Smith ramps up rhetoric over Hu case

Canberra is continuing to talk tough with Beijing, urging the Chinese government to
consider whether it could suffer "adverse implications" from its handling of the Hu
case.
Beijing is hosing down suggestions the detention of Australian mining executive
Stern Hu on suspicion of spying and stealing state secrets will affect its
international commercial reputation.
But it may be concerned by Washington's decision to intervene during a visit to
China by United States Commerce Secretary Gary Locke.
Foreign Minister Stephen Smith ratcheted up the rhetoric on Thursday after Prime
Minister Kevin Rudd issued the first warning on Wednesday that the world was
watching how China dealt with the Hu matter.
"China itself does need to think about whether its handling of this matter has any
adverse implications for it," Mr Smith told Sky News.
Mr Hu, a Shanghai-based iron ore executive with Rio Tinto, was detained along with
three Chinese colleagues more than a week ago during unusually contentious iron ore
talks.
Since then, it has emerged that a number of Chinese steel mill executives are being
investigated.
And on Wednesday, a state-run Chinese newspaper reported that Rio Tinto had bribed
executives from all 16 of China's major steel mills.
Mr Smith will speak to Chinese Vice Foreign Minister He Yafei on the sidelines of a
conference in Egypt late on Thursday.
"Clearly, I'll be saying to him that it's very important that this matter be dealt
with expeditiously," he told Sky News.
The government continued to dismiss opposition calls for Mr Rudd or Mr Smith to pick
up the telephone to make representations to their relevant Chinese counterparts.
"We need to take this matter sensibly, methodically, step by step," Mr Smith said.
He said the response needed to be appropriate and proportionate.
"It's not a case where in our view ... quick and easy phone calls will solve a
difficult problem."
The importance of the trade relationship between Australia and China was underlined
on Thursday when Beijing released data showing the Chinese economy grew 7.9 per cent
in the second quarter of 2009.
Fuelled by government stimulus measures, the result suggests China is rebounding
from the global financial turmoil that pushed economic growth to its lowest level in
a decade.
There are signs the issue is already affecting Australia's iron ore trade, with
unconfirmed media reports that Rio Tinto has begun pulling out some research staff
from China.
As well, the 21st Century Business Herald reported a major steel mill as saying it
wasn't importing iron ore from Rio Tinto until the case was cleared.
Beijing insists its international business relationships won't be affected by the
matter but it will be disturbed by a decision by Washington to take an interest.
Mr Locke, a Chinese-American, will raise the matter during meetings in Beijing.
"This is, of course, a great concern with respect to US investors, multinational
companies from around the world that have projects here, that are involved in
energy," he told CNN.
The state-owned China Daily on Thursday continued to press Beijing's message that
the case shouldn't alarm foreign investors in China.
"Some foreign observers had thus misread the case as an unfair tactic for
negotiation or a sort of discrimination against foreign businesses," it said in an
editorial.
The China Daily insisted the widening probe involving the Rio Tinto executives, as
well as key figures from Chinese steel mills, "will not have a negative impact on
China's long-term commitment to protect the legitimate rights of foreign companies
doing business in or with the country".
Moreover, cleaning up domestic corruption would benefit commercial activity.
"This is actually a good cause for foreign companies to shore up confidence in the
Chinese economy," the China Daily said.
"Fair competition will boost economic growth to create more business opportunities."