Rio Tinto exec pleads guilty at China trial

US firms feel increasingly unwelcome in China: survey
Beijing (AFP) March 22, 2010 - A growing number of American businesses feel unwelcome in China because of what they see as discriminatory government policies and inconsistent legal treatment, a survey released Monday said. The American Chamber of Commerce in China asked 203 member companies if they felt unwelcome to participate and compete in China's market, with 38 percent saying they did, up from 26 percent in the fourth quarter of 2009. Inconsistent regulatory interpretation and judicial treatment topped the list of concerns for American businesses, the survey said, without giving any specifics on the legal concerns. Respondents also cited what they view as a push by Beijing to squeeze foreign technology companies out of the multi-billion-dollar market for selling computers and office equipment to government departments.

New rules stipulate sellers of high-tech goods must contain Chinese intellectual property as part of an "indigenous innovation" campaign, in order for them to be included in a government procurement catalogue. Accredited products will be favoured, according to the policy, which foreign firms say effectively excludes them from the process. "The AmCham-China survey shows that US companies believe they face product discrimination in state-owned enterprise purchases, as well as in government procurement," a statement accompanying the survey results said. The survey was released as the trial opened in Shanghai of four employees of Anglo-Australian miner Rio Tinto -- including an Australian citizen -- on bribery and trade-secrets charges. The four defendants were arrested last July during contentious iron ore contract negotiations that later collapsed, and after Rio snubbed a near 20-billion-dollar cash injection from state-run Chinese mining firm Chinalco.

The trial has cast a pall over Beijing's relations with Canberra and raised concerns about doing business in China. Of the American technology companies surveyed, 57 percent said they expected the preferential purchasing policy to have a negative impact on their operations in China while 37 percent said they were already losing sales. Member-companies believed some policies in China were "increasingly restrictive and protectionist" which could limit foreign participation in the world's third-largest economy, the survey said. It did not say what percentage of companies felt that way. Companies also cited the increasing deviation from international standards in China and the environment for intellectual property as major concerns. The survey also comes as US Internet giant Google has threatened to leave China, citing cyberattacks and censorship, and with Sino-US ties inflamed over a range of contentious issues including China's currency policy. Critics say China keeps the value of its yuan artificially low, making its exports cheaper and thus more competitive on world markets.

by Staff Writers
Shanghai (AFP) March 22, 2010
An Australian executive with mining giant Rio Tinto pleaded guilty Monday to taking bribes at a politically-charged trial in Shanghai that has stoked concerns about doing business in China.

Stern Hu, who heads the Anglo Australian company's Shanghai office, pleaded guilty to the bribe charge on the first day of the trial of a total of four Rio staff, a defence lawyer told AFP.

Hu and the three other employees are being tried on bribe-taking and trade secrets charges, eight months after their arrest in a case that has strained ties between Beijing and Canberra, key trading partners.

Rio Tinto chief executive Tom Albanese, on a visit to Beijing, said the case was a "great concern" to the mining giant, a vital source of the natural resources China needs to sustain its economic boom.

"This issue is obviously of great concern to us, as it would be for any company operating in China," Albanese said in a speech to an economic forum. "I can only say we respectfully await the outcome of the Chinese legal process."

Emerging from the Shanghai court after Monday's hearing, attorney Tao Wuping told AFP that Hu was charged with accepting six million yuan (880,000 dollars) in bribes.

Hu pleaded guilty, said Tao, who represents fellow defendant Liu Caikui.

The four were arrested last July during contentious iron-ore contract negotiations which later collapsed, and after Rio snubbed a near 20-billion-dollar cash injection from state-run Chinese miner Chinalco.

Australian Consul-General Tom Connor said that during the trial Hu "made some admissions" on the bribery allegations.

"He did acknowledge the truth of some of the bribe amounts," Connor said, adding that Hu "looked fine."

Tao told AFP Liu faced a charge of accepting three million yuan in bribes, while the other defendants Wang Yong and Ge Minqiang were charged with accepting bribes of 70 million yuan and six million yuan, respectively.

Asked whether he was optimistic about the outcome of the trial, Tao said, "Yes, yes".

He gave no other comment, including giving the pleas of the other defendants.

Dow Jones Newswires earlier quoted Tao saying that Hu and Liu had pleaded guilty but were contesting the bribe amounts. It said the other defendants also planned guilty pleas.

The trial, which has been closed to all but a handful of state-run domestic media outlets, will continue Tuesday with more bribery hearings followed by the first sessions on the trade secrets charges, Tao said.

Tao told Dow Jones the charges could bring jail terms of more than five years.

The charges of "infringing trade secrets" are to be heard in separate close-door sessions by the Shanghai No 1 Intermediate People's Court, which have added to questions over whether the men can get a fair hearing.

A crowd of about 50 journalists had gathered outside the court as the trial got under way, hoping to be allowed inside. However, only a handful of reporters who appeared to be from state-run domestic media were allowed in.

Canberra has called for transparency in the trial.

It has said consular officials will attend hearings on the bribe-taking charges and has asked China to reconsider the closure of the other hearings.

"The general case against the (defendants) was outlined and all had an opportunity to answer and put their views forward on some of the points being made," Connor said.

The trial opened after Rio Tinto announced Friday it had signed a 1.35-billion-dollar deal with Chinalco to develop a huge iron-ore mine in Guinea, adding new impetus to rocketing Sino-Australian trade.

But it is widely viewed as a test of whether China is willing to honour commitments to foreign investors.

Australian Prime Minister Kevin Rudd said the world will be watching "very closely", adding: "China has a different legal system to Australia, China has a different legal system to the rest of the world."

The American Chamber of Commerce in China on Monday released a survey of 203 member companies that showed 38 percent felt unwelcome in the Chinese market, up from 26 percent late last year.

Inconsistent regulatory interpretation and judicial treatment topped the list of concerns for American businesses, it said.

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Google 'thinks out of box' on China: activists
Washington (AFP) March 22, 2010
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