Leading article: Facing down the Chinese dragon

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These are uncertain times for western businesses which operate in China. The trial in Shanghai of four executives of the Anglo-Australian mining giant Rio Tinto, including one Australian citizen, on charges of bribery and commercial espionage ended yesterday. The verdict is not expected for several days but the trial has already exposed the opaqueness of the Chinese courts.

Foreign observers were barred from significant parts of the trial, despite strong representations from the Australian government. Few details of the allegations have been released. And there is a belief in some quarters that this is all revenge for Rio Tinto's decision to spurn an offer of Chinese investment last year when the mining giant was in financial difficulties.

Whatever the truth, the trial has fed a mood of concern among foreign businesses in the country. A survey by the American Chamber of Commerce in China this month found that 38 per cent of its members felt unwelcome in the country, up from 26 per cent last year. Their top concerns were inconsistent regulation and judicial treatment. Some newly introduced commercial rules stipulate that sellers of high-tech goods must contain Chinese intellectual property. There is a widespread belief that Beijing wants to squeeze foreign technology companies out of lucrative markets to sell computers and office equipment to government departments.

Meanwhile, Beijing's dispute with Google continues to rage. The internet search giant made good on its threat to pull out of mainland China this week. In return it is being accused by the authorities of being part of a US government plot to impose American values on China.

Google's defiance of Beijing makes for an interesting contrast with the behaviour of Rio Tinto. Despite the trial of his employees, Rio Tinto's chief executive, Tom Albanese, has said his company is still committed to strengthening ties with China. Rio Tinto even signed a new deal with the Chinese aluminium giant, Chinalco, last week. Mr Albanese and his shareholders seem prepared to put up with Beijing's behaviour for the sake of the bottom line. Google on the other hand is taking a firm line, despite the commercial opportunities it is likely to forgo.

Google's stance is certainly the more risky in the short term. But it might also prove wiser in the longer term. China has grown at an incredible rate these past two decades. The country's politically authoritarian model of state capitalism has not been the constraint on economic expansion that many predicted. But it does seem likely that China will, in the end, run into problems if it fails to bring transparency to its courts, or allow greater rights of free expression to its vast population. If radical political change does come to China, its population will remember those western interests which took their freedoms into consideration, and those which put such scruples to one side for the sake of profit.

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