China steps forward in new bid to end Iran dispute

China edges nearer the centre of contention over Iran's nuclear ambitions on Wednesday by hosting talks of diplomatic powers on whether to offer stronger incentives to Iran to curb atomic work.

The gathering of the five permanent members of the U.N. Security Council - the United States, Russia, China, Britain and France - plus Germany marks a first such meeting for China, which has kept away from the spotlight in the dispute.

China, which has hosted six-party talks aimed at ending North Korea's nuclear programme, wants to highlight its role seeking to end the impasse over Iran's efforts to enrich uranium, but also wants to avoid falling out with a key oil supplier.

"With this balance of interests, it's difficult to imagine China being a place for breakthroughs," said Shen Dingli, an expert on nuclear politics at Fudan University in Shanghai.

"The equation of interests won't change and China isn't some magical place to solve problems. But it's important to show that China is part of the international mainstream on these issues."

Tehran insists it has the right to enrich uranium, which it says is for peaceful power. But the United States, Western European powers and their supporters fear Iran's enrichment could give it the means to make nuclear weapons.

The Security Council has passed three resolutions with sanctions pressing Iran to give international inspectors more information about nuclear work and stop the enrichment.

The meeting in Shanghai will discuss whether to sweeten a 2006 offer of incentives to persuade Iran to curb its nuclear program, a Western diplomat earlier told Reuters.

The six powers offered civil nuclear cooperation and wider trade in civil aircraft, energy, technology and farming, if Iran suspended uranium enrichment and negotiated with them.

DEFIANCE

But Iran has ruled out halting or limiting its nuclear work in exchange for such incentives, and says it will only negotiate with the U.N. watchdog, the International Atomic Energy Agency.

"As the host, China faces expectations that it will propose or broker more concrete ideas on how to persuade Iran," said Yin Gang, a Middle East expert at the Chinese Academy of Social Sciences.

China has hosted talks aimed at ending North Korea's nuclear programme that have stalled in recent months but yielded steps towards dismantling atomic facilities.

But in a show of defiance at the international sanctions, Iran announced last week that it had expanded its nuclear work by starting to install 6,000 more uranium enrichment centrifuges at its Natanz plant, in addition to 3,000 already there.

China fears a nuclear arms race if Iran gains the ability to make nuclear weapons, said Guo Xian'gang, a former Chinese diplomat to Tehran who now works in a policy institute.

But Beijing is also wary of a rupture with Iran, which is China's third biggest source of crude oil imports, behind Saudi Arabia and Angola.

"Both the United States and Iran are always unhappy with China, but if we do any more then at least one side will be even unhappier," said Guo. "So China's stance won't change - cooperate with the U.S. but not too far."