During his visit to Xi'an, Talabani said he hoped his visit would promote mutual understanding between China and Iraq, especially considering the fact that 2008 was the 50th anniversary of the establishment of diplomatic ties between the two nations. He said that after studying the ancient culture of China, he had a better understanding of the efforts of the Chinese Government to unify the country peacefully. Talabani also voiced his intention to import equipment from Shaanxi Province for Iraq's reconstruction, stressing that the agreements signed with the Chinese Government during his visit would definitely boost China-Iraq relations.

Talabani also observed that Chinese businesspeople and enterprises had contributed a great deal to Iraq's reconstruction, especially in the fields of telecommunications, infrastructure construction and oil projects. "The next five years are crucial for Iraq's development, and the Iraqi Government is trying to ameliorate the investment environment, so as to attract more investments and repair the country's industry, agriculture, oil culture and medical services," said the Iraqi President. He encouraged Chinese companies to invest in Iraq, and in this way to strengthen economic and trade cooperation between the two countries.

Chen Xiaodong, Chinese Ambassador to Iraq, said that friendly political relations and growing economic ties between the two countries would make for even broader cooperation in the future. Chinese analysts described Talabani's visit as a "landmark." Yin Gang, a researcher with the Chinese Academy of Social Sciences, stated that the visit showed that cooperation between the two countries in various fields was returning to normal.

China's contribution to Iraq's reconstruction

On May 3, in Egypt, Chinese Foreign Minister Yang Jiechi announced at a ministerial meeting of the International Compact with Iraq (ICI) that the Chinese Government was ready to substantially reduce and forgive the debts owed by Iraq, and at the same time to assist Iraq with a grant of 50 million yuan for the present year. The grant would be used in Iraq's public health and education sectors, Yang said.

China has taken note of Iraq's request for debt reduction in accordance with the Paris Club, Yang averred, and was ready to resolve the issue through continued friendly consultations. "China supports the ICI, which serves as a blueprint for Iraq's future development and reconstruction, and defines its partnership with the international community," he said. "The international community needs to increase consultations and coordination so as to assist Iraq better."

Moreover, he said, China supported the UN in continuing to play a leading role in this effort, and a proper balance was required among the various areas covered by the ICI. These include efforts to promote dialogue and reconciliation among Iraqi groups, human rights and the rule of law, and economic and social reform. Yang called on the international community to deliver on their promises to assist Iraq's reconstruction, and help Iraq develop its capacity for self-development. Yang also stressed strengthening supervision, pointing out that a fair and transparent environment would encourage all parties to participate in Iraq's reconstruction. China supported conducting regular progress evaluations on Iraqi's reconstruction, he said, and the providing of international assistance.

China and Iraq have also cooperated on oil exploration for many years. An oil contract, detailing the joint exploration of the Al-Ahab fields and valued at $1.2 billion, was signed in 1997 by the China National Petroleum Corp. and the Iraqi side in Baghdad when Saddam Hussein was in power.

"China is welcome to explore oil resources in Iraq, as a new law is set to open its oil fields to international companies," said the Iraqi Ambassador to China, Mohammad Saber Ismail, on June 18. "We encourage Chinese enterprises to join the multinational competition for the exploration of Iraqi oilfields."

The new oil and gas law faces a parliamentary vote in July after Iraqi Prime Minister Nourish Al Maliki endorsed it in February and the cabinet approved it the following month. If ratified, it would open the country's oil resources to foreign companies, he continued, and a frozen Sino-Iraqi oil contract could be reactivated.

Under the terms of the new law, all energy contracts signed by foreign producers during the Saddam era must be renegotiated. "The revival of the deal is in process and the two sides have established working groups to help the contract forward," he explained.

Ismail stated that Iraq's ambition was to exploit about 80 new oilfields in the coming years and produce 6.5 million barrels of oil per day by 2015. Iraq had produced 2.6 million barrels a day before the 2003 U.S.-led invasion. Production is about 2 million barrels a day at present.

Ismail said that a Sino-Iraqi joint committee, to be co-chaired by the Iraqi Oil Ministry and the Chinese Ministry of Commerce, would resume discussions on such sectors as trade, foreign affairs, science and technology. The joint committee held its first meeting in 2001.

The ambassador said that the friendship between China and Iraq dated back 2,000 years. "There has never been any conflict between the two countries," he said.

He also spoke on the subject of trade. "Made-in-China products are common in Iraqi households, especially toys. The economies of the two countries are highly complementary."

Ismail said he hoped that bilateral trade would ride on the back of last year's trade volume of $1.1 billion and increase further.