The Chinese were, of course, joking about the financial impact of the actions of former Rio Tinto executive Stern Hu and his three fellow workers (sacked last night by the company).

Media reports in Australia this morning said the judge in the Shanghai court claimed the quartet caused huge losses for China’s steel industry, a claim that is not backed up by the surge in the volume of China’s iron ore imports last year and the drop in their cost to the country.

The reports said the presiding judge claimed the four had caused 1.018 billion yuan ($164.6 million) in losses to Chinese steel companies, as well as 11.73 million yuan in interest on those losses. All up about $166 million in losses. That sounds a lot, but it’s a small drop in the vast business that’s the Chinese steel industry.

Looked at another way, the claimed cost is about 2.7 million tonnes of iron ore at the official Japanese contract price for the 12 months ending tomorrow of $62 a tonne (ignore the fact that the Chinese never agreed to that price). At the previous contract price it was about 1.6 million tonnes, and at the current spot price of about $US140 a tonne, its 1.2 million tonnes of ore.

Last year China imported 630 million tonnes of iron ore, up 41% from the previous year and more than double the 2005 level. Iron ore imports have been running at 60 million tonnes a month recently.

Over the full year, that’s 1.72 million tonnes of iron ore every day coming through China’s ports. The dollar value of those daily imports would have been close to the figure in costs claimed by the government.

Steel produced was up 13% to an all-time high of 568 million tonnes. In every way the Chinese steel industry had a record year last year.

But the most telling statistic was the fall in the per tonne value of iron ore imports last year. Despite the 41% rise in volume, the value was a reported $US50.14 billion, down 17.4% over the 12 months, with the average price of $US79.90 per tonne down around 41.7% from the 2008 figure.

China imported 160 million tonnes and 140 million tonnes of iron ore from Australia and Brazil respectively; up 42.9% and 41.5%. So no “punishment” for Australia, or Rio Tinto from the government for the actions of Stern Hu and the other executives.

The Chinese government would have us believe that four men working for Rio Tinto caused “economic damage” to the country’s national interest to the tune of one day’s iron ore imports at best. The amount of iron ore involved and its value wouldn’t match the spillage and ore blown away by the wind (China buys fines, not lump ore) from the stockyards at steel mills and import facilities. The dollar value of the losses claimed by the court were nothing compared to the entire value created by the Chinese steel industry last year.

Given the amounts are so small as to be a joke, what is the real reason for the prosecution and the supposed state secrets? It can’t be a mere $166 million or so in economic losses. The corruption claimed by the court (and accepted by Rio) is not a real offence in China, so long as no one really notices, or you keep onside with the right faction. If you fall out with the dominant faction or the government it suddenly becomes a an issue (of life or death in many cases).

Was the corrupt behaviour by Stern Hu and others merely a failure by them to institutionalise their activities by converting them to something like cosy share deals, under-priced options or consultants fees and retainers, as it is so often done in the West (including Australia)?