China Inc.'s Top Deal Maker Provokes a Backlash Abroad

China's biggest corporate deal maker is now a rising star in government -- a fact that could trip up one of the nation's biggest-ever foreign investments.

Just days after the head of state-owned Aluminum Corp. of China signed a landmark $19.5 billion deal for part of Anglo-Australian miner Rio Tinto, he left his post to join China's cabinet.

The move by aluminum czar Xiao Yaqing into politics in February raised a critical question about China's state-owned corporate giants as they step onto the global stage: Are they driven by profits, or are they pursuing a nationalist agenda for the Chinese government? A close look at the Rio Tinto deal suggests that the answer is both, as business and politics intertwine for a new breed of globally savvy Chinese executives.

On Wednesday, the deal with the Chinese aluminum company, also known as Chinalco, was the focus of shareholder scrutiny at Rio Tinto's annual meeting. Chief Executive Tom Albanese defended it. "We remain committed to delivering the Chinalco transaction, and our focus is on successfully navigating the regulatory process before putting it to a shareholder vote," he said.

But nailing down regulatory approval could be complicated by the political battle now brewing in Australia over the country's ties to China. In the latest twist, opposition politicians have accused Prime Minister Kevin Rudd, a Mandarin-speaking former diplomat in China, of being a "roving ambassador for Beijing." They also have attacked the defense minister for not disclosing that a Chinese-Australian property developer paid for two trips he made to China when he was an opposition lawmaker. Both men have defended their ties to China.

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