The election of Mandarin-speaking Kevin Rudd as Australia’s prime minister was supposed to open a new chapter in Sino-Australian relations. Mistrust and suspicion would be replaced by harmony and plain-speaking among friends.

The Stern Hu affair, the arrest of a senior Australian executive involved in iron-ore negotiations with Chinese steelmakers, has severely damaged that prospect. While Australian ore producers deny shipments to China have been affected, the episode has underscored structural problems in the relationship between the world’s biggest iron-ore consumer and its biggest supplier. These problems will not disappear.