What's in a secret? Rio case frightens Chinese analysts

By Lucy Hornby and David Stanway

BEIJING (Reuters) - China's detention of steel executives suspected of leaking state secrets could reduce the flow of market information in China as analysts and researchers self-censor to avoid trouble.

A senior executive at Shougang, China's eighth-largest mill, is accused of leaking China's position in annual iron ore price negotiations to four members of Rio Tinto's iron ore team, one of whom is an Australian citizen.

All five have been detained, but not charged. Because Stern Hu is Australian, the case has been taken up by the Australian government, which has twice summoned China's ambassador for an explanation.

Much of the information that was supposedly leaked is regularly sought by industry analysts and researchers. Respected Chinese analysts did not want to be named in this article, for fear discussing state secrets could bring unwelcome attention.

"We collect information. Should I now worry that we will hear a knock on the door?" said one Beijing-based consultant.

"We are all about transparency and providing information to our clients. Hopefully it will all blow over and won't spread beyond the iron and steel sector, but this is a big worry for us."

In recent years, Chinese listed corporations have become much more professional about what is, or is not, appropriate to reveal outside the company.

But using the state secrets laws, rather than corporate discipline, is a blunt tool in a country where even the headline national data is routinely available to a large circle of insiders before being officially released.