China's Supreme People's Procuratorate said the four had obtained trade secrets about China's steel and iron industry through "improper means," Xinhua news agency reported.

The four -- Australian Stern Hu and his Chinese colleagues Liu Caikui, Ge Minqiang and Wang Yong -- have been in detention since early July, but Rio Tinto said in a statement it understood that no formal charges had been laid.

"The charges have been downgraded and I think that reflects what we've been saying all along -- that we don't, in fact, believe there's any evidence of wrongdoing," Rio's chief executive of iron ore, Sam Walsh, told reporters.

"From what we understand this is a normal commercial market situation. I don't believe that our employees have, in fact, done what has been inferred by (the) charges," he said.

In a sign that China may have decided to see the matter in a less dramatic light than previously, an official with China's national security bureau said the bureau was not in charge of the case anymore.

"It is no longer under the jurisdiction of the national security bureau. It has been passed to the procuratorate," the official with the bureau's Shanghai branch told AFP.

This followed an earlier remark by an Australian government official that Hu's arrest indicated the case had moved away from earlier allegations involving "state secrets."

"These articles, and the involvement of the Ministry of Public Security, indicate that the case has moved from the 'state secrets' area," a foreign affairs department spokeswoman told AFP.

In an apparent attempt to head off concern among foreign investors, the Chinese government said it did not believe the Rio Tinto case would impact its status as a destination for foreign direct investment, or FDI.

"It will not impair China's efforts in terms of attracting FDI. On the contrary, we believe it will benefit China's (efforts to get) FDI," Vice Commerce Minister Fu Ziying told reporters at a briefing.

Fu added that he did not believe the case would damage bilateral relations with Australia.

Hu's detention last month along with his three Chinese colleagues followed Rio's snubbing of a proposed 19.5-billion-dollar investment from China's state-owned metals giant Chinalco, raising speculation the events were linked.

A report published over the weekend on the baomi.org website run by China's state secrets watchdog said Rio was involved in a "six-year espionage case (that) involved corruption, information-gathering and spying."

The report, which later was said to represent merely the personal views of one of the watchdog's employees, estimated Rio's spying had cost China's steel sector 700 billion yuan (102 billion dollars).

In addition to the formal arrests, Chinese investigators have asked for permission to arrest a number of local steel executives in connection with the Rio Tinto case, state media said Wednesday, without identifying them.

"Investigators have recently filed applications with the prosecutor's office for permission to arrest Chinese steel executives suspected of providing commercial secrets to Hu and others," the Procuratorial Daily said.

China's decision to approve the arrests of the Rio employees came just days after Australian diplomats were permitted their second monthly prison visit with Hu.

Under Chinese law, the police are required to get the green light from the people's procuratorate if they want to arrest a criminal suspect.

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