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Australia nixes two Belt and Road deals with China

April 21, 2021

Beijing has warned Canberra of "further damage" to relations after Australia’s government revoked two Belt and Road Initiative deals instigated by the state of Victoria.

Marise Payne addressing media in Canberra on March 29, 2021
Foreign Minister Marise Payne said the deals inked by the state of Victoria could not be reconciled with Australian foreign policyImage: Mick Tsikas/AAP/imago images

Australian Foreign Minister Marise Payne overruled officials in Victoria on Wednesday, canceling two deals the state made in 2018 and 2019 as part of China's vast infrastructure project known as the Belt and Road Initiative.

Payne said the memorandums of understanding were "inconsistent with Australia's foreign policy or adverse to our foreign relations."

In response, the Chinese Embassy in Canberra warned of "further damage to bilateral relations" after multiple trade rows between the countries on topics ranging from wine to telecoms and as a result of the governments' rival bids to influence Pacific island nations

"This is another unreasonable and provocative move taken by the Australian side against China," according to the embassy.

In 2018, Canberra staged an international first by banning the Chinese tech giant Huawei from Australia's 5G network. 

Canberra handed veto power

In December, the Parliament granted Australia's federal government veto power over foreign noncommercial deals signed by states and territories.

"The Foreign Relations Act is entirely a matter for the Commonwealth government," a Victoria state spokeswoman said on Wednesday.

Victoria Premier Dan Andrews had signed Belt and Road deals with China's National Development and Reform Commission despite opposition by Australian Prime Minister Scott Morrison and his predecessor, Malcolm Turnbull. 

Analysts have warned that Chinese lending for Belt and Road projects could entice developing nations, including Australia's Pacific neighbors, into unsustainable debt, thereby making them vulnerable.

Deals with Iran, Syria also annulled

Reviewing past deals with other nations, Payne on Wednesday also said she would revoke a 2004 memorandum of undertstanding between Victoria state and Iran on education as well as a scientific cooperation agreement with Syria of 1999.

Morrison's government had previously denied that its newly legislated veto power was aimed at China.

Payne on Wednesday said that Australia had more than 1,000 foreign deals overall, including those between its local governments and publicly funded universities.

"I expect the overwhelming majority of them to remain unaffected," Payne said.

Educational ties also strained

Before the COVID-19 pandemic and Australia's border closures, China had been the biggest source of overseas university students.

Australia infuriated China at the pandemic's outset by calling for an independent probe into the coronavirus's emergence in the Chinese city of Wuhan.

Currently in doubt is the presence of China's government-backed Confucius Institutes at Australian universities, amid accusations that they are Chinese Communist Party mouthpieces. 

Australia slams coal import curbs

ipj/msh (Reuters, AFP)

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