But Beijing insisted trade relations would not be harmed by the incident, as state media claimed the executive's company Rio Tinto had bribed officials from all 16 of the country's major steel mills.

Rudd said Australia's key trading partner had "significant" business interests on the line in Hu's case and cautioned that foreign governments and international companies were watching developments closely.

"Australia of course has significant economic interests in its relationship with China, but I also want to 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," Rudd said.

"A range of foreign governments and corporations will be watching this case with interest and be watching it very closely, and will be drawing their own conclusions as to how it is conducted."

Rudd's strong statement comes 10 days after Rio Tinto's Stern Hu, who has been leading troubled iron ore negotiations, and three Chinese colleagues were arrested by counter-espionage agents in Shanghai.

China has not detailed the allegations against Hu but says it can prove he was involved in bribery during the iron ore talks, equating the offences with spying and stealing state secrets.

Commerce ministry spokesman Yao Jian moved to soothe tensions, saying Hu's case would not harm the vital trade link, which was worth 58 billion US dollars last year.

"China and Australia are very important trading partners and have good co-operation in areas including raw materials, free trade talks and agriculture," Yao told reporters.

"I don't think the Rio Tinto case will affect China's trade environment or foreign investment environment," he added.

Anglo-Australian giant Rio would not comment on the latest bribery claims but repeated it was "committed to high standards in business integrity and takes its ethical responsibilities very seriously."

The incident has cast a shadow over one of Australia's most important trade relationships and created a headache for the Mandarin-speaking Rudd, who has pledged to boost ties with China.

The former diplomat vowed to press for more information on Hu's arrest but said economic interests would not stop Australia speaking out on human rights or "broader questions of China's engagement with the institutions of the world."

"We pursue a broad-based relationship with the Chinese, one where we will pursue all of our interests simultaneously," he said.

"When it comes to prosecuting the interests and supporting the wellbeing of individual Australians abroad, that will be done with full vigour ... without compromise to the interests of a single Australian."

RioTinto bribed all 16 Chinese steel mills: state media
Anglo-Australian mining giant Rio Tinto has bribed executives from all 16 of China's major steel mills, one of the nation's most prominent state-run newspapers alleged Wednesday.

Rio targeted key executives for Chinese firms who negotiate iron ore prices with large foreign suppliers, the China Daily reported in a front-page article, although it cited just one unnamed industry insider.

"Rio Tinto got to know the key executives of the 16 steel mills, who have sensitive industry information, when the China Iron and Steel Association brought them to the bargaining table," said a senior manager at a large steel company, who requested anonymity, the paper said.

"And then Rio Tinto bribed them (to get access to industry data), which has become an unwritten industry practice," the source said.

"If companies didn't accept, they would have cut supplies and so the whole steel industry has been bribed."

The English-language China Daily is often used by the government to deliver a message to a foreign audience.

When asked for a response to the China Daily allegations, Rio Tinto said it had no immediate comment.

An Australian mining executive for Rio Tinto, Stern Hu, and three Chinese colleagues were detained by counterespionage agents in Shanghai on July 5, prompting a wider investigation.

China has not outlined the specific allegations against Hu, but says it can prove he was guilty of stealing state secrets and causing huge economic loss to the country.

However its state-run media have given more details of the allegations against him and the other executives.

The incident has cast a shadow over one of Australia's most important trade relationships, which was worth 58 billion US dollars last year.

China says Rio 'spy' case will not harm ties with Australia
China insisted Wednesday that trade relations with Australia would not be harmed by the case of a detained Rio Tinto executive accused of spying, despite a warning from Australia's prime minister.

"China and Australia are very important trading partners and have good co-operation in areas including raw materials, free trade talks and agriculture," commerce ministry spokesman Yao Jian told reporters.

"I think these relations will definitely not be affected by an individual case."

He also dismissed criticism that the case -- in which Australian Rio Tinto executive Stern Hu and three Chinese colleagues were detained on July 5 for allegedly stealing state secrets -- would hurt China's business reputation.

"I don't think the Rio Tinto case will affect China's trade environment or foreign investment environment," he said.

Australian Prime Minister Kevin Rudd earlier Wednesday warned China that it had economic interests at stake in the case.

"Australia of course has significant economic interests in its relationship with China, but I also want to 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," Rudd said.

"A range of foreign governments and corporations will be watching this case with interest and be watching it very closely, and will be drawing their own conclusions as to how it is conducted."

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