Australian PM warns China over Rio spy claims

Kevin Rudd, the Australian Prime Minister, today issued a stark warning to China over its decision to detain four executives from Rio Tinto on allegations of spying, reminding "our Chinese friends" of the economic links between the two countries. The Chinese authorities detained the Shanghai-based executives, one of whom is an Australian national while three are from China, on July 5 and has since confirmed that they are suspected of stealing state secrets in connection with negotiations over the price of iron ore. Mr Rudd said that the world was watching how it was dealing with the investigation into the four detained men employed by the Anglo-Australian mining company. "Australia of course has a significant economic interest in its relationship with China," Mr Rudd said. "Let me also remind our Chinese friends that China too has significant economic interests at stake in its relationship with Australia and with its other commercial partners around the world." He added: "A range of foreign governments and corporations will be watching this case with interest. They'll be drawing their own conclusions as to how it is conducted." China’s Foreign Ministry is claiming that investigators have proof the four stole state secrets, endangered national security and caused China to suffer huge economic losses. Security officials, in a statement published by China’s state-run media, accused Stern Hu and the others of bribing Chinese steel executives in exchange for industry information. The state-run China Daily alleged Rio Tinto had bribed executives from all 16 of China’s major steel mills. However, China is insisting that the row will not harm ties with Australia. A spokesman for China's commerce ministry said: “China and Australia are very important trading partners and have good co-operation in areas including raw materials, free trade talks and agriculture. “I think these relations will definitely not be affected by an individual case." Mr Rudd confirmed that the Australian Government had not received a direct briefing as to why Mr Hu had been detained. Opposition parties in Australia have criticised the Government's handling of the case and demanded that Mr Rudd contact the Chinese President directly. There was speculation that the four executives had been detained after Rio Tinto pulled out of a $19.5 billion (?12 billion) deal with Chinalco, the state-owned metals group, in favour of a joint venture with BHP Billiton. Chinalco has denied that the collapse of the deal has had any bearing on the detention of the four Rio staff while China has widened its investigation into spying allegations to include local traders in the iron ore industry. The Anglo-Australian mining company has been locked in fraught negotiations with China over the price of iron ore in recent months refusing demands for a cut in price. A Commerce Ministry spokesman said that price talks over iron ore are ongoing, adding: "Given that iron ore prices are continuing to rise sharply... it is justified for Chinese steel companies, led by the China Steel Manufacturers Association, to engage in iron ore price talks to get a rational price." Rio Tinto today announced that production in the second quarter rose by 8 per cent to 45.1 million tonnes, but warned that global markets remained tough while confirming that it has yet to reach an agreement with China over prices despite securing deals with Japan, Korea and Taiwan. Tom Albanese, chief executive of Rio Tinto, said: “Deliveries continue to other customers on a provisional price or spot sales basis.” source:business.timesonline.co.uk