China signs deal with Iceland to develop geothermal energy

The Chinese have signed a deal with Iceland to increase co-operation over the development of geothermal energy.

China’s Premier Wen Jiabao concluded the agreement last weekend during the first stage of a four-nation European tour.

As a trained geologist, Wen toured the Thingvellir national park, home to popular tourist attractions the Gullfoss falls and the Geysir geyser.

The talks, during what is the first visit by a Chinese premier to Iceland, also yielded accords covering cooperation in marine and polar science and technology and solar energy.

During a visit to a geothermal power plant on an active volcanic ridge, he told students in a spontaneous 10-minute speech that more needed to be done about global warming.

A deal already exists between Iceland’s Orka Energy company and the Chinese firm Sinopec, to develop geothermal energy in China.

Chinese interest in Iceland recently emerged when Chinese property magnate Huang Nubo tried to buy a large portion of land in the north of the country.

Suspicion was voiced that the purchase might help China win a foothold in the region and the deal was eventually blocked by the Icelandic government.

But in Iceland, the visit of the bespectacled "Grandpa Wen" has given rise to some unease over what his rising power, the world’s second-biggest economy and most populous nation, really seeks from the fiercely independent island.

Worries centre on China’s economic clout and its lack of democracy in a state that boasts the world’s oldest parliament.

China’s interest in ties to resource rich lands is no secret. Its businesses have also been on the lookout for opportunities in a Europe weakened by the global financial crisis – a crisis felt nowhere more sharply than Iceland.

Global warming also has the potential to redraw the geopolitical map near Iceland as melting ice could one day allow for trans-Polar traffic, opening up speedy new routes to Europe for Chinese exporters.