(Releads with Pak-China agreement on nuclear plants)

By Augustine Anthony

ISLAMABAD, Oct 18 (Reuters) - China has agreed to build two nuclear power plants in Pakistan, and Chinese firms and banks are planning heavy investments to help an old ally desperate for financial support, Pakistani officials said on Saturday.

Foreign Minister Shah Mehmood Qureshi trumpeted intensified ties with China in the wake of a visit by Pakistani President Asif Ali Zardari to Beijing.

Zardari intends to visit China every three months "to promote economic integration between the two countries", Qureshi said.

China's agreement to help build two new nuclear plants for civil power generation was particularly valued, given the United States' refusal to offer Pakistan a similar nuclear deal to one given to rival India.

"Pakistan and China have signed agreement for Chasma-3 and Chasma-4 ... 680 MW of electricity will be generated from these two new plants," Qureshi said.

Chasma is a town in central Punjab province, where China helped Pakistan build its second nuclear power plant in 1999. Pakistan's first nuclear power plant was set up with Canadian help in 1972.

China has also promised to invest in a mega-dam and hydro-electricity project.

Pakistan is suffering from acute power shortages, and officials say there is a shortfall of up to 4,000 MW.

Analysts believe China has supported Pakistan's missile and nuclear weapons programme for decades, motivated by mutual desire to counter the rising power of India.

Pakistan and India, having already fought three wars, became a nuclear weapons states in 1998.

Whenever Pakistani politicians ask for a deal like the one given to India, Washington cites Pakistan's poor record on nuclear proliferation, and role played by its disgraced top scientist Abdul Qadeer Khan in a nuclear smuggling ring.

China has remained Pakistan's all-weather friend, while ties with the United States have tended to run hot and cold.

The new government is seeking to maintain the alliance with the United States that former army chief Pervez Musharraf entered in the wake of al Qaeda's attacks on U.S. cities in 2001.

But it has also tried to draw a limit on how far the United States can go in terms of targeting militant targets in Pakistani territory.

Zardari picked China for first state visit after being elected in September, though he went to the United States last month to attend the U.N. General Assembly.

Army chief General Ashfaq Kayani visited China, one of Pakistan's main arms suppliers, shortly before Zardari, and Prime Minister Yousaf Raza Gilani is expected to follow in their footsteps later this month.

According to uncorroborated media reports, Zardari requested more than $3 billion support from China during his visit, to help Pakistan overcome a looming balance of payments crisis.

Qureshi said China would participate in a "Friends of Pakistan" conference due to take place in Abu Dhabi next month. The participants are largely made up of potential donors who gathered on the sidelines of the U.N. General Assembly to address Pakistan's needs as its seven-month-old civilian government faces rising Islamist militancy and economic meltdown.

Shaukat Tarin, the recently appointed adviser to the prime minister on economic affairs, said Chinese companies had committed to invest $1 billion in Pakistan by June next year.

Pakistan intended to set up industrial zones for Chinese companies, Chinese banks intended to open branches in Pakistan, and Chinese executives from the information technology and telecommunications sectors would be visiting to look at opportunities for investment.

(Additional reporting by Sahar Ahmed; Writing by Simon Cameron-Moore; Editing by Jeremy Laurence)

AlertNet news is provided by