If foreign investors thought they need not concern themselves with the Chinese government’s spotty record on basic rights, the Rio Tinto case might well be their wake-up call. Since July 5 2009, four of the Shanghai-based staff of the Anglo-Australian mining giant have been in jail, no doubt wondering how they will defend themselves against China’s curiously slippery state secrets law.

The Rio Tinto employees, who include an Australian citizen, Stern Hu, have been accused of obtaining confidential documents during negotiations for the supply of iron ore to Chinese state-owned firms.

While the Chinese government has carried out a great deal of legal reform in the past decade, particularly as it prepared to join the World Trade Organisation in December 2001, less progress has been made towards a stable and predictable legal system. The Communist party is still uncomfortable with the idea that its judgment about the best interests of the state must bend to a real rule of law. The crime of disclosing state secrets is a near-perfect illustration of this attitude.

The Rio Tinto case gives China’s foreign investment community a crash course on the Kafkaesque nature of the Law on Guarding State Secrets. This law can classify as state secrets any information under ex­tremely broad criteria, including information that is related to “economic and social development”, as well as a non-specific “other matters” category.

National and local officials are allowed to decide after material has been published whether it is a state secret, and those determinations cannot be legally challenged. As recently as 2005, information related to domestic natural disasters was also on the state secrets list.

Even information already publicly circulated can be problematic, as the case of Shi Tao, a journalist, illustrates. He was sentenced to 10 years’ imprisonment in 2005 for posting on overseas websites the official restrictions the government had circulated to Chinese media outlets on coverage of the 15th anniversary of the June 1989 massacre.

The Criminal Procedure Law and Criminal Law aid and abet the Law on Guarding State Secrets. During the investigatory stage of state secrets proceedings – which routinely lasts months – the Criminal Procedure Law bars suspects access to lawyers pending investigators’ approval. The Criminal Procedure Law also classifies all evidence in state secrets trials as confidential and requires judges to hold trials behind closed doors. Under China’s Criminal Law, state secret convictions can range from a minimum prison term of five years to the death penalty.

Last month, the National People’s Con­gress, China’s parliament, re­leased a draft revision of the Law on Guarding State Secrets for public feedback. However, the revisions focus mainly on securing confidential information stored on computers or transmitted via the internet and leaves intact the law’s broad criteria for classifying state secrets.

China’s international investors have resisted pushing for progress on the rule of law and transparency beyond the immediate boundaries of their commercial interests. The Rio Tinto case, however, shows that those boundaries provide no immunity when the Chinese government perceives its interests to be threatened.

Foreign investors, representative governments and international business federations such as the Chambers of Commerce of both the US and the European Union should urge China to narrow its definition of state secrets and demand an end to the routine violation of international due process standards for all suspects in state secrets cases. A unified challenge by private industry, foreign governments and international business federations would dovetail with the efforts of Chinese lawyers, academics and human rights defenders to end the abuses built into China’s state secrets laws.

Just last month, concerted and diverse foreign opposition to the government’s move to require computer manufacturers to pre-install the controversial Green Dam/Youth Escort internet filter prompted Beijing to delay the measure. There is room for guarded optimism that a similar campaign to demand change in China’s state secrets laws might just bear fruit.

Phelim Kine is an Asia researcher for Human Rights Watch.