Rio case shows China should clarify its 'state secrets' law

Shortly thereafter, China criticized Australia for giving a visa to Rebiya Kadeer, the former Uighur businesswoman whom Beijing has accused of being responsible for the July 5 riot in Urumqi.

Chinese officials demanded that a film about her at the Melbourne International Film Festival—”The Ten Conditions of Love”—be withdrawn from the Melbourne International Film Festival and that she not be allowed to address the National Press Club in Canberra.

These events had an effect not only on Australians but on the international business community as a whole. There was much speculation that China was lashing out at Australia because Rio Tinto had rejected an offer from a Chinese state-owned company, Chinalco, to expand its stake in Rio Tinto from 9.32 percent to 18% percent in China's largest foreign investment in history.

If China's intention was to send a message to the international business community, it was hugely successful. Many multinational companies became fearful that they, too, could become targets in similar state secrets cases.

This is because the definition of state secrets is extremely vague. They may have to do with defense, foreign policy, economic and social development, science and technology, criminal investigations or “other matters” classified as state secrets, even if the information is already in the public domain.

The case took a bizarre turn when a Web site associated with China's National Administration for the Protection of State Secrets Bureau alleged that Rio Tinto had engaged in spying in China for at least six years and over that time caused China to spend an additional US$100 billion on iron ore imports, a sum that it said was equivalent to 10 percent of Australia's GDP.

This allegation was peculiar because, in the last six years, China's iron ore imports from Australia amounted to about US$90 billion. So, if the figures on the state secrets Web site are to be taken at face value, it would mean that China should have received the iron ore for free and on top of that been awarded a US$10 billion bonus.

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