China has accused Rio Tinto of spying on its steel industry for six years, costing the country Rmb700bn ($102bn) in excessive charges for iron ore and highlighting the need for Beijing to overhaul the way it deals with state secrets so that it can better fend off any systemic threat to its economic security.
The remarks, contained in an editorial in the magazine of the National Administration for the Protection of State Secrets, indicate that Beijing’s detention of four Rio employees in China on accusations of stealing state secrets about iron ore price negotiations could be the start of a widening campaign rather than an isolated case.
“From the large amounts of intelligence data that was found on Rio Tinto computers …it is clear that the economic spies, using bribes for six years, forced the Chinese steel companies …to pay more than Rmb700bn more for imported iron ore than they would otherwise,” the NAPSS said.
The report said the Rio case was only the tip of the iceberg and China should treat commercial espionage as seriously as a national security threat as does the west. “Our country has already entered a peak period of a commercial espionage war,” it said.
Stern Hu, Rio’s head of sales and marketing in China, and three other of the Anglo-Australian miner’s sales staff in China have been held since July 4. But Chinese authorities have given little detail of the Rio employees or the investigation.
Rio has said it is not aware of any evidence that supports China’s allegations against the four. The company on Sunday declined to comment on the watchdog’s remarks. The company’s shares fell 3.3 per cent in trading in Sydney on Monday.
China’s vaguely formulated law on guarding state secrets allows officials to classify as “secret” information that is already public by arguing it is related to economic and social development or “other issues”.
The commentary by the watchdog argues that the legislation on state secrets needs to be overhauled because it fails to serve its purpose.
The watchdog argues that the law needs to be defined clearly and narrowly and that responsibility for guarding secrets should be assigned clearly in government and the corporate sector.
The watchdog also called for the creation of a new regulatory framework for the registration, auditing and supervision of foreign companies and their representatives in China “just as the west does it with regard to Chinese companies”.
The report said decades of economic reform of the private sector had left state-owned companies without any sense of economic security, and left their management and industry associations prone to infiltration.
Additional reporting by Peter Smith in Sydney
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