Australia says spy row risks China business standing
2009-07-12

Nations Australia City Melbourne Category Regions Victoria Event 2009 Rio Tinto Spy Case Source (AFP)

MELBOURNE (AFP) - Australia on Sunday warned China risked damaging its business reputation abroad by holding a top Rio Tinto executive accused of spying and predicted a lengthy diplomatic stand-off over his fate.

As the opposition labelled Canberra-Beijing relations "fractured" over Australian passport holder Stern Hu's arrest, Australian Foreign Minister Stephen Smith urged China to consider how the row would impact on its standing in the business world.

"One of the issues for Chinese authorities to contemplate is the extent to which the circumstances of this case will cause the international business community to have any cause for concern," he told reporters.

Hu, the head of the Shanghai office for mining giant Rio, was arrested on suspicion of espionage and stealing state secrets by bribing staff at Chinese steel companies during protracted iron ore price negotiations.

China has become the world's biggest buyer of iron ore, the main ingredient in steel, as economic growth fuels demand for commodities in the world's third-largest economy.

Hu was arrested in Shanghai on July 5 but Australian consular staff only gained access to him five days later and Canberra has still received no official explanation about the allegations he faces.

Smith said Australia had asked China to deal with the matter quickly, adding that it would be another month before consular staff were next allowed to see the executive.

"We may well be in for a long haul here," he said.

China is Australia's number two trading partner, in a relationship worth 58 billion US dollars last year, according to official figures.

Opposition foreign affairs spokeswoman Julie Bishop said Beijing's lack of cooperation on the issue showed deep problems in Australia's diplomatic relations with China.

"There appears to be a major fracture in the relationship between Canberra and Beijing," she told public broadcaster ABC.

"There's been a lack of cooperation, no response to numerous requests for information and no information coming from Beijing.

"In fact our Foreign Minister Stephen Smith has been reduced to scouring Chinese government websites to find out information on Mr Hu."

Smith quoted at length Friday from a Chinese government website outlining the allegations levelled at Hu, saying there had been no direct contact with Chinese officials on the matter.

And Trade Minister Simon Crean said in Shanghai on Saturday that the government was reliant on press reports for updates on Hu's case.

Bishop said Australia should be demanding answers directly from Beijing.

"The Australian ministers, as far as we're aware, have not even picked up the phone to their counterpart ministers and raised this issue," she said.

Employment Minister Mark Arbib denied that Canberra was reluctant to raise the case more forcefully with Beijing because of the trade ties between the two countries.

"It shouldn't matter what our relationship is in terms of trade, all Australians who are overseas and in trouble should be getting appropriate action from the government, and that is what we're doing," he told Channel Nine.

Analysts have linked Hu's arrest to Rio's rejection of state-owned Chinalco's 19.5-billion-US-dollar bid to lift its stake in the miner and the Anglo-Australian mining giant's tough stance in iron ore negotiations.

"Although we cannot say whether it is China's revenge or retaliation, the incident will definitely dampen the commercial relationship between Beijing and the overseas companies," Hong Kong Baptist University associate finance professor Billy Mak said.