With the arrest of four Rio Tinto employees on charges of obtaining commercial secrets by improper means, China has crossed another milestone in its remarkable commercial and economic transformation. Beijing is demonstrating that it has become such an essential home for foreign direct investment from all around the world that it is prepared to crack the whip, even with an international mining company that is a key supplier of essential raw materials.
The original charges leveled against the Australian sales executive and his three Chinese colleagues were that they had violated China’s national security. This alarmed the foreign business community because there is no clear definition of a state secret. Indeed even publicly available information has nevertheless been classed by Beijing as being top secret. In such a looking-glass world, the normal cut and thrust of business, as opposed to outright industrial espionage, could potentially have rendered many overseas executives liable to prosecution. That the national security accusations have been dropped may be a triumph for ruling party liberals as some observers have claimed, or rather a deliberate frightener to demonstrate the extent of Chinese power.
The latter would seem more likely because the Australian-based Rio Tinto this year incurred Chinese wrath. When the resources company was struggling for liquidity this February, it opened talks with Chinese state-run Chinalco in order to raise its small stake in the company to 18 percent by injecting $19.5 billion of fresh capital. Though Beijing insisted that becoming Rio’s largest single shareholder would not give it priority access to the mining company’s output, other shareholders and industry regulators, particularly in Australia, cried foul. Under rising outside pressure, the Rio board abandoned the Chinalco buy-in in June. Now two months later, the Chinese authorities have alleged that the activities of Rio’s top iron ore salesman have cost the country $100 billion. If true, it is unlikely Beijing did not know this during the Chinalco-Rio deal talks; yet it appears never to have been mentioned.
Thus, the Rio pullout plus the recent refusal of the Australian authorities to sanction the sale of a single Rio mine to Chinese interests has clearly angered Beijing and must surely lie behind the targeting of these four company executives. This smacks of the same sort of commercial rough handling that Russia’s state-owned energy companies have meted out. Gazprom has twice starved Western Europe of gas in its payment disputes with Ukraine and Russian oil companies bullied Shell and BP out of their originally lucrative stakes in Sakhalin.
For foreign businessmen, there is simply too much money to be made in China to be too concerned at Rio’s present plight. They will be hoping that this is a one-off dispute that in no way presages a wider change in Chinese attitudes to their business partners. And certainly none will be so impolitic as to mention that despite China’s 2001 WTO membership, when it comes to industrial espionage and the theft of intellectual property, there are few more outstanding perpetrators than the Chinese themselves.
Swine flu and schools
EXCERPTS from the editorial that appeared in The Washington Post on Monday:
Stay open. That was the guidance issued on Friday by the Obama administration to the nation’s schools as they prepare for the fall return of students, and swine flu. Ultimately, it’s up to local authorities whether to shut their schools. But the information gathered during and since the initial outbreak in April shows that in many cases it will make more sense to keep school in session.
Fears of swine flu led to the closure of more than 700 schools across the US in the spring. The guidelines released by the departments of Education and of Health and Human Services and the Centers for Disease Control and Prevention outline three situations when a school closure would be warranted: One, children with special needs are the majority, and swine flu emerges; two, large numbers of students and staff are hit with H1N1; or, three, parents send sick, feverish kids to school.
The CDC also recommends that students and staff return to school 24 hours after their fever is gone, not after an extra week. Schools with students and staff members who appear to have flu-like symptoms are encouraged to send the sick to a separate room until they can be sent home. Students with ill household members should stay home for five days from the day that relative got sick. For more information, go to www.flu.gov.
Concern about swine flu is understandable. It roared to life in Mexico, came to the United States and then made its way to just about every corner of the world. The World Health Organization classifies it as an unstoppable pandemic. So far, it is less deadly than regular flu, which claims 36,000 lives in the US every year. But researchers are carefully following the virus’s progression and potential mutations as it makes its way through the Southern Hemisphere’s winter.
As they have since the initial outbreak of swine flu, federal officials are counseling common sense in responding to the next wave of illness. Those who feel sick should stay home. If you sneeze or cough, cover your mouth. And wash your hands frequently or use a hand sanitizer. In the end, you are your best defense against the pandemic’s spread.
