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July 17, 2009

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China on alert over interference in spy case

China has warned against stirring up the spy case against four Rio Tinto employees, including an Australian citizen, saying it is not in the interests of Australia.

"We resolutely oppose anyone deliberately whipping up this case or trying to interfere in China's judicial independence," Foreign Ministry spokesman Qin Gang told a news briefing in Beijing yesterday.

China detained four Rio's Shanghai-based iron ore salesmen, including Chinese-born Australian Stern Hu, on July 5 over spying allegations.

They are accused of obtaining confidential information on China's strategy in sensitive negotiations over iron ore prices by bribing clients.

Qin said some people in Australia were "making noise" over the issue.

"This is an interference in China's judicial sovereignty," he said. "It cannot change the facts and the investigation."

Australian Foreign Minister Stephen Smith said yesterday in Egypt that China should consider the adverse implications of the detentions.

Australian Prime Minister Kevin Rudd said on Wednesday that the world was watching China's handling of the case.

Qin said the behavior of the four Rio employees had hurt China's interests.

"In this regard, I think Stern Hu and his company are clear about it and it is legal for related Chinese organizations to take measures against them," Qin said.

He stressed that China and Australia were vital trading partners and China attached great importance to healthy and stable economic and trade cooperation with Australia.

Qin said he firmly opposed any person who wanted to use the issue to harm the sound relations between the two countries.

In Shanghai, Baosteel Group Corp denied yesterday that any of its executives had been investigated in relation to the Rio case.

Domestic news reports have said executives of at least five major steel companies and officials of the China Iron and Steel Association, the lead negotiator for China, are under investigation.

Yesterday, The Australian Financial Review reported that Rio had pulled its researchers who were involved in research work in the iron ore and steel industries in China out of the country.

China's 21st Century Business Herald said the employees left China on Wednesday.

Rio declined comment on the report. But a source close to Rio said a bigger-than-usual number of the company's China-based Australian staff had left China recently.

However, Rio's offices in Shanghai, Beijing and Guangzhou remained operational, the source said.

Part of Rio's China team is responsible for carrying out price negotiations and managing details of term contracts as well as tracking and analyzing market information.


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