Australia-China and Stern Hu: Cold War, corruption or cooling of relations

China‘s economic growth over the last decade has been spectacular. Australia has been a beneficiary of this Chinese growth especially in terms of China‘s demand for resources and the strength of Chinese exports. Pundits even suggest that Australia avoided the global recession as a result of this trade relationship. Trade relations between Australia and China have resulted in China becoming Australia‘s key trading partner. The arrest and imprisonment in 2009 of four Rio Tinto executives (including Stern Hu the head of Rio‘s operation in China) based in China case has raised fears of posing a strain on this vital economic relationship. Moreover China‘s inability to takeover of Rio Tinto and the significance and consequences of this incident are at the core of this paper. This paper asks whether these events reflect the uncertainties of doing business in China or whether they demonstrate China‘s sovereign right to enforce anti-corruption legislation. While China has embraced the international business community, the consequences of the arrest of Stern Hu has placed pressures on the Australian-China trade relations which may go beyond normal country to country tensions.