Chinese President Hu Jintao (R) shakes hands with Iranian President Mahmud Ahmadinejad in Shanghai, east China, June 16, 2006.

SHANGHAI: President Hu Jintao on Friday urged Teheran to "respond positively" to an international incentive offer aimed at resolving Iran's nuclear standoff.

In reply, his visiting Iranian counterpart Mahmoud Ahmadinejad said Iran is looking at the offer.

The Iranian leader later told a press conference that the offer from the permanent members of the UN Security Council, along with Germany, was a "positive step."

"My colleagues are carefully considering the package of proposals ... and in due time they will give the response," he said.

The Western powers have threatened to push for UN-backed sanctions if Iran rejects the proposal, which includes both incentives and penalties.

During his meeting with Ahmadinejad, Hu said the offer has provided a new opportunity for a solution to the Iran nuclear issue.

"The critical point at present is for Iran and the international community to build mutual trust," Hu said.

"We hope the Iranian side will earnestly study and respond positively to the offer in order to seek an earlier resumption of nuclear negotiations."

Hu's meeting with Ahmadinejad took place following Thursday's Shanghai Co-operation Organization (SCO) summit.

Iran, along with Pakistan, India and Mongolia, is an observer nation of the SCO. It was the Iranian leader's first visit to China since his election in 2005. The meeting was also his first with Hu.

Hu said China understands Iran's concern over its right to the peaceful use of nuclear power.

The Chinese side insists that the Iranian nuclear issue be properly settled through talks, he added.

"China is ready to maintain close communications with Iran and other parties concerned to play a constructive role in solving the Iranian nuclear issue," he told Ahmadinejad.

The Iranian president said his country is willing to peacefully settle the nuclear issue through negotiations.

He added that the proposal is better than before and has provided new opportunities for the resumption of talks.

"We are studying the offer and will give a response in the near future," he said.

Ahmadinejad stressed that his country is willing to maintain peace and stability in the region and the world at large.

"All the nuclear programmes of Iran are for peaceful use and Iran neither needs nor seeks to develop nuclear weapons," he said.

Liu Jianchao, a spokesman for the Chinese delegation at the SCO summit, had earlier called on all parties concerned to show patience in resolving the Iran nuclear issue.

"I think they (the Iranians) might need more time. So we need to remain patient," Liu said at a news briefing late on Thursday night.

Describing the Iran nuclear issue as "prolonged and rather complicated," Liu said relevant parties should continue to show flexibility and patience.

During their meeting, Hu and Ahmadinejad also agreed to expand co-operation in a wide range of sectors including energy, transportation, telecommunications and the power industry. They also agreed to co-operate on cultural and human exchanges.

While meeting with Pakistani President Pervez Musharraf on Friday, Hu proposed the two countries speed up their work on a five-year plan for economic and trade co-operation and reach a Sino-Pakistani free trade agreement as soon as possible.

He also said it was necessary to speed up the reconstruction of Pakistan's quake-hit areas and reach agreements on the renovation of the Karakoram Highway and a number of projects using aid from China, including the building of schools, hospitals and an earthquake monitoring network.

Source: China Daily