A verdict showing China is still made of steel
The Age
Wednesday March 31, 2010
The Hu sentence exposes the risks of dealing with Beijing. FOREIGN Minister Stephen Smith yesterday summed up Australia's recent efforts to maintain good relations with China as a "learning experience" on how "to manage those circumstances where we do have different values or different systems or different approaches". The 10-year jail term handed to Australian businessman Stern Hu, a Rio Tinto mining executive, and the entirety of the legal process that culminated in the sentence of the Shanghai court, suggests the learning curve remains steep indeed.There is little sense of closure now that this dramatic episode in Sino-Australian relations, which began with the arrest of Hu in July last year, has technically concluded. Unless, of course, we're talking about the closed courtroom in which part of the charges against Hu was heard. The international business community is none the wiser about what constitutes a commercial "secret" under China's unique system of market authoritarianism. And as Mr Smith rightly pointed out, this might ultimately be to China's detriment if companies decide the uncertainty and risk of trading with Beijing outweighs the profits.Australian officials and legal experts are still to translate and digest the 71-page judgment that condemned Hu and his three Chinese colleagues. Mr Smith conceded there was "substantial" evidence that Hu had accepted bribes from two private steel mills, based on access consular officials had to that part of the trial. Hu confessed to those charges, while disputing the amount of money involved. It remains confusing, however, that he was initially charged with paying, as opposed to taking, bribes. The original charge would clearly have implicated his employer. Now Rio Tinto has sacked the men, saying their actions violate the company's ethics. Bribery has long been part of China's business landscape €” the state's efforts to clean things up send a positive signal to the outside world.But the backstory remains front-and-centre in this case. Rio Tinto had been locked in high-stakes iron ore negotiations with Chinese steel enterprises. Hu's arrest was read as an intimidatory tactic to influence the outcome, as "payback" for the failed Chinalco deal or even as Beijing's show of displeasure at Australian criticism of its militarism.Unfortunately, the closed aspect of the trial has failed to allay such suspicions. Hu was originally accused of stealing state secrets €” again, this was later changed to commercial secrets. It is unclear where the fine line between the former and the latter is being drawn. Similarly, the line between "secret" and ordinary commercial information in China remains unknowable.The opposition has blasted the government for not fighting hard enough to allow consular officials access to the entire court proceedings. Two prominent American legal experts have also suggested that Australia's consular agreement, struck with China in 1999-2000, confers unfettered rights in this regard.But this tends to be a rather circular argument. When it comes to China, contractual certainty often gives way to political capriciousness. The agreement was always subject to Chinese law and as Mr Smith explains €” rather too diplomatically perhaps €” Chinese law allows courts to close from time to time for a "commercial in-confidence" matter. Australian courts have the same option, he says. In short, Australia did its best €” even making an 11th-hour plea to the Chinese ambassador €” but Beijing was never going to be moved. Perhaps the subject of commercial espionage is one on which China would prefer to pass judgment rather than be judged.In reality, this case will have little effect on Australia's lucrative relationship with the world's third-largest economy. But as a test of the rule of law in China, the outcome is a fail.
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