RioTinto's China crisis: Stern Hu, State Security and Iron Ore geopolitics ~ Updated

Post GFC China is flexing its focus, I suspect that the "old" rules are under strain. The Chinese must have been under the impression that Hu was on their side and the failure of the Chinalco bid was a wake up call that he wasn't which cast his no doubt strong relationships with the chinese resource purchasing execs in a "new light", whereas the Chinese can't deeply penetrate the aussie iron ore biz due to worries about "market power" but on the other hand whats good oligopoly wise for BHP/RIO is just business, so sorry.

Or maybe these close commercial relationships were suspect for ages from the Chinese perspective and only the prospect of a stake in the biz stayed hands.



Its an interesting case: he shoulda bailed.

The man whom he replaced, iron ore consultant Philip Kirchlechner, explained how the Chinese "legal" system works. "China is one of the freest countries in the world, except in some circumstances," he said.

"In this case, a serious commercial dispute, they can get you for small irregularities that are usually overlooked."

The criminal system can be fiercely arbitrary, turning on people without warning, and providing them with little cause for redress.

And almost everyone who watches business in China says it is impossible to separate politics and vested interests from this sort of criminal investigation.

"My sense is it's part of the very complicated context of the Chinalco deal, the iron ore negotiations, the Rio-BHP Billiton deal," said John Frankenstein, a China business watcher at the City University of New York.

Mr Hu grew up in Tianjin and met his wife at the prestigious Peking University.

He is fiercely proud of his son, who wants to work in hotel management and has just spent a year studying in Europe and the US.

Both Mr Hu's wife and son are in Shanghai and struggling to come to terms with his disappearance. And they want to defend their privacy.

Some detainees, like the American-Chinese professor Song Yongyi, have been sucked into China's state security system and been released after little more than a month, following pressure from the US Government.

But this case is the exception.

No one, it seems, expects Mr Hu to be released soon.

The international context of Mr Hu's detention suggests to many observers that his case has already received some sort of tick from Beijing.

The fact that the Shanghai State Security Bureau acknowledged his detention and that the Ministry of Foreign Affairs said it had evidence to support the investigation suggests they do believe in their case.

And even if they change their minds, the public nature of their comments means they will be greatly reluctant to back down.

Even if Mr Hu is released and cleared of every allegation, close observers say it will be difficult for him to work effectively in China again.

"He's already ruined," said a family friend of Mr Hu.




Malcolm Maiden
July 10, 2009

Confusion and not a little fear are abroad in the Australian business community in China after last Sunday's detention of four of Rio Tinto's Shanghai-based employees, including Stern Hu, a senior executive who was responsible for marketing Rio iron ore to Chinese steel mills.

The affair could take several paths from here and most of them lead to places Rio and the Australian Government do not want to be.

Here are the facts so far: Chinese officials believed to belong to China's main security agency, the Bureau of State Security, raided Rio's office at the top of the ultra-modern Hong Kong New World Tower on Shanghai's Huai Hai Road on Sunday, detained the four and removed computers.

Rio has not been in contact but the Chinese Government now says they have hard evidence the Rio executive stole state secrets and damaged China's economic security.

Hu is Rio's general manager, commercial, in China and oversees Rio's ore sales to Chinese steel mills, placing him at the intersection of one of the world's most important commodity routes. Rio is the second-biggest iron ore exporter in the world and China now accounts for about half of global consumption.

There were reports in the Chinese press yesterday that the Rio raid was one of several and that the Chinese Government was cracking down on side deals for iron ore tonnage, the growth of spot sales for iron ore and on deals that may have involved kickbacks.

A southern Chinese business paper, 21st Century Business Herald, reported the authorities also detained an iron ore executive with Shougang Group, a Chinese steel company that produces more than 12 million tonnes of steel a year.

The executive was said to be personally known to Hu, but that is not unusual: part of Hu's job is to know his customers.

The detention of the Rio executives is a conspiracy theorist's goldmine.

