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By James Grubel
CANBERRA (Reuters) - Australia declared an end to diplomatic tensions with China on Monday despite differences over the arrest of a Rio Tinto mining executive, and urged Beijing to stay calm when disagreements flare in the media.
Australia's ties with China have been tense for several months after China's state-owned metals firm Chinalco failed in a bid to take a $19.5 billion (12 billion pound) stake in Rio Tinto, an Anglo-Australian mining company.
The arrest in China of Rio Tinto executive Stern Hu, an Australian, and three Chinese staff on suspicion of corporate espionage added to the diplomatic chill.
"We have been going through some tense times but we're confident that we're now effectively back to business as usual," Australian Foreign Minister Stephen Smith said.
The thaw was on show when Prime Minister Kevin Rudd met China's Premier Wen Jiabao on the sidelines of an East Asia summit in Thailand on Saturday. Rudd also announced that China's vice-Premier Li Keqiang would visit Australia, in a further sign that government-to-government relations were back on track.
In a speech to a China forum, Smith said the China-Australia relationship was becoming more important to both countries, as China looks to Australia for the supply of raw materials, energy and food.
But he said as ties grew, so did political and media scrutiny, meaning differences between the two countries would be more noticeable than in the past.
He said China needed to understand media comment in Australia did not always reflect government policy and both sides needed to respond in a calm and measured way to public debate.
"When public disagreement occurs, it is generally regarded with much more seriousness than is the case in Australia, where it is often regarded as a healthy and positive aspect of policymaking."
China was Australia's second-biggest trading partner behind Japan in 2008, with two-way trade worth $53 billion, accounting for 13 percent of total Australian trade. China and Japan account for 40 percent of all Australian exports.
Chinese state-owned companies have been eager to buy into Australian mining assets to secure supplies of raw materials in its rapidly growing economy, the world's third largest.
Australia on Friday approved China's Yanzhou Coal's $2.9 billion takeover of Australian coal-miner Felix Resources Ltd, but said the firm's assets must be run by an Australian company.
Smith said Australia continued to welcome Chinese investment, adding the Rudd government had approved about $35 billion of Chinese investment in the past two years.
However, he said tensions over issues such as the arrest of Hu would arise from time to time, and would spill into the public arena.
Australian officials had visited Hu five times since his arrest, Smith said, urging China to quickly deal with the case, consistent with Chinese law and procedures.
(Editing by Dean Yates)

Reuters