, which could otherwise have been lent to firms and households, through the increase of the bank reserve requirement, he told Reuters.

Money and credit growth rose sharply in January and February, reviving fears of an acceleration in investment in fixed assets such as factories and flats that would undermine a year-long central government drive to curb wasteful capital spending.

“In such a situation, I think reserve hikes are good for the stable growth of China’s macroeconomy,” Zhu said. China’s economy expanded by 10.7 per cent in 2006, its fourth consecutive year of double-digit growth.

“From a banking perspective, currently market liquidity is very good, so I don’t think the reserve hike will have any big impact on our business development and profit making,” he said.

http://www.thenews.com.pk/daily_detail.asp?id=50088

 

[Neo]

China Mobile plans new subsidiary for 3G business

SHANGHAI: The parent of China Mobile Hong Kong the country’s top cellphone operator, plans to set up a new subsidiary to run the third-generation wireless network, state media reported on Saturday.

The new unit would mainly be in charge of the construction and layout of China’s homegrown TD-SCDMA Time Division Synchronous Code Division Multiple Access standard, according to a report published on the official Xinhua news agency’s Web site.

The plan is aimed at avoiding issues over the origin of the large sums of capital being invested in TD-SCDMA, the news report said, citing an unidentified industry source.

Having parent company China Mobile, rather than its Hong Kong-listed unit, oversee the large amounts of capital flowing into TD-SCDMA projects meant the National Development and Reform Commission would be better able to steer the scale and direction of investment and support the project, the report added.

NDRC is China’s top economic planner and is working with ministries to design the country’s 3G strategy.

The tender for contracts to build the country’s high-speed TD-SCDMA network has risen to 26.7 billion yuan from 18 billion yuan, mainly due to rising prices for equipment, Xinhua said. It added that the TD-SCDMA network would then be leased out to Hong Kong-listed China Mobile.

The results of China Mobile’s tender for contracts to gear makers to build TD-SCDMA contracts are also expected to come out at the end of April, the report said.

China’s 3G rollout now expected later this year or early next year by most analysts has been pushed back for years. The standard is expected to yield rapid Web and multimedia services.

Beijing is extending pre-commercial testing of the TD-SCDMA standard in trials that may last until end-October.

http://www.thenews.com.pk/daily_detail.asp?id=50087

 

[Neo]

Sunday, April 08, 2007

ABN AMRO, UCBH eye stake in China’s Huishang

SHANGHAI: Dutch financial services firm ABN AMRO and US community bank UCBH Holdings Inc. are among potential rivals seeking to buy a minority stake in China’s mid-sized Huishang Bank, regulatory and banking sources said on Friday.

ABN AMRO Holding NV has been in formal negotiations with Huishang Bank, based in the eastern Chinese province of Anhui, for at least six months, with the aim of becoming a strategic investor by buying about a 20 percent stake, the sources told Reuters.

However, San Francisco-based UCBH, the parent company of United Commercial Bank, the largest bank specialising in serving Chinese-Americans in the United States, recently joined discussions with Huishang Bank, the sources said.

UCBH hopes to buy a 10 to 20 percent stake in the bank, although UCBH and ABN AMRO have not submitted formal bids, the sources said.

A senior executive for ABN AMRO in Shanghai declined to comment, while officials at Huishang and UCBH were not immediately available for comment.

Last week, UCBH said it had agreed to buy Business Development Bank Ltd, a small Shanghai-based lender, for $205 million in cash, as part of its plans to expand in China over the next four to five years.

“UCBH is little-known to bankers and consumers in China. The provincial government of Anhui definitely wants to get a well-known partner for Huishang Bank to boost the reputation of the bank as well as the province,” said one source close to Huishang.

“But that doesn’t mean UCBH has no chance of beating ABN AMRO, as ABN AMRO is keen on getting as big a stake as possible and participation in management of the bank, while UCBH is not that aggressive at this point,” said the source, who declined to be identified.

Uncertainties: Huishang Bank opened for business in early 2006, the product of the merger of a handful of small city commercial banks and urban credit cooperatives in Anhui province.

Singapore’s DBS Group Holdings also approached Huishang Bank about a potential investment last year but the talks stalled over price and the size of the stake, the sources said. DBS declined to comment on the matter.

ABN AMRO, the Netherlands’ biggest bank, and British lender Barclays Plc entered exclusive merger talks in March after investors, led by British hedge fund TCI, pressured the Dutch bank to consider a sale or break-up to boost shareholder returns.

The proposed merger of the two European financial giants creates potential uncertainties for ABN AMRO’s strategy in China, the sources said, adding that there were signs ABN AMRO had become less enthusiastic in the talks with Huishang.

ABN AMRO is separately planning to incorporate its Chinese unit domestically, under a Beijing-led campaign allowing foreign banks to offer yuan-based retail banking services without any restrictions.

ABN AMRO plans to register its Chinese subsidiary in Shanghai, China’s financial hub, while Huishang Bank, a regional lender, is not allowed to operate outside Anhui province, the sources said.

BOC International, the investment banking arm of Bank of China, is working for Huishang as financial adviser in selecting a foreign investor, the sources said, adding that a formal bidding process could begin in the next few weeks. Huishang, which means “Anhui Merchants” in Chinese, runs about 100 outlets in cities and villages in the inland and mostly rural province. It had total assets of nearly 46 billion yuan ($5.96 billion) at the end of 2005. afp

http://www.dailytimes.com.pk/default.asp?page=2007\04\08\story_8-4-2007_pg5_26

 

[Neo]

Sunday, April 08, 2007

China and Myanmar sign new hydropower dam deal

YANGON: Military-run Myanmar and China have signed a deal to build a hydropower dam on the Salween River, as yet the longest undammed waterway in southeast Asia, official media said Saturday.

The deal is the fourth hydropower agreement signed with China this year, and came just days after Thailand began work on a six-billion-dollar dam on the Salween to generate electricity that will be carried back to the kingdom.

Activists warn the dams could prove disastrous to the Salween’s delicate ecosystem and accuse Myanmar’s military junta of using the dams as an excuse to evict thousands of ethnic minority villagers from their land.

Myanmar’s Hydropower Implementation Department signed the deal Thursday with the Chinese firms Farsighted Investment Group and Gold Water Resources, the official New Light of Myanmar said.

The dam, which is the fifth planned for the 2,800-kilometre (1,750-mile) river, will have a capacity of 2,400 megawatts, the government mouthpiece said.

The paper gave no other details of the deal, but said the dam would be on the Upper Salween in Myanmar’s northern Shan State.

China and Thailand have signed a raft of deals over the last year to tap impoverished Myanmar’s energy resources, particularly in natural gas and hydropower.

The United States and Europe have economic sanctions against military-run Myanmar to punish them for the ongoing detention of democracy leader Aung San Suu Kyi and other human rights abuses.

But the effect of the sanctions has been largely eroded by rapidly increasing trade with energy-hungry neighbours like China, Thailand and India. afp

http://www.dailytimes.com.pk/default.asp?page=2007\04\08\story_8-4-2007_pg5_30