It has come amid a stand-off on this year's iron ore contract pricing negotiations, during which Beijing pushed Baosteel and other steel companies aside and inserted the country's industry association as peak negotiator.

It also came after Rio's decision a month ago to abandon a plan to raise $US19.5 billion ($24 billion) by selling stakes in its assets and shares in itself to double state-owned Chinese metals group Chinalco's stake in Rio to 18 per cent.

Rio's decision to replace the Chinalco deal with a general share issue and a Pilbara iron ore joint venture with BHP Billiton was the worst possible outcome for China Inc - a loss of face and a loss of strategic position.

Chinalco was dumped after agreeing to a deal with Rio last February at a time when Rio was friendless and struggling.

The Rudd Government did not have a direct role in that but it enabled the switch by extending its Chinalco foreign investment decision by 90 days, time enough for the markets to recover and for options to open up for Rio.

From here, the situation could develop in several ways.

One scenario, a diplomatic nightmare for the Rudd Government and a strategic blow for Rio and any company hoping to extend ties with China, is that this is a brutal Beijing-directed reprisal for any or all of the Chinalco snub, Australian Government unease about direct Chinese investment here and the iron ore price stand-off.

That's unlikely. But the issue becomes only slightly less diplomatically and commercially challenging if the four Rio employees are pawns in an attempt by Beijing to reassert control over the iron ore market.

The Government has fewer problems if the raid was based on claims about side deals in iron ore, but such claims, if proved, would still be a setback for Rio - and the Chinese Government is now clearly signalling it has broader and more serious concerns about corporate espionage.

The best outcome for Rio and the Government would have been that the orders to detain the executives came from lower, even local levels, of the Chinese Government and that the suspicions that motivated the detention of the Rio four were unfounded.

That seems a faint hope now.

http://business.smh.com.au/business/riotintos-china-crisis-escalates-20090709-derw.html

CHINALCO has launched its first frontal attack on Rio Tinto's integrity as the China-Australia spy scandal threatens to derail the political and perhaps economic relationship between the countries.

Chinalco's vice-president and spokesman, Lu Youqing, strongly denied yesterday that the company had any connection with the Shanghai State Security Bureau's investigation into Rio Tinto's iron ore chief in China, Stern Hu, and three of his senior Chinese staff.

But Mr Lu also revealed the extent of Chinalco's anger about apparently groundless speculation that the Rio case was linked to commercial bribery.

"Rio Tinto has no business credibility as a company. It is not unlikely that a few staff are suspected of breaching law," Mr Lu said.

As the rhetoric from Chinalco intensified, sources at the China Iron & Steel Association were also denying any involvement in the Hu arrest and detention.

Mr Hu is Rio's top iron ore negotiator in China.

Australian officials said last night the Chinese investigation had exposed the brittleness of Australia's political relationship with its largest trading partner.

"This sort of thing can only happen if the top political leaders on both sides do not trust each other," said an Australian official involved in managing the China relationship. He said the dangers were greater to Australia. "China can do without Australia, but at a cost. Australia cannot do without China."

Meanwhile, China's peak trade group in Australia has declared it is "business as usual" within the resources-hungry nation as Australian companies say they are not recalling staff from China.

Australian businesses with a presence in China admit they are watching what happens to the four detained Rio executives, who have been held since Sunday on suspicion of espionage.

The Victorian president of the Australia China Business Council, Jason Chang, said while the detention was "a bit odd" there was no information that Australians or other foreigners were at any increased risk.

"As far as I am concerned and the ACBC is concerned I would say that right now it is business as usual until further notice," he said. "I haven't seen any correspondence at this point other than through the papers.

"These things happen from time to time but it is very hard to comment before knowing what precisely happened."

A spokesman for BHP Billiton said it was "operating as normal" in China. Similarly, iron ore miner Fortescue Metals has not issued any directive for China-based staff to return home.

On Wednesday the Department of Foreign Affairs changed its travel advice, saying "Australians in China who find themselves in a business or civil dispute may be prevented by authorities from leaving the country until the matter is resolved". But a spokesman said the change in advice was not linked to Mr Hu's case.

