China has come out with the toughest defence yet of its decision to detain executives from Rio Tinto on spying charges, accusing the Australian mining giant of six years of "industrial espionage" that had cost the country 700 billion yuan (Dh376bn) in overcharging for iron ore. "For six years, these economic spies have curried favour, bribed, pried out intelligence and gained things by deceit," an aggressively worded report by the National Administration for the Protection of State Secrets (NAPSS) said.
The report, posted on its website, continued: "It's clear that it caused tremendous harm to the national economic security and interest." It went on to say that "traitors" were getting rich at the expense of Chinese businesses. Four Rio Tinto employees, including an Australian national, Stern Hu, have been arrested and stand accused of espionage, although they have not been formally charged. They are suspected of paying bribes for information on China's negotiating stance on the price of iron ore. A number of Chinese mill owners are also under investigation.
Relations have been under strain between Australia and China, its second-biggest trading partner, since the detentions early last month. China is the world's largest buyer of iron ore and the issue has cast a shadow over this year's iron ore price talks. Some industry watchers believe the Rio case is China taking its revenge for the collapse in June of a bid by the Chinese state-owned company Chinalco to buy a US$19.5 billion (Dh71.62bn) stake in Rio Tinto. The deal was abandoned by Rio in favour of a link-up with its fellow Anglo-Australian miner BHP Billiton, four months after it had agreed to what would have been China's biggest overseas investment.
The NAPSS report said: "That means China gave the employer of those economic spies more than $100bn for free, which is about 10 per cent of Australia's GDP it also caused the serious consequence of climbing losses in China's pillar industry of steel making." While defiant in tone, the report was low in details on how it came up with its figures. The Australian prime minister Kevin Rudd said he was watching the outcome of the case carefully. Some Australian parliamentarians believe the arrests are linked to the annual price talks for iron ore.
The Beijing government is keen to tackle criticism about local corruption by showing that foreign companies are also liable to prosecution on graft charges. However, China has been criticised for not being transparent in the way it is investigating the case, and its international image as a place to do business has suffered. There have been signs that the government was moving away from more serious charges of espionage to less serious charges of bribery. But the charges on the web seem to indicate, if anything, a hardening of Chinese resolve.
"The large amount of intelligence and data from our country's steel sector found on Rio Tinto's computers, and the massive damage to our national economic security and interests are plainly obvious," the Chinese-language report said. The posting on the website also seemed to indicate that China may be considering toughening up controls on how foreign companies do business in China. Government agencies should enhance surveillance of the secret protection work at key companies they supervise, the report said.
"Our country has entered a peak period of commercial espionage warfare, and the threat to important economic intelligence and security of national economic activity increases by the day," it said. Rio insists its employees have done nothing wrong and did not bribe Chinese steel mills for information. email@example.com