AN INTERNAL Chinese government post-mortem into the collapse of the $US19.5 billion Chinalco-Rio Tinto investment deal has exonerated both the Australian government and the Anglo-Australian miner.
Instead, it accepts the prevailing view in Australia that ordinary economic forces killed what would have been China's biggest foreign investment deal.
''Objectively speaking, the failure of the merger between Chinalco and Rio Tinto lies in the rapid recovery of the world resources market including the related stock market, which was beyond everyone's expectations,'' says the report to the State Council, seen by the Herald.
The report says the failure of the deal provides an opportunity for ''introspection'' and has exposed China's own lack of experience, talent and political acuity in investing the country's enormous savings abroad. Its clear-eyed conclusions undermine arguments that the arrest of Rio Tinto's Stern Hu and three colleagues was an act of revenge against Australia or the company following the collapse of the complex Chinalco deal on June 5 last year. Some observers, however, say top Chinese leaders who supported the Chinalco deal were undermined by its collapse, leaving them less willing or able to intervene to block the arrests.
The State Council document reveals a capacity to accept and learn from the Chinalco failure, which may lead to more politically sophisticated deals in future. It does not list the Rudd government or its Foreign Investment Review Board among Chinalco's many problems. It accepts ''all nations cannot avoid rebellious emotions of the public when they acquire overseas resources''.
But it also says the Australian backlash to the deal was bigger than expected, largely because of the behind-the-scenes effectiveness of Rio's chief rival.
''BHP Billiton took full advantage of its skilful mass media propaganda and its lobbying capacity to arouse public emotions and influence the judgments of government policy makers,'' it says.
It says BHP ''seized the point that Chinalco had a state-owned background''. It then lists its mistakes that contributed to losing the Australian PR war:
The near-simultaneous timing of Minmetal's bid for Oz Minerals and Valin Steel's investment in FMG.
Chinalco's strategy of keeping a low-profile ''lost opportunities for positive publicity''.
Chinalco regarded Rio's shareholders as unified and ''thus lacked sufficient communications with each important shareholder''.
Chinalco lacked experience in engaging its own lobbyists.
Chinalco wanted too much too fast by combining a large equity investment with separate joint ventures in individual assets.
The State Council document does not mention what many believe was another key problem: the promotion of the Chinalco chief, Xiao Yaqing, to deputy director general of the State Council at the time of the announcement of the deal, which confirmed the tight links between Chinese corporations and the state.
The $US19.5 billion investment deal was signed in February 2009 and collapsed in June, when Rio announced a joint venture with BHP Billiton.