Queensland Liberal Michael Johnson, chairman of the Australia-China Business Forum, said business figures were waiting for more detail on the arrest of Mr Hu before deciding whether to alter their plans.

"If there is evidence to substantiate it, then I think business won't be as dramatically affected," he said.

"But if he has been detained without compelling evidence, that's when I think Australian business, in terms of the depth and breadth and the pace, will be affected."

While speculation continues that the iron ore arrests may have something to do with recent price talks, there is still no confirmation that Chinese steel makers have agreed to a 33 per cent cut.

Meanwhile, Rio has received an upgrade from ratings agency Standard & Poor's following its successful $15 billion rights issue.

http://business.smh.com.au/business/spurned-chinalco-denies-role-in-rio-arrest-20090709-dert.html

Mining giant Rio Tinto bribed executives from all 16 of China's major steel mills, one of the nation's most prominent state-run newspapers alleges.

Rio targeted key executives for Chinese firms who negotiate iron ore prices with large foreign suppliers, the China Daily reported in a front-page article, although it cited just one unnamed industry insider.

"Rio Tinto got to know the key executives of the 16 steel mills, who have sensitive industry information, when the China Iron and Steel Association brought them to the bargaining table,'' said a senior manager at a large steel company, who requested anonymity, the paper said on Wednesday.

"And then Rio Tinto bribed them (to get access to industry data), which has become an unwritten industry practice,'' the source said.

"If companies didn't accept, they would have cut supplies and so the whole steel industry has been bribed.''

The English-language China Daily is often used by the government to deliver a message to a foreign audience.

When asked for a response to the China Daily allegations, Rio Tinto said it had no immediate comment.

Stern Hu, an Australian mining executive for Rio Tinto in charge of the iron ore business in China, and three Chinese colleagues were detained by counterespionage agents in Shanghai on July 5, prompting a wider investigation.

China has not outlined the specific allegations against Hu, but says it can prove he was guilty of stealing state secrets and causing huge economic loss to the country.

However it's state-run media have given more details of the allegations against him and the other executives.

In a climate of simmering tension, such as now exists between China and Australia, speculation and rumour reign supreme.

The arrest by Chinese security forces of four Rio Tinto executives, including Stern Hu, an Australian citizen, has created a diplomatic rift that has the potential to damage trade between the nations.

So far it is just potential. Despite talk of an impending trade war, Chinese steel mills are still demanding Australian iron ore, and Australian producers, including Rio Tinto, are desperate to supply it.

At an official level, there appears to be an information vacuum, something the Trade Minister, Simon Crean - on an official visit to China with the Industry Minister, Kim Carr - says he finds "frustrating".

But the propaganda war goes on. A front page report in a state-owned Chinese newspaper accused Rio Tinto of bribing officials from all of the country's large steel mills.

According to unnamed industry "insiders", Rio obtained confidential information from key executives in each of China's 16 steel mills, "forcing" them to take bribes by threatening to cut off the iron ore supply.

That is an odd accusation, to say the least, but it comes from an organ, the English-language China Daily, often used by the Government to deliver messages to foreigners.

Under those circumstances, it is not surprising to learn of a sudden rise in the spot price for iron ore. One theory was that Australia had boycotted shipments to China, creating a shortage that Chinese mills would have to source from Brazil.

There is no doubt that the spot price has risen. But even if Australian producers wanted to turn off the tap, it simply is not possible to achieve within a week. The iron ore is already on ships, on its way to China.

Cutting supply is a difficult operation. And neither BHP nor Rio Tinto have any interest in inflaming the political situation, let alone denying themselves valuable revenue during a global recession.

There are two possible reasons for the spot price jump. The first is that traders may think the tension could create supply problems. The more likely explanation is that the price of freighting bulk ore into China has risen because imports have risen.

