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TRADE WARS
Rio case won't hurt China trade: Australia

by Staff Writers
Sydney (AFP) March 19, 2010
Australia Friday voiced confidence its vital trade ties with China would not be harmed by next week's sensitive trial of an Australian mining executive charged with bribery and industrial espionage.

Trade Minister Simon Crean said Australia did not link the case of Rio Tinto's Stern Hu, set to be tried along with three Chinese colleagues, with the booming resources sales that have made China its top trading partner.

"The two matters are separate," Crean told public broadcaster ABC. "We are treating the Stern Hu case strictly as a consular case. We've never sought to make any link and neither have the Chinese in their discussions with us."

Analysts say the case goes to the heart of Australia's relationship with China, as it centres on its biggest export to the country, iron ore, and touches on issues such as judicial independence.

Hu and his colleagues Wang Yong, Ge Minqiang and Liu Caikui are scheduled for a three-day trial in Shanghai from Monday over allegations arising from high-stakes negotiations to set annual iron ore benchmark prices.

They were arrested last July and initially accused of stealing state secrets, just weeks after Rio snubbed a major deal with state firm Chinalco. The timing of the arrests sent shudders through China's foreign business community.

The charges were later downgraded and now focus on accusations that the four received bribes from Chinese steel mills and obtained commercially sensitive information.

The trial will be held against the backdrop of new iron ore tensions, after China ignored Australia's request to stay out of this year's negotiations and vowed to support steelmakers in the pricing dispute with top miners.

"We've told them that we're not going to deal government to government. We recognised China as a market economy status. We keep telling them they've got to act like one," Crean said.

"They can agitate as long as they like, within the industry and try and pressure that point. We're not going to change," he added.

Both Australia and China sought to draw a line under the affair after a brief plunge in ties last year, with Foreign Minister Stephen Smith stressing this week that relations were "back on track".

However, Prime Minister Kevin Rudd on Thursday warned that the "world will be watching" next week's case, earning a stern rebuke from Beijing.

Rio, which says it is unaware of any wrongdoing by its staff, has also moved on and is in talks with Chinalco over projects such as the joint development of a massive iron ore field in Guinea, West Africa.

This weekend, the company's chief executive Tom Albanese will speak at a business forum in Beijing, underlining the Anglo-Australian company's desire for close links with the emerging economic superpower.



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