Editorial
Bad Business in China
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LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkPublished: July 17, 2009
One has to be suspicious when China detains an Australian executive on charges of stealing state secrets without providing further details or evidence and waits three days to inform the Australian government.
Suspicions grow exponentially when it happens that the executive’s employer, the Anglo-Australian mining company Rio Tinto, recently snubbed a bid by China’s state mining company for a major stake. Rio Tinto is also playing hardball in negotiations over the price of iron ore it sells to Chinese state-owned steel mills.
Stern Hu, the Australian detained along with several Chinese employees, was Rio Tinto’s top negotiator for a new long-term supply contract. Whether the accusations have any merit, Beijing’s tactics reinforce fears about its penchant for bullying companies to get its way.
More than 10 days after detaining Mr. Hu and his colleagues, the Chinese government has not provided further details of the charges against them. Reports in state-controlled media suggest they are accused of bribing officials at Chinese steel mills to obtain confidential information and gain an edge in negotiations.
It is not clear how that would ever qualify as stealing a state secret and endangering China’s national security. Beijing has used similarly vague, arbitrary and all-too-convenient charges to punish dissidents.
All countries have a right to prosecute foreign companies and their executives for violating its laws. China’s steel business is reportedly rife with corruption.
But the Chinese government is acting like the guilty party. To be credible, it must detail the charges and provide evidence to justify its actions. The executives must be guaranteed an impartial, transparent trial. So far they haven’t even been allowed to see a lawyer. A Rio Tinto official said that won’t happen until they are officially charged — and that could take months.
Beijing should not assume that it will pay no price for its thuggish behavior. It increases the cost of doing business in China, making foreign businesses more cautious about investing and deploying executives there, and it may fuel resistance to investments by Chinese state-owned firms in other countries. That could ultimately prove expensive.
