When one of Australia’s top mining firms, Rio Tinto, refused to allow China’s Chinalco to double its ownership interest last year (to 18%), China arrest

When one of Australia’s top mining firms, Rio Tinto, refused to allow China’s Chinalco to double its ownership interest last year (to 18%), China arrested local CEO (and Australian citizen) Stern Hu and three managers, who remain in jail today, under espionage charges. China denies any connection. ... In politics, thought, and business, China remains a police state. No. I'd support the conclusion, but the evidence presentation here is shabby. The event that immediately preceded the Rio executive being arrested was the closing of contract negotiations for a yearly contract on iron ore shipments [1]. The rejected Chinalco acquisition mentioned in the quoted section was only a month before, but evidence for link of causality between that and the arrests is weaker than between the price negotiations and the arrests. Other motivations need to be weighed up as well: * At the time the arrest happened there were internal riots in China's western provinces (causing their leader to abort one of those G meetings and fly back to China). There's nothing like stirring up trouble against foreign devils as a mechanism to distract your people away from internal strife. * The snubbing given to the Australian foreign office also suggests a political aspect. Did the Rudd government imply that it could cause things to happen that it could not deliver? Or did it hamper the process? Or are China just being big-girl's-blouse because they can? [2] In weighing up iron ore issues you need to be aware that China is easily the largest producer [3]. It tends towards bilateral deals on 'strategic' commodities rather than working through global markets like the other major consumers (e.g. oil). This pushes the dynamic of areas affected by those commodities from flexible markets into a zero-sum game. [1] See http://en.wikipedia.org/wiki/Rio_Tinto_Group#Arrests_in_China.2C_2009 http://en.wikipedia.org/wiki/Rio_Tinto_Group#Arrests_in_Chin... [2] "The Chinese seem determined to continue to humiliate Canberra.", http://www.theaustralian.com.au/news/beijing-ramps-up-the-humiliation/story-0-1225748894393 http://www.theaustralian.com.au/news/beijing-ramps-up-the-hu... [3] http://en.wikipedia.org/wiki/Iron_Ore http://en.wikipedia.org/wiki/Iron_Ore