China, unhappy at the handling of the negotiations over iron-ore shipment contracts, took into custody Shanghai-based Rio executive Stern Hu, alleging he had engaged in industrial espionage.

Further inflaming tension was the visit of Kadeer to attend the premiere of an Australian-made documentary about her life and work.

Opposition Liberal Party leader Malcolm Turnbull blamed famously Sinophile Prime Minister Kevin Rudd for the deteriorating relationship.

Rudd, a Mandarin-speaker and a former diplomat in Beijing, stands accused of frittering away goodwill.

'(Relations) are at the lowest ebb they have been for many, many years and Rudd has mishandled our relations with China,' Turnbull said.