(Adds details, quotes, W. Australia state premier)
By Ben Blanchard
PHUKET, Thailand, July 23 (Reuters) - Australian Foreign Minister Stephen Smith said he told his Chinese counterpart on Thursday he wanted the case of detained Rio Tinto employees in China dealt with quickly.
Smith, speaking to reporters at a regional security gathering on the Thai island of Phuket, said he also agreed with Foreign Minister Yang Jiechi the case would not affect bilateral ties.
It was the highest-level meeting between Australia and China since Chinese authorities this month detained four employees of Rio, including its top iron ore salesman in China, Australian Stern Hu, alleging they were involved in stealing state secrets.
"I pressed the point that we believe this matter should be dealt with expeditiously. The foreign minister made the point that an investigation was under way and that the investigation had to be led to come to its conclusion," Smith said.
"He made the point that so far as China is concerned, this is an individual matter, they're conducting an investigation. It goes to matters of corruption and bribery, it also goes to state secrets, as defined under Chinese law."
Rio denies its employees had bribed Chinese steel mills.
The detentions have raised concerns about doing business in China and overshadowed critical 2009 iron ore price negotiations. Rio's share price, however, has been little affected.
Chinese officials in Phuket previously said Yang would not meet Smith at the Phuket meetings, which end on Thursday.
The case has strained ties between the two countries, with Australian officials frustrated by China's slow pace in dealing with the issue and its reluctance to provide full details of any charges. Last week China's Foreign Ministry told Australia to stop "whipping up" the case.
Smith said he and Yang did not envisage any wider impact.
"Both of us have been at pains to make the point we don't see this going to the wider relationship, which we regard as very good," he said.
WEST AUSTRALIA PREMIER
China is Australia's biggest trade partner, with trade worth $53 billion last year. Iron ore exports accounted for $14 billion of that figure, led by Rio Tinto and BHP Billiton Ltd.
Much of that trade and investment is with the mineral-rich state of Western Australia, whose premier, Colin Barnett, has been meeting Chinese officials and companies this week.
Australia needed to recognise China as a "special case" and devise policies aimed at encouraging more Chinese companies to invest in its resources, Barnet said on Thursday.
Barnett told reporters Chinese companies have been frustrated by Australia's tough foreign investment rules, and their efforts need to receive "special policy attention".
Chinese metals conglomerate Chinalco's failed bid for an 18 percent stake in Rio Tinto had also soured ties between the countries amid the acrimonious iron ore price negotiations.
Barnet, who leads an opposition-ruled state, said he understood Chinalco's frustrations after its $19.5 billion bid to invest in Rio Tinto was rejected in June.
"I think Chinalco behaved impeccably throughout that and I can understand their disappointment... We should not have been having a debate over whether 18 percent was too much or too little."
China bought 68 percent of Australia's total commodity exports in 2008, and its unique role in the country's economy should be acknowledged, Barnett said.
Barnett said he has reassured officials with some of China's biggest state-owned firms -- including the Anshan Iron and Steel Group and the China National Offshore Oil Corporation -- that Western Australia will make "a special commitment to helping Chinese projects get through."
(Additional reporting by David Stanway)
(Writing by Dean Yates; Editing by Bill Tarrant)