Mr. Hu, manager of Anglo-Australian miner Rio Tinto PLC's iron-ore operations in China, and three colleagues who are Chinese citizens, are being held by the State Security Bureau in the Detention House of Shanghai, a red-brick compound next to farm fields on a small road not far from the city's financial center. Authorities allege they bribed steel-mill operators to obtain secrets related to iron-ore price talks, damaging China's "economic security."
No formal charges have been filed against Mr. Hu, who was detained July 5. Rio Tinto says allegations that its employees were involved in bribery are "wholly without foundation." Australian officials have called for China to move quickly with the case.
Mr. Hu couldn't be reached to comment. In China, suspects in state-secrets cases aren't accorded the right to meet with a lawyer while being investigated.
The detentions come amid China's mounting dissatisfaction with its lack of bargaining power in annual price talks with miners, and deep concern about its dependence on foreigners for economically vital raw materials.
For Mr. Hu, that would have complicated his job considerably. Mr. Hu, who is in his 50s, has been in charge of managing Rio Tinto's relationships with China's biggest state-owned steel mills.
Mr. Hu in many ways personifies China's recent history of marketization and opening to the outside world.
Mr. Hu, who was born in the northern port city of Tianjin, was among the first generation of students admitted to universities when they reopened after the chaos of the Cultural Revolution. He graduated from Peking University with a degree in history and then studied at the Chinese Academy of Social Sciences -- and still maintains a scholarly mien, according to industry analysts who say he regularly attended research conferences. As a graduate student, Mr. Hu cowrote a book, "The Art of Entrepreneur Leadership," according to Chinese business magazine Caijing.
In the mid-1980s, he went to work at the China International Trust & Investment Co., now known as Citic Group. Citic pioneered business contacts between a cautiously reforming communist state and the capitalist outside world with the aim of obtaining foreign technology, capital and resources.
Mr. Hu left Citic after several years to join an Australian technology company in Beijing. Then, in the mid-1990s, he joined Rio as its main iron-ore salesman for northern China. In 1997, he became an Australian citizen.
"He was not quite typical for an iron-ore salesman," recalls Philip Kirchlechner, an Australia-based consultant who at the time was leading Rio Tinto's iron-ore sales effort for southern China from the Shanghai office. Unlike others in the business, "He was not into drinking," Mr. Kirchlechner says. "No alcohol, no smoking."
Mr. Hu's abstemious habits didn't hold him back. "He was energetic, diligent, conscientious," says Mr. Kirchlechner. "He was always very eager to make a sale."
In the late 1990s, after the Asian financial crisis hit, that wasn't always easy. "We really had to go out there, visit the mills, take people to dinner, build relationships," says Mr. Kirchlechner. Mr. Hu, he says, was able to use his north China heritage to establish strong bonds with the region's steel-mill executives.
The two men also spent considerable time trying to forecast steel mills' buying behavior. "We wanted to understand future iron-ore demand. It's perfectly legitimate, I think," Mr. Kirchlechner says. He says there was regular information-sharing between the mills and their suppliers that benefited both sides.
Mr. Kirchlechner left Shanghai in 2001, and around that time Mr. Hu became head of iron-ore sales for all of China. Mr. Hu and his wife and two children settled in Shanghai, just before the global iron-ore business was transformed by China's economic rise. In 2003, China surpassed Japan as the largest importer of iron ore.
Spurred in part by rising demand, iron-ore prices marched upward, driving sales and profits for Rio Tinto and other big miners. But China's steel mills continued to follow pricing deals reached first in other countries. Some in China complained Rio Tinto and Anglo-Australian miner BHP Billiton weren't doing enough to boost capacity to meet Chinese demand and keep ore prices from jumping.
Last year, according to figures compiled by Mr. Kirchlechner, China spent more than $57 billion on iron ore and the freight costs of bringing it to China -- equivalent to more than 1% of the nation's gross domestic product. In 2002, it spent less than $3 billion on iron ore.
Ensuring flows of the natural resources required to feed China's industrial-development machine has become a major preoccupation for the government.
"Economic security is viewed as a component of regime and state security in China in a way that it isn't in more advanced industrial countries," says M. Taylor Fravel, a political scientist at the Massachusetts Institute of Technology who studies Chinese national-security issues.