China suspends economic dialogue with Australia as ties worsen

Disputes over technology and the coronavirus pandemic have eroded relations between the two countries in recent years.

Bilateral ties between Australia and China were strained in 2018 when Australia became the first country to publicly ban Chinese tech giant Huawei from its 5G mobile telecommunications network [File: Jason Lee/Reuters]

China has “indefinitely” suspended all activity under a China-Australia Strategic Economic Dialogue, its state economic planner said in the latest setback for their strained relations.

“Recently, some Australian Commonwealth Government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination,” China’s National Development and Reform Commission (NDRC) said in a short statement on Thursday about the decision.

The commission did not say what specific measures prompted the action.

The Australian dollar fell sharply on the news and was as low as 0.7701 to the United States dollar from $0.7747 on Wednesday.

Bilateral ties were strained in 2018 when Australia became the first country to publicly ban Chinese technology giant Huawei from its 5G network. Relations worsened last year when Australia called for an independent investigation into the origins of the novel coronavirus, prompting trade reprisals from China.

Australia’s trade minister, Dan Tehan, did not immediately respond to a request by the Reuters news agency for comment on China’s decision.

Ties between China and Australia became fraught after Canberra called for an inquiry into COVID-19’s origins last year [File: Brendon Thorne/Bloomberg]

The last meeting under the mechanism, intended as a framework for economic cooperation, was in Beijing in 2017, when Australia’s trade minister signed an agreement on cooperation on Belt and Road projects in third-party countries.

Australia has, however, declined to sign agreements on direct participation in China’s flagship foreign policy initiative.

In April, Canberra cancelled two Belt and Road deals struck by its state of Victoria, prompting the Chinese embassy to warn that already tense bilateral ties were bound to worsen.

Veto power

Reuters reported this week that Australia was reviewing the 99-year lease of a port in its north to a Chinese firm, according to a government source.

Australia’s federal parliament was granted veto power over foreign deals by states in December amid the deepening diplomatic dispute with China, which has imposed a series of trade sanctions on Australian exports ranging from wine to coal.

In the 12 months to March, Australia exported 149 billion Australian dollars ($115.04bn) worth of goods to China, excluding services, of which iron ore was by far the largest product.

A trader said he expected the latest strains would not have a significant effect on the iron ore trade.

“We believe the iron ore trading relationship between Australia and China will remain ring-fenced in relation to current political tensions between the two nations,” said Atilla Widnell, the managing director at Singapore-based Navigate Commodities Ptd Ltd.

“This is a co-dependent relationship whereby either party cannot survive without the other.”

Source: Reuters