Deal shows China-Australia business ties on track: experts

TRADE WARS

Rio Tinto welcomes China espionage move as profits slump
Anglo-Australian mining giant Rio Tinto on Thursday welcomed the downgrading of espionage charges against four employees under arrest in China, as the group unveiled slumping half-year profits. In Rio's most high-level comments to date on the China arrests saga, chief executive Tom Albanese said the four men had been treated well, were in good health and had family and legal support at hand. "We do welcome the fact that the grounds for their arrests do not seem to be as serious as early reports had suggested," Albanese told reporters in London as Rio announced a 65-percent slide in first-half net profits. Profits after tax slumped to 2.45 billion US dollars (1.72 billion euros) after sharp falls in commodity prices, the group said in a statement. Stock markets reacted positively pushing up Rio Tinto's share price, however, as traders said there were bright spots in its economic outlook. The firm said the drop in metals and minerals prices during the worst downturn in decades meant earnings in the six months to June fell from the 6.95 billion dollars recorded at the same point in 2008. Chairman Jan du Plessis said prices had risen recently as the world economy recovers but the company was wary about the short-term outlook. "We remain cautious about the recent rally in prices," he said in the earnings statement. "However, the expectation that development in emerging markets will generate underlying strength in minerals and metals demand over the long term remains broadly unchanged," he said. On the Chinese espionage situation, du Plessis emphasised that Rio was unable to go into detail on the allegations. "I am naturally personally concerned about them, but I want to stress that we will respect the Chinese legal process," du Plessis told reporters in London. Rio executive and Australian passport holder Stern Hu, along with three Chinese colleagues, were detained in Shanghai on July 5 on suspicion of stealing state secrets. The arrests were made during fraught iron ore negotiations and followed Rio's snubbing of a proposed 19.5 billion US dollar investment from China's state-owned metals giant Chinalco, raising speculation the events were linked. Hu and his colleagues were formally arrested last week on lesser charges of commercial espionage, which was welcomed at the time by Canberra. Chinese officials say Hu is suspected of using improper means to obtain commercial secrets about China's steel enterprises, including "taking bribes from individuals not employed by state organisations". Regarding its earnings, Rio on Thursday added that group revenue dropped 30.7 percent to 18.85 billion US dollars in the first half. Underlying earnings were down 54 percent to 2.4 billion dollars, roughly in line with market expectations. Rio said it would not pay an interim dividend. Following the results announcement, the share price of Rio was up 1.45 percent to 2,345 pence in midday trade on London's rising FTSE 100 index. "The company remained upbeat on the outlook and once again it looks like investors are happy to focus on the positives and ignore the negatives," said IG Index trader Tim Hughes. Albanese meanwhile added on Thursday that the company was reducing debt through asset sales and cutting expenditure. "Despite difficult markets, our businesses are running smoothly," he said. "We are on track to meet the commitments we made December last year to reduce operating expenditure and the capital expenditure estimate has been revised in line with market conditions."

by Staff Writers
Beijing (AFP) Aug 19, 2009
The massive energy deal signed by China and Australia shows that relations are on track between the Asia-Pacific economic powerhouses despite recent political tensions, analysts said Wednesday.

China's biggest oil and gas producer PetroChina ordered 2.25 million tonnes of liquefied natural gas (LNG) a year over 20 years from ExxonMobil's share of Australia's Gorgon plant -- a deal totalling 41.3 billion US dollars.

The news came shortly after Australia's Fortescue Metals offered China discount iron ore prices, breaking a months-long stalemate in talks complicated by Beijing's arrest of a Rio Tinto executive on suspicion of bribery.

"The (PetroChina) deal proves that Rio Tinto is just an individual case... and the close trade ties between China and Australia will not be affected," said Han Xuegong, a professor at CNPC Managers Training Institute in Shanghai.

"Mutual cooperation between the two countries will just get closer and closer in the long run.

Wang Yong, a professor of international relations at Peking University, agreed, saying the timing of the deal showed that China was willing to work with Australia to resolve inevitable disagreements.

"China will deal with disputes emerging between the two countries in a cooperative way," he told AFP. "China values economic cooperation with Australia and hopes to maintain the momentum of that cooperation."

China is Australia's second-most important trade partner, with the relationship worth 58 billion dollars last year, according to official figures.

Energy-hungry China has increasingly turned to resource-rich Australia in recent months to keep its economy -- the world's third largest -- growing, investing heavily in oil, gas and mining firms.

But the arrest last month of Rio Tinto executive Stern Hu, following Rio's rejection of a proposed 19.5 billion US dollar investment from China's state-owned metals giant Chinalco, raised fears that trade ties would suffer.

Canberra's decision to approve the recent visit of exiled Uighur leader Rebiya Kadeer -- blamed by Beijing for orchestrating last month's deadly ethnic unrest in China's Xinjiang region -- compounded those concerns.

But analysts said the economic interdependence of the two countries would eventually overshadow diplomatic spats.

"While there's been a few hiccups over the last few months, at the end of the day, the business relationship's still very solid," said Shane Oliver, chief economist with AMP Capital Investors in Sydney.

"The bottom line is that both countries are still well and truly open to doing business with each other."

Niu Li, an economist at China's State Information Centre, a top government think tank, described ties as "healthy", adding: "Australia really needs the Chinese market and China needs to go abroad to secure its energy supplies."

Officials in both countries also sought to downplay the frictions between them.

Australian Resources and Energy Minister Martin Ferguson was quoted as saying the ExxonMobil-PetroChina deal was "testimony to the strength of Australia's continuing trade and investment relationship with China".

Chinese foreign ministry spokesman Qin Gang, asked whether a Chinese minister had cancelled a visit to Australia over the Rio case and Kadeer's visit, said Wednesday both sides were "clear" about Beijing's concerns.

He added in a statement sent to AFP that he hoped both sides would work together to "maintain the correct direction of the development of bilateral relations and properly handle the sensitive issues."

For Peking University's Wang, the events of recent months were nothing unusual.

"Cooperation and friction are likely to continue in China-Australia relations in the future," he said.

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TRADE WARS

China to top Germany as 2009 export champion: German exporters
Berlin (AFP) Aug 18, 2009
Germany is set to lose its unofficial title of world's top exporter this year to China as the recession hits demand for its cars, machinery and chemicals, Germany's leading export group said on Tuesday. Although it is hard to measure the relative exports of the two countries as they deal in different currencies, the DIHK export association said a collapse in demand for goods "Made in Germany ... read more

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