As Xi heads into Middle East feud, China says aims for balance

By Michael Martina and Chen Aizhu BEIJING (Reuters) - China intends to retain a balanced stance in the Middle East, a senior Chinese diplomat said on Monday, as President Xi Jinping prepared to leave on an unusual visit this week to Saudi Arabia and Iran, regional powers currently locked in a bitter dispute. Tensions between the Sunni Muslim kingdom of Saudi Arabia and Shi'ite Muslim Iran have escalated since Saudi authorities executed Shi'ite cleric Nimr al-Nimr on Jan. 2, triggering outrage among Shi'ites. In response, Iranian protesters stormed the Saudi embassy in Tehran and its consulate in Mashhad, prompting Riyadh to sever relations. Tehran then cut all commercial ties with Riyadh, and banned pilgrims from traveling to Mecca. Chinese Vice Foreign Minister Zhang Ming told reporters China was not taking sides. "Regarding some of the region's problems, China has always taken a balanced and just position," Zhang said, when asked about tensions between Riyadh and Tehran. "If the Middle East is not stable, I'm afraid the world can't be very peaceful. If a country or a region is not stable, it cannot realize development," he added. "China firmly supports regional countries individually exploring a development path that suits their national conditions." The trip, that also takes in Egypt, has been shrouded in a rare level of secrecy, even for a country which tends to keep details of its top leaders' activities under wraps. Zhang would not even say on which days Xi would be in the countries. While relying on the region for oil, China has tended to leave Middle Eastern diplomacy to the other four permanent members of the U.N. Security Council - the United States, Britain, France and Russia. But China has been trying to get more involved, especially in Syria, recently hosting both its foreign minister and opposition officials. A Chinese president has not visited Saudi Arabia since 2009 when Hu Jintao went, and Jiang Zemin was the last Chinese president to visit Iran, going in 2002. OIL DIPLOMACY Iran emerged from years of economic isolation on Saturday when world powers lifted sanctions in return for Tehran curbing its nuclear ambitions. China is Iran's top oil client and the countries have close ties across the board. Chinese Foreign Minister Wang Yi has also been active in pushing both the United States and Iran to reach a nuclear agreement. Zhang did not say what may lie ahead for China and Iran now, though said energy was an "important part" of cooperation. Chinese energy firms are seeking a bigger role in both Saudi Arabia and Iran, which together supply nearly a quarter of the country's crude imports. [O/CHINA1] An official at state giant, Sinopec, said Xi may attend a ceremony to mark the successful operations of its joint venture Yasref refinery in Saudi Arabia. Sinopec is targeting more engineering and construction contracts for refineries and petrochemical plants, said the official. CNPC, parent of PetroChina <0857.HK>, is also restructuring its Middle East operations, aiming to offer more integrated services from exploration to engineering, a company source said. China's official Xinhua news agency said on Sunday that Iran would be a key part of China's new Silk Road initiative to develop trade and transport links across Asia and beyond, which Beijing refers to as the "one belt, one road" strategy. Potential exists for cooperation in the fields of infrastructure, high-speed rail, natural gas and oil pipelines, Xinhua added. ISLAMIST MILITANTS China also has its own worries about radicalisation of the Muslim Uighur people who live in China's far western region of Xinjiang, which has been beset by violence in recent years, blamed by Beijing on Islamist militants. China says some Uighurs have traveled to Syria and Iraq to fight with militant groups there. In November, Islamic State said it had killed a Chinese citizen it had taken hostage in the Middle East. "China and Middle East countries are all victims of terrorism and are also important cooperative participants in the fight against terrorism," Zhang said. (Writing by Ben Blanchard; Editing by Ed Davies)