REFILE-Q&A-China holds Rio Tinto executives in secrets case

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By Lucy Hornby

BEIJING, July 13 (Reuters) - Four Shanghai-based employees of global mining firm Rio Tinto (RIO.AX)(RIO.L) were detained last week on accusations of stealing state secrets.

The case highlights the risks for foreigners doing business in China, a country run by a single party with no independent judiciary.

WHAT HAPPENED?

Stern Hu, Rio's head of iron ore marketing in China, and three other members of the iron ore team were detained in early July for "stealing state secrets". Sources said Hu, an Australian of Chinese descent, was accused of obtaining and passing on the Chinese industry's negotiating position.

An iron ore executive from China's eighth-largest mill, Shougang, was also taken into custody, Chinese media reported. Executives from other big Chinese mills have also been questioned.

The arrests came as local media reported Chinese steel mills had given in on annual iron ore prices, agreeing to the same 33 percent cut other Asian steelmakers set earlier.

That capitulation would be a loss of face for the state-backed Chinese Iron and Steel Association, which had vowed to the central government it could achieve a deeper discount. Chinese and Rio Tinto officials have denied any agreement was reached.