China Warns Australia on Rio Tinto (LON:RIO) Case


Thursday, March 18th, 2010

The upcoming trial of four employees of Australian-based Rio Tinto (LON:RIO) are going on trial for commercial espionage in China next week, and China has warned Australia not to politicize the trial.

After taking some time to smooth over some ruffled feathers, China hopes to get a resurgence in bad feelings between the two countries as the trial goes forward.

Australian Prime Minister Kevin Rudd pressed China recently by stating the world would be watching how the trial would be conducted, which instigated the response from China on the politicization of the trial comment.

Chinese Foreign Ministry spokesman Qin Gang said today that this is an individual business case and nothing more, and consequently shouldn't be considered a political issue in any way. Qin added this shouldn't do any harm to relationships between Australia and China.

There's a lot of stake in the way this is all handled and responded to for both countries, as China is the largest trading partner of Australia, doing business worth $53 billion in 2009 with each other.

On the part of China, they import about 41 percent of their iron ore from Australia, which is in high demand in the country for steel-making, and that means they have to try to walk softly and ensure things are above board in the trial.

There were some questions about the four being arrested and indicted because of the timing of the entire event, which was right after Rio Tinto wouldn't accept a lower price for their iron ore extracted from Australia from steel companies in China, while also rejecting a separate investment deal with another investment company based in China.

Concerns are tensions could rise if public pressure in Australia emerges from perceptions the trial brought too stiff of sentences for the individuals.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: australia business , china , china business , iron ore , rio tinto

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