China vs. Australia vs. The World

I have had the pleasure of arriving a bit early for my time with the Australia American Leadership Dialogue, set to start in a couple of days, and so I have been able to pick up my reading on world events and trends from the Australian press and media over the last few days.  Of course, most of these stories were already in the news, and on my radar, before arriving down here.

Before I get going, let me say Thank you to Michael Pfeffer and Lacey, for a terrific French dinner at the Chef Mavro on Oahu; what a delight!  As the end to a day driving around the island in a convertible, it was close to perfect.

Now, on to less happy subjects.

The Chinese arrested Stern Hu a long time ago now, the top manager for global mining corp Rio Tinto, out of Australia. I won’t go into lots of detail at the moment, but much has been written in the last few days about which tea leaves to read to ascertain what will happen next.

The Chinese need to release him immediately (and perhaps his three staff members).  This is not because I say so, but because I see what they are doing, and so, now, will the rest of the world.

Stern Hu’s arrest has, I think, nothing to do with the fake charges of bribery, corruption or spying.  I don’t know Hu, and have no private data about his case.  But I have been watching China quite carefully.  I believe Hu was arrested in retribution for Australia deciding to cancel the deal between China and Rio Tinto for equity in the latter.  Without going into lots of details, China was getting a preferential price on iron (why?) vs. all other foreign companies, and wanted to buy a piece of the company.  It played hardball, the deadline for negotiations passed, and they lost both their chance to invest, and their globally-preferential price for iron.

For the others who buy RT ore, life just went on.  For China, this was not only a problem, but an opportunity.

And this is where, I worry, both Australia, and the rest of the world, misses the point in Chinese bully tactics.

Most of the news and op ed writers here seem worried whether their citizen / manager Hu really did something wrong, and if so, how far did he go?

They don’t seem to be viewing his and their perspective in the larger frame: not just of the failed investement in Rio by the Chinese goverment, but of the real larger frame: that of China doing deals all over the world for resources, usually at good prices.

And then Oz showed up.

In my opinion, this whole affair is about China becoming belligerent on foreign resource negotiations, and using Oz as a case study of what they will do to those who dare resist their approach for special pricing or purchase.

As of this morning, China was lining up their next big investtment in Australia.  What if Oz says no?  Do the Chinese arrest more managers inside China?

What do they do next, shoot them?

The foreigners really don’t see what the Chinese are up to here.

This is not about an Australian citizen spying on China; it is about China buying Australia.