Almost 80 per cent of the iron ore produced in Australia is shipped to China, and the collapse in the world economy has had the unusual effect of lifting shipments because ore prices are lower - the Chinese mills have opted for more imported product and less of the locally mined, inferior ore.

China needs Australia to supply the raw materials it requires to maintain economic growth and social cohesion. Australia is banking on China's economic growth to cushion it from the worst of the global recession.

Sadly for Mr Hu and the other three Rio employees, those economic and business considerations will ultimately prevail over their individual rights and freedoms.

Mining executives are accustomed to the political vagaries and dangers of operating in exotic locales. Normally, however, those at the mining sites are most at risk. Marketing product to big customers is usually a low-risk endeavour.

China's heavy-handed, even brutal, approach to what should be a commercial dispute has stunned the business world.

But in the context of its fragile domestic political situation, it should not have come as a surprise. Millions of its workers have been displaced by the shutdown in export industries that supplied a once-booming West. It is facing uprisings in several provinces. And its desire to secure supplies of crucial materials to ensure domestic stability borders on paranoia.

As a one-party regime, China has never shied away from using maximum force to quell uprisings or even dissent internally, and it believes it can employ similar tactics on the global stage, threatening sanctions against foreign leaders who engage with the Dalai Lama.

This time, however, its actions may have jeopardised its economic imperatives.

http://www.businessday.com.au/business/rio-espionage-angle-out-20090719-dpje.html

CHINESE investigators who have detained Rio Tinto executive Stern Hu are "not interested in what we would regard as espionage", Foreign Minister Stephen Smith said yesterday.

Mr Smith said Vice-Foreign Minister He Yafei had conveyed to him on Friday that Chinese authorities were confining their investigation to this year's iron ore negotiations and that the "criminal" probe would not threaten the broader relationship.

"Vice-Minister He made it clear that the Chinese are regarding this matter as an individual matter," Mr Smith told the ABC's Insiders program yesterday.

"It's quite clear they are focusing on a criminal or a judicial investigation relating to the 2009 iron ore negotiations." he said.

"That is their clear focus; they're not interested in what we would regard as espionage or national security matters," he said.

But Mr Smith's comments do not contradict earlier Chinese Government statements that Mr Hu and his three Chinese staff in Shanghai have been detained by China's top spy agency, the Ministry of State Security, for allegedly threatening China's economic security and stealing state secrets.

Instead, Mr Smith's comments show that China's espionage laws are far broader and far more flexible than similar laws in Australia.

"One of the problems is the breadth: they can say almost anything is a state secret, and they sometimes do," said Jerome Cohen, professor of law at New York University.

"Second, there are procedural flaws that are very great in terms of the inability of anyone to question a determination by the State Secrets Bureau of what is a state secret," Professor Cohen said.

"You can't ask about it, you can't even see it."

Mr Smith said yesterday that commercial and economic matters such as iron ore negotiations were included "under their general definition of state secrets".

He said Chinese authorities had responded to his urgings to provide more information through the usual diplomatic channels. "The response to that is there is an ongoing investigation, which potentially includes allegations of bribery, allegations of criminal conduct, and that's what we're continuing to grapple with," he said.

The Chinese domestic media has published numerous allegations including that Rio Tinto has bribed all of China's top 16 steel mills.

But most of the stories have been unsourced and many appear to be of questionable veracity.

On Friday, Rio Tinto's head of iron ore, Sam Walsh, denied all bribery allegations and said his employees had "acted at all times with integrity and in accordance with Rio Tinto's strict and publicly stated code of ethical behaviour". But The Age can confirm that the Rio Tinto arrests are part of a broader investigation of China's iron ore market, which has been sanctioned by China's top leaders, and has led to the detention or interrogation of several steel company executives.

Mr Smith suggested he would withhold judgment until Chinese authorities released specific details.

"When they've brought their investigation to a conclusion they may well make a decision to charge him and then if they do charge him, the precise details will be there for all to see," he said.

Julie Bishop, the Opposition's foreign affairs spokeswoman, again called on Prime Minister Kevin Rudd to raise the matter with senior Chinese leaders.



