State-owned aluminium firm Chinalco said last week it was putting 19.5 billion dollars into troubled Anglo-Australian mining giant Rio Tinto -- the most money China has ever invested in an overseas company.

For Rio, the deal provides cash to help pay off its vast debt load.

But for China, analysts say, the long-term strategic goal is to get more leverage over the essential materials -- like iron ore, a vital resource for making steel -- that have allowed the country's stunning rise.

Wang Jianhua, vice-director of Mysteel Research in Shanghai, put it simply: "China has money and needs resources."

Before the global economic downturn, China's virtually unquenchable demand for mineral resources helped push up commidities prices. Now amid the slowdown, Beijing could be looking to take advantage while prices are lower.

"It may want to grap the chance to acquire some (overseas) assets when international asset prices are relatively cheap," said Chen Qing of Beijing investment bank Core Pacific-Yamaichi.

China imports an estimated 60 to 70 percent of its copper and the country's steelmakers last year accounted for 38 percent of world production, according to the World Steel Association.

In 2008, they were forced to pay suppliers BHP Billiton and Rio Tinto at least 80 percent more than the previous year.

"Our objectives are to seek commodity and geographic diversification with a view to achieving long-term financial returns from our investments," said Chinalco President Xiao Yaqing in announcing the deal.

Zou Jian, director of the Metallurgical Mines Association of China, told state news agency Xinhua the deal could "give Chinalco some say in the global commodities market" and reduce its dependence on foreign suppliers.

The two companies said the "strategic partnership" would give Chinalco stakes in mining assets as well as bonds convertible to Rio shares, which could eventually raise its overall stake in Rio to at least 18 percent.

But analysts said Australia's announcement of changes in foreign investment laws, made just moments after the Chinalco deal was unveiled, signalled the government plans to scrutinise the deal closely.

Chinalco has said it expects to get regulatory approval of the deal.

Yet the move has highlighted worries about China's growing international influence on world markets, and will evoke bitter memories in China of state-owned oil company CNOOC's failed 2005 bid to buy US company Unocal.

That deal foundered in the face of stiff US political opposition.

China has also had its fingers burned with deals in the banking sector, including investments by sovereign fund CIC in Morgan Stanley and Blackstone and by insurer Ping An in the former finance wing of Dutch-Belgian bank Fortis.

The far-reaching Rio deal, however, may prove to be as popular abroad as at home.

"It will help stabilise global iron ore prices," Mysteel's Wang said. "(And) it will stabilise domestic demand by securing supply to meet China's economic development needs."

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