Chinese state investigators have widened their probe into alleged espionage in the steel mills and iron ore import industries, as the stand off over the arrest of Rio Tinto officials threatens to blow up into a diplomatic incident with Australia.

State officials have widened their investigation to question directors at several Chinese steel mills following the detention of Rio Tinto executives over alleged spying charges.

Chinese officials arrested Stern Hu, an Australian executive of Rio Tinto based in Shanghai, along with three Chinese Rio colleagues. It is believed they have been variously accused of spying, bribery and of stealing state secrets.

The charges relate to negotiations with the China Iron and Steel Association which represents the country's industry in annual negotiations with global iron ore miners like Rio.

It is claimed the executives sought commercially sensitive information such as mill production plans, iron ore stock levels and import information to help Rio in price negotiations.

Australian officials meanwhile fear China's motives over the arrest.

Foreign Minister Stephen Smith said: "We have again pressed Chinese officials yesterday to do two things: firstly to provide us with more detailed information about the circumstances relating to Mr Hu's detention, and secondly, to urge them that this is a matter that needs to be dealt with expeditiously."