July 19 (Bloomberg) -- China’s arrest of Rio Tinto Group’s Stern Hu is related to a criminal probe into iron-ore price talks, not espionage, and the case may result in a decision to charge the mining executive, Australia’s foreign minister said.

Stephen Smith, who met with Vice Foreign Minister He Yafei on July 17, again urged China to provide more information about the arrest of the Australian citizen, the minister told the Australian Broadcasting Corp. today. “If they do charge him, the precise details will be there for all to see,” Smith said.

The investigation into Hu and three other Rio executives detained on July 5 has strained relations between China and Australian Prime Minister Kevin Rudd, a Mandarin-speaking former diplomat to Beijing. China said on July 16 that Australia was an “interference” with the nation’s legal sovereignty.

“It’s getting more and more mired in what looks like politics and high-level Chinese bureaucracy,” said Peter Arden, a resource analyst at Ord Minnett Ltd. in Melbourne. “It’s going to have some impact, in the short-term at least, on iron- ore supply and commerce more generally.”

Foreign ministry spokesman Qin Gang had said on July 9 that Hu was suspected of “stealing Chinese state secrets for foreign countries.” China has also accused Hu of bribing steel mill officials during the iron-ore negotiations, Smith said on July 10, citing a statement from Shanghai’s Security Bureau.

Rio’s Denial

Rio, the world’s third-largest miner, has denied the allegations against Hu, who manages the London-based company’s iron-ore business in China, and the three other employees, who are Chinese nationals. Rio Tinto spokeswoman Amanda Buckley today declined to comment when contacted by phone.

China is the world’s largest steelmaker and relies on iron- ore shipments from Rio, BHP Billiton Ltd. and Brazil’s Vale SA to feed the industry. The round of iron-ore talks is meant to set contract prices for the raw material from April 1.

“It’s quite clear they are focusing on a criminal or judicial investigation relating to the 2009 iron-ore negotiations,” Smith told the ABC’s Insiders program today. “They are not interested in what we would regard as espionage or national security matters.”

Rio Tinto denied allegations this week that the four executives had bribed officials at Chinese mills. Employees “acted at all times with integrity and in accordance with Rio Tinto’s strict and publicly stated code of ethical behavior,” iron-ore unit chief Sam Walsh said in a statement on July 17.

The case is making many Australian businesses “wary of getting entrapped in something unwittingly,” Ord Minnett’s Arden said by phone.

‘No Magic Solution’

Julie Bishop, the opposition’s foreign affairs spokeswoman, today called on Prime Minister Rudd to raise the issue of Hu’s detention with senior Chinese officials.

While Australia will continue to push China to resolve the case quickly, “there is no magic solution,” Smith said. “We have to expect that we may well be in for a long-haul here.”

Smith said he also told Vice Minister He that he would have preferred to get more information from Chinese officials much earlier. “I was frankly disappointed that I didn’t get those through the usual channels,” Smith told the ABC.

Rio, which has about a third of its assets in Australia, last month scrapped a $19.5 billion investment by Aluminum Corp. of China. China is Australia’s second-biggest trading partner, with two-way trade worth A$68 billion ($55 billion) in 2008, and largest source of foreign investment.

http://www.allroadsleadtochina.com/index.php/2009/07/15/rudd-proves-theory-china-cannot-win/

A lot of coverage recently has once again thrown China (the prosecutor) into the spotlight for charging Rio Tinto’s GM and 3 employees (The Innocents) with espionage. It is a situation that has gradually escalated from a period of concern (when no one knew what happened to the executives) to this recent statement from Australian Prime Minister Kevin Rudd:

“Australia of course has significant economic interests in its relationship with China, but I also want to remind our Chinese friends that China too has significant economic interests at stake in its relationship with Australia and with its other commercial partners around the world,” Rudd said.

“A range of foreign governments and corporations will be watching this case with interest and be watching it very closely, and will be drawing their own conclusions as to how it is conducted.”

