Prime Minister Kevin Rudd has moved to quash claims the government is avoiding a clash with Beijing over Stern Hu.
With pressure mounting for Mr Rudd to use his clout with China to help the detained Australian Rio Tinto executive, the prime minister on Tuesday revealed he had spoken to a Chinese minister about the matter.
Beijing is investigating more Chinese steel executives as it widens its spying probe that has seen Australian Mr Hu accused of espionage and stealing state secrets.
China has ignored Canberra's demands for details about the Hu case, and it will be a month before consular officials can again meet the Rio Tinto executive, who was detained with three Chinese colleagues.
The Rio Tinto employees were detained in the midst of annual iron ore negotiations, which have been more contentious than normal.
Mr Rudd told ABC radio he had spoken to an unnamed Chinese vice foreign minister about the Hu case when he was in Italy last week.
Despite intense interest in the case and what it means for Sino-Australian relations, it was the first time Mr Rudd publicly mentioned the meeting.
"When I was recently in Italy I ... raised this matter with the Chinese vice foreign minister who was attending that conference and I understand that the foreign minister (Stephen Smith) is himself expecting to meet a Chinese vice foreign minister," Mr Rudd said.
Mr Smith is in Egypt at a meeting of the Non-Aligned Movement.
The government has accused the opposition of politicising the Hu case by continuing to call for direct ministerial intervention.
Mr Rudd accused Opposition Leader Malcolm Turnbull of only wanting "screaming headlines".
"We're interested here in the individual and how we deal with the complexities of the case," Mr Rudd said.
Mr Rudd again promised the government would raise the matter at whatever level of leadership in Beijing was necessary as all relevant facts become apparent.
"Our interests are governed by one thing, that is the wellbeing of this Australian citizen," he said.
He disputed suggestions Beijing had been ignoring demands from Canberra for information.
The Department of Foreign Affairs and Trade has spoken to or called in the acting Chinese ambassador on three occasions but much information on the case appears to have come from Chinese government websites.
"We're engaged with the Chinese on elements of this entire matter and there are further engagements with the Chinese to occur," Mr Rudd said.
"In the last two days since coming back from the G8 plus summit in Italy, I've had rounds of discussions with officials here ... working our way through these matters."
And he rejected suggestions that the government was being cautious in its approach because of fears of getting offside with China, Australia's second biggest trading partner.
"Australia's national interest always and under every circumstance comes first," Mr Rudd said.
"That means the wellbeing of any Australian citizen, they come first.
"We will handle each of the other elements of our relationship in their own terms. The government has been clear about its preparedness to articulate clearly Australia's national interest in all of its relationships aboard, including that with China."
Mr Rudd acknowledged concerns that the Hu case involved the state getting involved in commercial matters.
"That's a continued concern for all of us engaged with the China economic relationship is to make sure that the economic relationship is pursued in its own terms," he said.
But he said Australia would not shy away from making representations on behalf of "individual Australian companies, individual Australian citizens or the broader question of human rights concerns".
"We will prosecute this relationship in a balanced and appropriate way," Mr Rudd said.
The issue took another turn on Tuesday when reports emerged from China that five Chinese steelmakers were under investigation in connection with the Rio Tinto matter.
The China Daily reported executives of Baosteel Group, China's biggest steel producer; Anshan Iron & Steel Group; Laigang Group and Jigang Group were under investigation, citing unidentified industry executives.
Last week, there were reports an executive who oversees iron ore purchases for another major producer, Shougang Group, was also detained.
In an alert on China's competition laws on Tuesday, lawyers Mallesons Stephen Jaques warned clients that new anti-monopoly guidelines, issued on July 7, meant firms should check they weren't now inadvertently involved in monopolistic behaviour.
"Firms should now prepare themselves for possible dawn raids and other enforcement action by the National Development and Reform Commission (NDRC) against pricing cartels," the alert cautioned.
Mallesons partner Martyn Huckerby, based in Shanghai, told AAP their clients were now "actively monitoring" the developments around anti-monopoly law.
Despite the diplomatic wrangle, Treasurer Wayne Swan says it's business as usual with China.
"We recognise that China has an interest in ensuring that we are able to supply the resources that it requires to fuel its continued economic growth," he told a China conference at the Australian National University (ANU).
The government has been quick to quash suggestions the Rio Tinto allegations are linked to a failed bid by China's state-owned Chinalco to grab a bigger share of the Anglo-Australian miner.
Liberal backbencher Bronwyn Bishop again stoked the theory on Tuesday.
"The way in which the government handled the would-be purchase of a large stake in Rio Tinto ... built up an expectation in China and this is the result that we've got," she told Sky News.
Opposition Leader Malcolm Turnbull wouldn't speculate on the reasons for the detention but continued to call for Prime Minister Kevin Rudd to personally intervene.
"The Chinese government would respect us if our prime minister were to call and say he is concerned about Mr Hu's detention," he told reporters.
"This idea that Mr Rudd would cause offence by contacting his counterpart in China is ridiculous."
Australian National University professor Ross Garnaut, a former Australian ambassador to China, told Sky News that discretion was key to Mr Rudd's dealings with Beijing.
"Whatever he does, he will be working in the interest of Stern Hu and his colleagues if he does it quietly," he said.
"Megaphone diplomacy can be counterproductive in many situations.
"The more you politicise (an issue) ... the more sensitive the authorities on the other side become to giving in to foreign pressure."
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