Even before the ink was dry on China's deal to acquire a 12 per cent stake in Rio plc, advisers to Beijing had already approached regulators to get clearance to lift the holding to just under 20 per cent.

Sources close to the authorities in China yesterday insisted that the purchase of what equates to 9 per cent of the wider Rio Tinto group was only a precautionary measure, but it underscores Beijing's determination to have a seat at the table at one of this year's hottest M&A deals.

It also underlines China's global ambitions at a time when the rest of the world is still reeling from the painful effects of last summer's credit crunch.

State-controlled Aluminium Corp of China, known as Chinalco, sent shockwaves through markets when it announced yesterday that it had joined with Alcoa to fork out $14 billion (£7 billion) for a significant stake in London listed Rio Tinto. The deal valued Rio at £60 a share, way above the value of BHP's share offer, currently equal to £50 a share.

It is the largest investment by China in a foreign corporation to date and it comes after similar deals last year to acquire stakes in Barclays Bank and Blackstone.

The move will give China a blocking stake to use against BHP Billiton, the Anglo Australian miner that is trying to buy Rio to create the world's largest mining group and the second biggest producer of iron ore.

A source close to the Chinese said yesterday: “The central issue is that the Chinese have a huge demand for steel to drive their economy and they could not put themselves in a position where the majority of the world's iron ore is held by one company.”

The source added: “This decision went right to the top, to the President.”

BHP and Rio together are the world's second and third largest producers of iron ore, while China has very few natural resources of its own and is one of the world's largest consumers of the metal.

Chinalco, which paid $13 billion of the total investment, made the audacious move just days before BHP's deadline for making a firm bid for Rio or walking away.

While Chinalco said it had no immediate plans to bid, the company said it reserved the right to enter the fray if BHP raises its offer.

It comes as Vale, the Brazilian mining giant and the world's biggest producer of iron ore, is itself considering a bid for Britain's Xstrata, which could be worth more than £35 billion.

The dawn raid also follows Gordon Brown's visit to China last week, although sources said the Prime Minister had no idea of Beijing's intentions.

Speaking at a press conference yesterday, Chinalco's president Xiao Yaqing described the deal as a long-term “strategic financial investment”.

He said that the group was “currently happy” with a 12 per cent stake in Rio but appeared open to the possibility of raising this later and sources said Beijing had already applied to the Australian regulators to get clearance to lift its holding to 19.9per cent if required.

“We don't believe this is a very high price,” he said, adding that the acquisition “reflects fair value”.

Mr Xiao said Chinalco had sought the support of the Chinese Government before buying the shares but insisted that “this investment was driven by (our own) commercial interests” and had not been guided by the state.

Rio surged 13 per cent at £56.42. China's move effectively sets a £58billion price tag on Rio that BHP must at least match if it wants to win control.

It also gives Beijing a powerful seat at the table and would mean that China could block BHP's bid if it chose to do so.

Although the news came as a surprise yesterday, sources said the deal was several months in the making.

Mr Xiao first flew to London in December to discuss its strategic options after BHP made its move on Rio.

It chose investment bank Lehman Brothers to advise it and there followed a series of meetings in London and Beijing, with Nick Wiles, Lehman's chairman of UK investment banking flying to the region once a week as the plan was hatched.

The Chinese Government finally signed off on the deal earlier this week and Mr Xiao and his team flew to London on Thursday afternoon.

After the markets closed later that day, Mr Wiles and his team moved quickly through the market, striking deals with a small number of handpicked shareholders.

The raid began briskly at 4.30pm and by 11pm the shares were safely in Chinese hands.

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