President Hu and Mr Hu of Rio

Comments on AAP news report “Hu Jintao reportedly endorsed Rio probe; inquiry was not 'revenge' for Chinalco”, 13/07/2009, http://www.businessspectator.com.au/bs.nsf/Article/Chinas-president-endorsed-Rio-probe-TVRVU?OpenDocument

This revelation should be conciliation to Rudd in terms of special relationship with China for two reasons. First, it started before the collapse of the failed Chinalco Rio deal. Second, it was proved by China’s top leader, highlighting the seriousness of the issue that China regarded, especially the matter involves a foreign company executive and an Australian citizen, presumably. The Chinese would have considered the potential ramifications of the issue.

It, however, may still have some subtle messages that China may want to send to Australia. Although the timing may appear largely to be a matter of the natural investigation process and coincidental to other possibly related issues, one would have to wonder the fact that it broke out shortly after the normal deadline of the end of June for the negotiation of the iron ore contract price.

Clearly, the centre of the matter involves a person from Rio. Rio has broken the deal with Chinalco, and that is a fact. Rio is the leader in negotiation of the iron ore price.

The Australian government brought a raft of measure into foreign investment rules immediately following some Chinese proposals of investment in Australia and in the process of reviewing Chinese proposed investments in Australia. It also imposed certain strict conditions on some Chinese investments it proved. It delayed the reviewing process that could be construed as a tactic that contributed to the failure of the Chinalco deal. In addition to the commercial matter, there has been the issue of Australian’s white paper on defence that at least implies China would be a threat to the region and Australia. Therefore, is China sure whether Australia is a friend or enemy?

Whether China is sending some signals or not, probably only Rio and the Australian government would know. All of us can only speculate.