Speed Bumps on the Road to the Chinese Century (Updated)

Events are taking place in China that I didn’t want to let pass without comment. China’s Ministry of State Security has apprehended and detained four employees of the large Anglo-Australian mining company Rio Tinto including a senior executive :

SHANGHAI — On July 5, officials from China’s Ministry of State Security took four employees of the Anglo-Australian mining giant Rio Tinto into custody here.

Rio Tinto was not told what happened to the employees; neither were their families. One of the four was a high-ranking executive and an Australian citizen. But the Australian government was also in the dark.

A few days later, only after Rio Tinto had issued a public statement that said the company did not know why the four had been detained, did an answer come from Beijing: they were being held on charges of stealing state secrets, spying on China and harming the country’s interests.

Beyond that it’s not really clear whether this is merely hard bargaining on the part of the Chinese authorities, corporate espionage which in China is not distinguished clearly from the other kind, or there is something more involved. Perhaps the Chinese authorities thought the four had swine flu. Or were Uighurs.

Regardless of their reasons this is really very high-handed action on the part of the Chinese authorities. It is not the proper conduct of a modern state at all. If China is to be a great power it should behave like one. At the very least the Australian government should have been notified.

This is yet another reminder to Western companies that it is prudent to be very, very cautious in doing business with China.

Update

The story is developing:

SHANGHAI — The Chinese authorities have detained or questioned at least seven Chinese steel industry executives in a broadening corruption investigation connected to the detentions last week of four employees of the mining giant Rio Tinto, the state-controlled news media reported Monday.

The investigation, which began with accusations that the four Rio Tinto workers had conspired to steal state secrets, has rapidly widened, according to accounts on government Web sites and Chinese news media. It now includes accusations of widespread bribery in business dealings, as well as allegations that the four workers paid for detailed government trade and manufacturing data to give Rio Tinto executives an edge in iron-ore negotiations with Chinese state-controlled steelmakers.

Hat tip: DC Loser in comments

I find that the update makes the story even more puzzling rather than less so. Was the sin of the Chinese executives accepting bribes or neglecting to pass the appropriate cut on up? We’ll probably never know the real story.

The image above is a picture of a Chinese “century egg”.

FILED UNDER: General,
Dave Schuler
About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging. He has contributed to OTB since November 2006 but mostly writes at his own blog, The Glittering Eye, which he started in March 2004.

Comments

  1. mpw280 says:

    You make the mistake of confusing China with a modern state, or a state that give a flying rats ass about what other nations think of them. They want lower iron ore prices and god damn it they are going to get them one way or the other. Rio Tinto isn’t playing ball so now the PRC is bringing in the hard ball team after sending the slow pitch team out to start with. If the EU and US were to stop buying the shit they produce, that might grab them by the short hairs, but its totally unlikely. MPW

  2. DC Loser says:

    This article just showed up on the NY Times site.

    SHANGHAI — The Chinese authorities have detained or questioned at least seven Chinese steel industry executives in a broadening corruption investigation connected to the detentions last week of four employees of the mining giant Rio Tinto, the state-controlled news media reported Monday.

    The investigation, which began with accusations that the four Rio Tinto workers had conspired to steal state secrets, has rapidly widened, according to accounts on government Web sites and Chinese news media. It now includes accusations of widespread bribery in business dealings, as well as allegations that the four workers paid for detailed government trade and manufacturing data to give Rio Tinto executives an edge in iron-ore negotiations with Chinese state-controlled steelmakers.

    The reports said that senior managers at five steel factories were giving the authorities information. Those being questioned include shippers, traders and steel-mill managers. A week ago, an executive at Shougang Steel in Beijing, one of the country’s biggest steelmakers, was detained.

  3. DC Loser says:

    The central government periodically embarks on one of these anti-corruption campaigns to bloster its public image. The public is very cynical about official corruption and this lets them vent and it also makes the party leadership look like it’s doing something. It’s politically expedient. And if the Rio Tinto execs did indeed got caught with their hands in the cookie jar, so much the better for the Chinese in giving notice to the Aussies about playing nice. And I’m sure they were looking to settle scores after Canberra scutted the Chinalco-Rio Tinto takeover bid.