Amid the pressures and turmoil inside China, Beijing has opened up a diplomatic rift with Australia to pursue a policy of intimidation.
Australia came under siege on July 5 with the arrest and detention of Stern Hu, a top executive of mining giant Rio Tinto and three of his colleagues in Shanghai.
In a show of disrespect towards Australia, the Chinese authorities stonewalled consular representations to ascertain details of charges against Mr Hu for two weeks before advising Foreign Minister Stephen Smith that they were focusing on a criminal or judicial investigation relating to the 2009 iron ore negotiation.
As an Australian citizen, the 53-year-old Hu is entitled to one consular visit each month at the Ministry of State Security centre in Shanghai, but he has no access to a lawyer or family.
Fairfax China correspondent, John Garnaut, says that the Chinese President Hu Jintao approved the investigation into Rio Tinto by the Ministry of State Security. Its police have been eyeing the iron ore sector for many years.
Soon there were calls from quasi academics and some media for Australia to adopt a position of appeasement towards this bullying from China. Some wanted Australian mining companies to offer special pricing arrangements to Chinese steel mills during iron ore negotiations. Others were telling the Government to observe China's quite opaque legal system where Hu had been accused of stealing state secrets.
When confronted by aggressive Chinese behaviour any form of concessions would be seen as kowtowing and a loss of respect for government, corporations and the people of Australia.
So far Australian political leaders have taken a firm stand against something less than civilised behaviour coming out of Beijing.
In his first measured comments about the arrest and treatment of Stern Hu the Prime Minister Kevin Rudd warned China, "A range of foreign governments and corporations will be watching this case with interest and will be watching it very closely.
"And they'll be drawing their own conclusions about how it is conducted. It is in all our interests to have this matter resolved."
Mr Rudd said Australia had significant economic interests in its relationship with China. "But I 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."
Foreign Minister Stephen Smith said it seemed clear the road the Chinese authorities were going down related directly to commercial matters: "It's very hard for the Australian government to, frankly, see the connection between what might be daily commercial matters ... and national security issues."
The Opposition Leader Malcolm Turnbull asked the government to do more to assist Hu.
In his second and stronger statement Rio Tinto's iron ore chief, Sam Walsh said the miner remained very concerned about the detention of the four employees: "Rio Tinto believes that the allegations in media reports that employees were involved in bribery of officials are wholly without foundation."
Mr Walsh said Rio believed the employees acted at all times with integrity and in accordance with Rio Tinto's strict and publicly stated code of ethical behaviour.
For as long as anyone can remember, kickbacks have been commonplace in commercial dealings in China where corruption is so widespread. The investigation by security police into the iron ore sector has sent shockwaves through foreign companies with a presence in China and some are evacuating staff out of the country.
On a recent visit to China, US Commerce Secretary, Gary Locke, raised the Hu case with authorities and called for transparent rules for the commercial dealings of American multinational corporations and others in China.
A leading advocate for Chinese detainees, American John Kamm, believes the Stern Hu case has the potential of becoming a cause celebre in China itself. So as to put all foreign companies with a presence in China on notice, the communist press has been highlighting the case with a stream of articles denouncing Hu as a spy and traitor. It puts the spotlight on China's problematic legal system.
The Chinese will often change course to defuse a row in the face of ongoing adverse publicity, diplomatic rifts and economic losses. All three factors are present in this case.
Several developments over the past year or so would have troubled the Chinese leadership before embarking on this crude exercise in intimidation towards Australia.
This year China would have expected much lower prices for minerals from Australia's mining giants— Rio Tinto and BHP Billiton. However Rio has been playing hardball on iron ore prices. As a counter, China has been using the China Iron and Steel Association to try and control iron ore pricing instead of allowing the 1200 steel mills to negotiate prices.
Last year Kevin Rudd told students at Beijing University it was "necessary to recognise that there are significant human rights issues" in Tibet.
A few days later Hu Jintao replied "The Tibet problem is an entirely internal issue for China."
Just weeks ago an Australian federal parliamentary group led by Michael Danby held a meeting in public with the Dalai Lama for talks about human rights in Tibet.
China's pride and ambition suffered a blow in May after its state-owned Chinalco failed in a bid of $US 19.5 billion to double its stake in Rio Tinto.
Leading mining analysts have described the bid as a creeping takeover of one on Australia's most prized strategic assets.
If over time Rio were to be lost, China's mercantilist trade strategy of ownership, control and pricing of mineral resources around the world would have decimated Australia's BHP Billiton, through pricing in the long run and control the world's richest centre of mineral resources in the vast Pilbara region of Western Australia.
The Chinalco episode was a close run thing for the economy of Australia.
Australia's iron ore export of $18 billion last year is the prime driver of economic growth to sustain the legitimacy and likely the survival of the ruling Communist Party. Outside Australia there is no other source of supply to replace the volume and quality of this precious red dirt.
The Communist regime knows that rising growth above 8 per cent is essential to meet the demands of the impoverished rural population numbering 80 per cent for jobs and a share in the prosperity of people living in the coastal zones.
At home in Australia people will look for a continuing firm and principled response from their political leaders to the Beijing bullies.
After all Kevin Rudd studied Chinese literature under Pierre Ryckmans, one of Australia's finest intellects, who may have told him that the totalitarian nature of the Chinese Communist Party often produces mad dogs for leaders.
Frank Lee was editor of The Clerk national journal Federated Clerks Union of Australia