Essentially, Kevin Rudd has threatened economic sanctions should the executives not be treated fairly (i.e. released ASAP).

From the viewpoint of China, it is quickly becoming yet another media storm that they are in fear of loosing control over. AGAIN.

That, regardless of whether or not they are arresting executives at MULTIPLE Chinese firms as well for being apart of the same crime, their own foreign ministry is having to put out a fire that is moving faster than a brush fire. A storm only picking up in intensity as Commerce Secretary Locke has also publicly stated his concerns, and intention to discuss the issue.

Were China not consistently being chided for its corruption, then perhaps I would be a bit more understanding or apathetic to the Australian side, but I cannot.

China has been a punching bag for many over the years for commercial and political corruption, and now that “one of their own” has been caught up in it, the tables are turned. That now China is being too heavy handed, is risking economic ties, and that everyone in China should beware.

Yet nothing could be further from the truth.

In fact, I would say that this case should surprise no one.

That for the last several years, China has been taking every opportunity to clean up many of the commercial and political corruption issues it faces, and to think that they would simply overlook the role that a foreign firm or executive may have played in a case is simply bad precedent (just wait for the next time a Chinese executive is arrested for a similar charge to see what the Chinese response is.. or see this current case in the US)

Yes, China’s law enforcement could have been more transparent about the arrest, but their silence on the arrest and the underlying issues in the days following the arrest should not somehow minimize the core issues of corrupt practices and stealing of state secrets.

China is not the U.S. where every detail of a case is played out on TV before the trial has started, and it is in the interest of everyone involved to exercise patience and wait for the evidence to be presented.

China deserves the time to work through this case. to complete gathering and presenting the evidence ( inside the court or out) and the process to be completed.

To force it to cut the process short in the name of economic interests would simply further ingrain the belief that some have that there is a double standards. that, in reality, it is not about fighting corrupt practices. that it is in fact about fighting corrupt practices that are will “level the playing field” for foreign firms in China.


here is an interesting take...

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The excellent article “KGB INTERROGATION: Cheng Li” (http://www.businessspectator.com.au/bs.nsf/Article/KGB-INTERROGATION-Cheng-Li-pd20090716-TZ9D7?OpenDocument&src=sph) is the first insightful and sophisticated discussion towards understanding what is happened. We should expand the context by considering the Chinese perspective and some aspects of geopolitical realities as well. Unfortunately, our parochial political and media commentators need to be less self absorbed, partisan and shallow in their analysis.

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I am a retired Australian expatriate previously employed by a major US Corporation and experience shows that major corporations do get involved in corruption to further their commercial by necessity in countries such as China.

It is unavoidable and mostly done indirectly with great care…..so why is China’s claim with regard to Rio Tinto dismissed out of hand?


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THE AUSTRALIAN REALITIES IN CONTEXT

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Australia’s small prosperous population was made possible by living on a huge continent using imported capital to export raw mining and agricultural commodities. In addition, we relied on US economic and military hegemony to underpin our peace of mind and manage the rise of Chinaand Asia.

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Hence we fought with the US in the Vietnam war of independence, participated in the neo-colonial oil wars in Iraq and Afghanistan; created with Japan APEC in a vain attempt to counter ASEAN; and with US support tried to prevent Asian countries from establishing a rival institution to the IMF post Asian Crisis including the now reality currency swaps between East Asian and Asean countries.

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Our recent Defence White Paper whilst founded on capabilities based calculus implies continued desire to contain China.


The WA state government awarded the Oakajee Port & Rail tender project to Japan at the expense of China under controversial circumstances. Now Canberra has allowed multinationals to determine our national interests by default and created a defacto RIO+BHP monopoly controlling circa 70% of global exported iron ore at the expense of China’s national interest under humiliating circumstances.

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Kevin Rudd tries to ignore the China leader during the recent photo-op in London. Australia’s economy will be devastated should China play hardball whilst their economy only suffers marginally. Our historically high private debt per capita exceeds even depression levels and debt de-leveraging drives our slowing economy as a subset of the global economic crisis.

