Australian and Chinese flags. Picture: REUTERS/ALY SONG
Australian and Chinese flags. Picture: REUTERS/ALY SONG

China has denounced Australia’s decision to cancel agreements between the Belt and Road Initiative and the Victoria state government, signalling a worsening of relations between the countries.

The Australian federal government scrapped the memorandum of understanding and framework agreement signed between Victoria and China’s National Development and Reform Commission, Beijing’s top economic planning body, foreign minister Marise Payne said in a statement on Wednesday. She said the deals were “inconsistent with Australia’s foreign policy or adverse to our foreign relations”.

The Chinese embassy in Canberra said that the step “is another unreasonable and provocative move taken by the Australian side against China. It further shows that the Australian government has no sincerity in improving China-Australia relations — it is bound to bring further damage to bilateral relations, and will only end up hurting itself.”

Australia “basically fired the first major shot against China in trade and investment” conflicts, Chen Hong, director of the Australian Studies Centre at East China Normal University in Shanghai, told the Communist Party-backed Global Times. “China will surely respond accordingly.”

China lodged objections with Australia and reserved the right to take more action, foreign ministry spokesperson Wang Wenbin said at a regular press briefing on Thursday in Beijing.

Relations between Australia and its largest trading partner have been in free fall for a year after the government called for an independent probe into the origins of the coronavirus. Beijing has since inflicted trade reprisals, including imposing crippling tariffs on Australian barley and wine while blocking coal shipments.

“What we have to wait for now is how Beijing will react materially” to Payne’s move, Clive Hamilton, a professor at the Charles Sturt University, said in an interview on Thursday. “The Belt and Road is Beijing’s strategic tool to advance Beijing’s influence around the world.”

The bans are the first under laws passed by the national parliament in December that give the foreign minister the ability to stop new and previously signed agreements between overseas governments and Australia’s eight states and territories, and also with bodies such as local authorities and universities.

No Thaw

Payne’s announcement, which included bans on two other deals between Victoria and the governments of Iran and Syria, came on the day a Chinese diplomat indicated that there will be no immediate thaw in ties between Beijing and Canberra.

“We have done nothing intentionally to hurt this relationship, and we have seen too many incidents over the past few years in which China’s interest has been hurt,” Wang Xining, the Chinese Embassy’s deputy head of mission, told reporters in Canberra.

The BRI deals with Victoria, the nation’s second-most populous state, aimed to increase Chinese participation in new infrastructure projects. They were signed between October 2018 and a year later.

Research Partnerships

The laws allow Prime Minister Scott Morrison’s government to block or curtail foreign involvement in a broad range of sectors such as infrastructure, trade co-operation, tourism, cultural collaboration, science, health and education, including university research partnerships.

Payne said on Wednesday she had been alerted to more than 1,000 arrangements between foreign governments and Australia’s states and territories, local governments and public universities since the laws were enacted.

The law may still allow the federal government to review and overturn memorandums of understanding between Beijing and the state governments of Western Australia, South Australia and Tasmania in sectors such as investment, science co-operation and access to the Antarctic.

“I will continue to consider foreign arrangements,” Payne said. “I expect the overwhelming majority of them to remain unaffected.”

Wang Huiyao, an adviser to China’s cabinet and founder of the Centre for China and Globalisation, said Australia’s move was unwise.

Victoria’s participation in the Belt and Road Initiative was a “huge benefit” for Australia, and “if they abandon that, it’s going to take more time for China-Australia relations to recover”, he said.

– Bloomberg News. For more articles like this please visit Bloomberg.com.

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