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Compare and contrast. On Friday July 3, Sergey Aleynikov, an ex-Goldman Sachs programmer, is arrested by the FBI; the following Monday he is charged with stealing software and released on bail. On Sunday July 5, Stern Hu, Rio Tinto’s top iron ore executive in China, is detained by Shanghai police. On Thursday, accusations of bribery and stealing state secrets emerge; only on Friday is Mr Hu allowed consular access from Australia, where he has citizenship.
Six days of obfuscation confirms China is ill at ease with its new status as the world’s most watched economy. Beijing’s foreign ministry allowed media reports of potential charges to percolate before contacting Canberra directly; it has since issued a warning to Australia not to politicise the affair. Beijing wouldn’t have to do this if the basis for the detention had been clearer from the outset. If authorities really had “established the evidence” before they took action, as claimed on Thursday, where was the harm in saying so? If this is part of a broader investigation into kickbacks between largely foreign traders and Chinese mills, as rumoured, why not make that clear?
For Rio, worsening relations with its most important customer nation are alarming. China is still pushing for cheaper iron ore in talks with producers, led by Rio, that are the longest-running in the history of the annual price-setting process. The wider impact, meanwhile, is hard to quantify. Cash prices of iron ore shipped into China rose 5 per cent last week. That may reflect the miners’ determination to switch supplies to other customers that have agreed contracts as much as any local crackdown on traders.
Perhaps a better indicator is the Aussie dollar – inextricably linked to China, Australia’s second-biggest trading partner – which fell 2 per cent this week, in trade-weighted terms. This may be a simple case of industrial espionage. But the cloak and dagger stuff helps no one.
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