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China alleges bribes over steel Foreign firm Rio Tinto is accused of buying inside information.

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SHANGHAI - China stepped up its campaign against the Anglo-Australian mining giant Rio Tinto on Wednesday by saying the company had bribed virtually every one of China's big steelmakers.

The allegation, published on the front page of China Daily, the country's state-run English-language newspaper, ratcheted up the stakes in a case that has already rocked the country's steel industry and strained relations between China and Australia.

In its report, China Daily, which regularly publishes government messages, said Rio Tinto bribed executives from 16 Chinese steel companies, all members of the China Iron & Steel Association, to get access to industry data. The paper attributed the allegation to an unidentified "industry insider" and did not identify the 16 companies.

The report comes more than a week after Chinese authorities detained four Rio Tinto employees, including one Australian national, on suspicions of espionage, stealing state secrets and harming the nation's economic interests and security.

A Chinese government-controlled website said last week that Rio employees had bribed Chinese steel executives to gain access to government documents that could have given Rio Tinto an edge in its annual iron ore negotiations with China's state-owned steel mills.

Rio Tinto declined to comment.

Many of the articles in state-run media also have described rampant corruption in the trading of iron ore.

More than a dozen industry officials, steel analysts and traders interviewed this week also said China's iron ore trade was plagued by corruption.

Experts blame China's two-tiered system for purchasing iron ore. Whereas big steel mills are allowed to negotiate long-term, fixed-price contracts, most small and medium-sized steel mills are supposed to buy from the more volatile, open market - or what is called the spot market.

The system, analysts say, has produced huge arbitrage opportunities, allowing big steel mills with fixed contracts to buy far more supplies than they need and then profitably sell excess supplies to smaller mills on the black market.

"There's a huge underground arbitrage market in China," said Ren Qiang, general manager at Zibo Antai Import and Export Company, which deals in the iron ore trade.

Small mills have long complained about what they see as an unfair system.

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