Doing Business in China

Four employees of the mining giant Rio Tinto were detained last week because of the accusations that they had conspired to steal state secrets.More senior manager of Chinese steel factories were questioned and detained now.The Chinese authorities have detained or questioned at least seven Chinese steel industry executives in a broadening corruption investigation connected to the detentions of Rio Tinto four employees, state-controlled news media reported Monday.

China is the world’s largest producer of steel; Rio Tinto is one of its biggest suppliers of a main ingredient, iron ore.“The whole industry is in a state of shock at the moment,” said Paul Bartholomew, an analyst based in Shanghai who writes for Steel Business Briefing. “There’s a sense of fear. ‘Don’t talk to us,’ or ‘Who’s going to get tapped on the shoulder next?'”.

Beijing officials deny that politics is involved, and they say the case will not harm China’s relations with Australia.On Monday, an article in The Beijing Morning Post, a state-controlled newspaper, reported that senior managers from five steel companies, including an individual involved in shipping, were being questioned about illegal activities.

Australian officials are pressing Beijing for more details on the case and asking that it be expedited. Beijing has officially said very little about the case, which is before the Ministry of State Security and therefore confidential. But facing growing concerns that the spying accusations might have been retaliatory, the government has been allowing the state-controlled media to reveal more and more details.