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China has evidence on stolen secrets

SHANGHAI, July  9 – China said on Thursday it had evidence proving detained Rio Tinto staff stole state secrets, as the affair threatened to boil over into a diplomatic row with Australia summoning the Chinese ambassador.

Stern Hu, the Australian head of the Anglo-Australian mining giant\’s Shanghai office, faces criminal charges for stealing state secrets on foreign countries\’ behalf, Chinese foreign ministry spokesman Qin Gang said.

"Competent authorities have sufficient evidence to prove that they have stolen state secrets and have caused huge losses to China\’s economic interest and security," Qin told reporters.

Chinese authorities collected evidence against Hu before arresting him and other Rio Tinto staff on Sunday, Qin said. Shanghai authorities earlier confirmed the others were three of Hu\’s Chinese colleagues.

The incident has cast a shadow over Australia\’s relations with one of its largest trading partners, in which Rio Tinto plays a key role as a major supplier of iron ore and other raw materials to China\’s growing economy.

The miner has led difficult talks with China over new iron ore contracts, which missed a key deadline at the end of June, and a month after it snubbed a major cash offer from China\’s Chinalco.

The executives allegedly used improper methods, including bribery, to coax secrets from Chinese steel executives during the contract negotiations, according to reports in two Shanghai government-run news outlets.

China\’s foreign ministry said the espionage allegations should be treated as an isolated case and that it did not want it to affect its important trade relationship with Australia.

"It\’s improper to exaggerate this individual case or even politicise it, which will be no good to Australia," Qin said.

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Australia\’s Mandarin-speaking Prime Minister Kevin Rudd rejected opposition calls Thursday for him to discuss the case with China\’s President Hu Jintao.

"The key thing is not for politicians… to begin trying to politicise issues like this but rather let\’s get on with the practical business of working with the very difficult case on the ground," Rudd told reporters in Rome.

However, Australia\’s foreign ministry announced that the acting Chinese ambassador, Hong Liang, had been called in on Thursday over the issue and that the lack of consular access to Hu was among the issues raised.

After the meeting, Chinese authorities said Australian diplomats could meet Hu on Friday, an Australian statement said.

Foreign Minister Stephen Smith earlier said he had seen no suggestion that Hu\’s detention was linked to Rio\’s fraught iron ore talks with Beijing or its decision to reject Chinalco\’s offer.

Last month, the debt-laden miner turned down a 19.5-billion-dollar cash injection from Chinalco after deciding that rising commodity prices made a rights issue and joint venture with BHP Billiton more attractive.

The four Rio Tinto executives are being held by China\’s secretive state security ministry, which handles counter-espionage operations.

In Beijing, police also arrested Tan Yixin — the head of iron ore trading at Shougang Group steel company, who had "close contact" with Hu — for suspected commercial crimes, the 21st Century Business Herald reported.

A Rio Tinto spokesman told AFP it was not giving out more information on the sensitive case, but the company indicated it had been taken by surprise.

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"We are not aware of any evidence that would support such an investigation," the company said in a statement.

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