The Chinese Government guarantees the lawful rights and interests of foreign enterprises in China, Qin said. Similarly, Foreign enterprises have the responsibility and obligation to observe China's laws and regulations.

Legislation necessary

With shareholders from Australia, Britain and other countries, it is appropriate to classify Rio Tinto as a transnational company, said Zheng Fengtian, a professor at the School of Agricultural Economics and Rural Development of Renmin University of China. After the company became entangled in the "espionage gate" scandal, Australia did not make a self-examination of the company's practices, but has since questioned and refuted China's actions.

"China should formulate related laws as soon as possible to strongly beat the vile practice," said Zheng.

China took part in the United Nations Convention Against Corruption in October 2005, and its laws, such as the Criminal Law and the Anti-Unfair Competition Law, impose severe punishments on commercial bribery. There is still no special provision, however, on punishment against foreign-related bribery.

"Although we can now strike illegal behaviors by foreign companies in China in accordance with existing laws and regulations, it is still urgent to make Chinese law against corruption by foreign-related companies with more direct deterrent effects," Zheng said.

"Espionage gate" imposes new requirements on China's legislators that include the protection of state secrets taken under consideration from the angle of global economic integration, said Qiao Xinsheng, a professor at the Research Center of Social Development of Zhongnan University of Economics and Law. The key point should focus on protecting state secrets related to national economic security.

China is now considering a revision to the Law on Guarding State Secrets, narrowing the protection scope, Qiao said. Since state-owned enterprises (SOEs) still account for a substantial percentage of China's economy, the legislators should give priority to the issue of utilizing state organs to protect state secrets in SOEs.

"If legislators define state secrets as just secrets in the national defense, foreign affairs and political fields and are not aware of the importance of protecting national economic secrets, they are bound to be not so comprehensive in formulating the law," Qiao said.

Since the management personnel of China's SOEs have access to a considerable amount of state secrets, Qiao holds that it is obviously not enough to protect state secrets by simply relying on the internal provisions of SOEs. On the one hand, the state secrecy department must adopt measures to prevent leaks of state secrets, while on the other, the legislature should formulate related laws.

Greasing Palms

In recent years, multinational companies have been disclosed to have been involved in bribery scandals in China on numerous occasions.

In 2004, Lucent from the United States was disclosed in a bribery scandal in China.

In March 2005, Fidelity National Information Services, Inc. based in the United States was disclosed to have given bribes of up to $1 million to Zhang Enzhao, former president of China Construction Bank.

In May 2005, a Chinese subsidiary of Diagnostic Products Corp. based in the United States, was disclosed to have given bribes of $1.62 million to Chinese doctors.

From 2006 to 2008, Siemens was disclosed to have been involved in an extensive bribery case.

In 2008, Avon (China) was disclosed to have also been involved in a bribery scandal.

In addition to the above-mentioned cases, more bribery by multinational companies in China is carried out in the form of soft bribery, but these individuals are not investigated, said Zheng Fengtian, professor at the School of Agricultural Economics and Rural Development of Renmin University of China. Soft bribery is more concealed and deceitful, making it more difficult to investigate. It is also more harmful to China's economic interests.

The bribery scandal of Rio Tinto is similar to the Siemens scandal involving Europe and the United States. As one of the world's largest electric and electronic companies, Siemens lost its reputation after the scandal. The company was forced to pay a penalty of $1.6 billion and fire a considerable number of employees to settle the case.

Court documents from the United States show that China is one of the major countries where Siemens' bribes are given out. But regretfully, Siemens receives almost no penalty for its bribery in China. This indicates to some extent that there are large loopholes in related Chinese laws and regulations. The recent "espionage gate" event establishes a precedent for a commercial espionage case by China's state security department.