A new potential dispute between the US and China is opening up as Beijing goes public with its plans to export two more nuclear reactors to Pakistan, in a deal that will raise questions about controls on nuclear technology. Chinese officials have admitted privately since earlier this year that they planned to go ahead with the long-mooted plan to sell Pakistan two more nuclear reactors, in addition to the one reactor it has already built and a second under construction. However, Beijing has this week publicly acknowledged the plan for the first time. Jiang Yu, a spokeswoman at the Chinese foreign ministry, said that Beijing had already informed the International Atomic Energy Agency of the new agreement with Pakistan. Meanwhile, an industry official at China National Nuclear Corporation told a conference this week that China was discussing with Pakistan the construction of a one gigawatt nuclear reactor far larger than the two 300MW reactors in the initial agreement. At a time when Washington and Beijing are already sparring about exchange rates, North Korea and territorial disputes in the South China Sea, the nuclear deal could spark a fresh diplomatic argument. The Obama administration has already come out against the sale of the two reactors and has made nuclear proliferation one of its signature foreign policy issues. This sets up a potential conflict between China and the US, said Mark Hibbs, an expert on nuclear politics at the Carnegie Endowment. A resolution will require a diplomatic discussion between the US and China about the future of the nuclear trade. China signed an agreement with Pakistan about the two additional nuclear reactors in 2003, although when Beijing a year later joined the Nuclear Suppliers Group, the body that establishes rules for nuclear commerce, the deal was put on hold. However, China revived its interest in the Pakistan deal after the US signed its civil nuclear deal with India in 2008 and lobbied other members of the NSG to give the arrangement their blessing. Chinese officials argue privately that if US companies can sell reactors to India which, like Pakistan, has not signed the nuclear non-proliferation treaty then China should be allowed to fulfil its agreement with Pakistan, a long-standing ally. Not only has the US-India deal weakened Washingtons hand in opposing the Chinese sale to Pakistan, but the Obama administration would also not want a tough argument with Beijing to lead China to pull out of the NSG. Diplomats say that the sale of the reactors to Pakistan is likely to be discussed at the next NSG meeting in November. China could argue that it should receive an exemption from the rule that prevents commerce with states that have not signed the NPT, or it could argue that the deal was covered by an agreement with Pakistan that was signed before it joined the NSG. Chinas foreign ministry spokeswoman implied that Beijing would take the second route, saying that the project is based on an agreement signed between the two countries in 2003. The renewed push behind the Pakistan deal also reflects Chinese commercial ambitions to become a big player in the reviving international nuclear industry. As China becomes the largest market for civil nuclear investments over the coming years, Chinese companies are likely to develop economies of scale and expertise that could make them tough competitors. Mr Hibbs said that China could export smaller 300W reactors using technology that it currently controls. However, if it wanted to sell Pakistan or any other country 600MW or 1GW reactors, it would probably need the consent of western companies that have licensed it key technologies. A senior Pakistani government official revealed that China had offered to extend extremely concessional financial terms for the nuclear agreement, which, he said, has made possible what would have simply been impossible for cost reasons. Without elaborating the exact terms offered by Beijing, the official said; Our Chinese brothers have left it to us to decide how much time we need to pay back their money. I can also say to you, the interest rates are very soft. (The Financial Times)