China, Brazil Set Up Agency To Promote Joint Ventures In Natural Resources

Separately, foreign direct investment into China jumped to $72 billion last year. Manufacturing investment still robust, and financial services sector shows impressive gains.

SHANGHAI, China (AP) - China and Brazil have agreed to set up an agency to promote joint ventures in oil, gas, minerals and other natural resources, the government said.

The agreement comes as pricing talks stretched into Thursday between China's steelmakers and major iron ore producers, including Brazil's Companhia Vale do Rio Doce SA, the world's largest iron ore miner.

The joint agency, agreed upon earlier this week, will promote exchange of information on resource policies and development strategies for oil, gas, renewable energy, bio-fuel, power and minerals, the National Development and Reform Commission said in a statement posted on its Web site.

Co-chaired by NDRC minister Ma Kai and Brazil's minister of energy and resources, it will also promote joint projects in those areas, it said.

China has sought to boost cooperation with a wide range of major oil and mineral-exporting countries, hoping to ensure steady supplies of resources for its booming economy, which has been growing at a rate of around 10 percent for several years.

Beijing has also been cultivating closer ties with South American countries viewed as promising markets for its own exports.

China is a major importer of soybeans, iron ore and other natural resources from Brazil. It imported 1.34 million metric tons of crude oil from Brazil in 2005, or 26,973 barrels a day.

This week's agreement follows an agreement reached in March on stepping up cooperation in trade, technology and other areas.

Despite the positive movements in some areas, Chinese steelmakers have been resisting demands from Brazil's CVRD and other major iron ore producers, such as Rio Tinto PLC and Australia's BHP Billiton Ltd., for a 19 percent increase in prices this year.

Suppliers and Chinese consumers are still haggling over prices for iron ore, originally meant to take effect April 1. China has expressed frustration over its inability to sway suppliers to take a smaller price increase, after a 71.5 percent jump in iron ore prices last year.

A report in the state-run newspaper China Securities Daily on Thursday said the talks were continuing, with both sides refusing to give way.

But a CVRD executive said he expected Chinese steel mills, led by No. 1 Chinese producer Baosteel Group, to eventually follow other steel mills in accepting the increase.

''The benchmark is already established at 19 percent,'' Jose Martins, the executive director of CVRD's iron ore division, told reporters in Sydney on Thursday.

''Now we are waiting for the last word from the Chinese - the number is there,'' Martins said.

Separately, strong foreign investment in financial services like banking and securities boosted China's total foreign direct investment last year to $72.4 billion (€56.5 billion), a senior official said Thursday.

That's up significantly from the $60.3 billion (€50 billion) first reported for 2005.

Vice Minister of Commerce Ma Xiuhong told reporters that the new, higher figure took into account robust investment in the banking, insurance and securities businesses.

Those areas had been largely off-limits to foreigners before 2005, and Ma said foreign investment in those financial services was negligible in past years.

China has been a magnet for foreign investment, attracting amounts that dwarf most other developing countries. But before the revision of the 2005 figure, foreign direct investment in China had seemingly stayed level at around US$60 billion (€50 billion) for two years.

Because in the past most foreign investment had been directed to China's manufacturing sector, Ma suggested that statisticians had overlooked last year's flow of funds into financial services.

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