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The US and UK are debtor nations with notionally insolvent financial industries hoping China will provide capital on one hand but on the other hand wish to maintain their hegemonic powers….a very delusional thought process indeed.


The Chinese and the majority of other countries outside the “international community” (code for the usual suspects US/UK/Canada/Australia) represent largely victims of centuries of western hegemony and note our behaviour referenced to their own histories.

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China invests in energy and mining infrastructure in Latin America, Asia, Africa and Central Asia to gain access to host country mineral resources in a win-win relationship. In contrast the US and the west merely focusing on the extractive sectors – oil, gas, minerals etc.


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Latin Americans, Asians, Africans and the Central Asians take note of the West’s exploitative instinct. Now it is beyond doubt that external forces have muddied the waters of disaffection in Xinjiang increases China’s determination to protect its national interests. We need to avoid hypocrisy and recognize the West also have blood on our hands thru war and human rights crimes the latest including supporting Israel’s colonization at the expense of Palestinians to killing civilians and colonial wars in Iraq/Afghanistan/Somalia/Pakistan etc as well as protecting the corrupt Middle East regimes.

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We are not morally superior and it can be argued inferior….despite rampant corruption in China.


The rise of creditor nations amongst the economic debacle in the west means China’s views now have impact simply because their narrative has more economic and political weight. We as a nation need to grow up and not hide behind self serving myths.

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We conveniently forget that China’s leadership is patently more capable and sophisticated than our own based on benchmark degree of difficulty comparisons such as sheer achievements over significant hurdles.

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THE CHINA REALITIES IN CONTEXT

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China has a growing USD 2 trillion surplus and underpins our nation’s prosperity. This ancient civilisation has fought western hegemony to rise to its present position in spite of internal and external obstacles by developing its own particular solutions. It has avoided the US leveraged debt and speculative capitalism free of regulation by maintaining some aspects of controlled economy mechanisms.

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China will not follow in our image and will develop their version of capitalism just as Japan has. The world has become a multipolar world. China feels threatened by the monopolistic multinationals and is commercially discriminated by the US andAustralia….despite their status as the major customer in Australia.


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China is a complex nation that is still developing facing serious internal and external challenges …it is not heaven on earth. This nation is in the “robber baron” era just as the US was and we were during the pre federation era. Its foreign policy in Africa, Middle East, Central Asia and littoral Asia has been pragmatic and built on mutual benefit rather than the US rabid and coercive ideology. US crony capitalism and the preferential treatment by IMF of western debtor countries in strive is noted.

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THE CONNUNDRUM

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The era of western dominance is ending and the multipolar world is taking shape. Australia has to come to terms with its geographic destiny and re-examine its pathway to future prosperity. China will exert greater influence on our prosperity and our nation needs to find ways to respect their needs without compromising our own sovereignty. In the past, we provided fealty to the UK then the US in return for protection… convenient because we share the same civilisation and broad cultural values.

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We have tried to be the intermediary between a rising China and the US Empire in decline to protect our national interest…this strategy is reaching its use-by date. Japan may end up coming to terms with China because their US and European markets are wilting?

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We need to respect reasonable China needs and develop a deeper and more mature relationship whilst protecting our sovereignty….this transferring our fealty to China is impractical. The re-assessment should include review of our economic structure that is too reliant on mining the soil and earth.

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All of Asia wants to counterbalance rising China harmoniously as good economic neighbours. Modernising China is presently co-operative but history shows that when nations become hegemons they become tyrannical to their victims….read UK, US, Ottoman history.


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WHAT NEEDS TO BE DONE NOW


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Stop bleating about “International Community” meaning western countries not trading with China as a threat…..its rhetoric.

Block the RIO-BHP production JV and workout a pragmatic strategic frame work between Canberra-Beijing based on real-politick and mutual respect.

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Educate the average Australian on today’s realities.


China just needs respect recognising its hard won status and not patronising noises.