In August Stan Hu and 3 other members of the Rinto Tinto Iron Ore negotiation team were detained in Shanghai for their activity in negotiations with the Chinese Gov't on Iron Ore prices. Intial charges were 'stealing state' secrets. Stan Hu, Austalian Citizen is still detained. The Chinese Gov't announced in Nov that the investigation will continue for another two month and charges will be made public at trial. In Australia, this story continues to be a National Headline and diplomatic issue between the country's.
http://www.abc.net.au/news/video/2009/11/12/2741444.htm
http://news.asiaone.com/News/Latest%2BNews/Business/Story/A1Story20091025-175799.html
How does this relate to game theory? Certainly a game. Two players, pie, and strategic moves galore. I'll concentrate on rationality, specifically the Chinese Government.
Rational Irrationality - Adopting a strategy that is not optimal after the fact, but serves a rational strategic purpose of lending credibility to a threat or a promise.
The above definition is a valuable academic thought of Chinese Gov't action in this case. There is no doubt they have and will use punishment if they believe a negotiating party has not acted fairly.
Will there behavior impact there position with other companies who supply valuable raw materials? A intriguing subject to keep our eye on.
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