TOPICS > Economy

China Holds Workers, Stirring Diplomatic Spat

BY Admin  July 16, 2009 at 5:30 PM EDT

A Rio Tinto plant in Australia; AFP/Getty Images

On July 5, China detained the employees, alleging they had paid bribes to Chinese steel executives to get confidential government data that might have given Rio Tinto an edge in iron ore price negotiations between Chinese steelmakers and miners, reported the New York Times.

Rio Tinto has denied the accusations, and no formal charges have been filed. According to media reports, Rio Tinto has asked its foreign staff to leave China or not return to the country.

Some analysts have suggested that Beijing may be using the case to punish Rio Tinto for its recent decision to cancel a $19.5 billion planned investment by a state-controlled Chinese company, the Times reported.

On Thursday, Chinese foreign ministry spokesman Qin Gang criticized what he called “noise” from Australia about the detentions, according to the Wall Street Journal. “We absolutely oppose anyone stirring up this case or attempting to interfere in China’s judicial independence,” he said, adding that such actions wouldn’t be “in Australia’s interest.”

His comments followed those of Australian Foreign Minister Stephen Smith, who said, “China itself does need to think about whether its handling of this matter has any adverse implications for it.”

U.S. Commerce Secretary Gary Locke said he has pressed China for more information about the arrests, reported Bloomberg News.

“People don’t know whether this is an isolated case or this is a widespread problem,” he said. “So far, people are saying they don’t know the facts of the case, they want information, and until then we’re going to have to withhold judgment.”

The investigation might even serve as an example of China’s efforts toward transparency and leveling the playing field for foreign investors, said Thomas Mucha, managing editor and economics columnist for GlobalPost.

“The specifics of the Rio Tinto case are still murky, but if it’s true that Rio Tinto broke the law, and if it’s true that China is upholding that law, and therefore leveling the playing field for all businesses who want to exploit this growing market, then that could actually be a good thing,” said Mucha.

Listen to part of his interview here: