China shut down a channel for diplomatic and trade talks with Australia on Thursday in a largely symbolic act of anger, following clashes over a wide variety of issues, including human rights, espionage and the origins of Covid-19.
Tensions between the two sides have skyrocketed since Canberra called for an independent investigation into the origins of the coronavirus pandemic last year and banned telecom giant Huawei from building Australia’s 5G network.
China – Australia’s largest trading partner – has already imposed tariffs or disrupted more than a dozen key industries, including wine, barley and coal, decimating exports.
In the latest salvo, the China-Australia Strategic Economic Dialogue was drawn “on the basis of the Australian government’s current stance,” China’s National Development and Reform Commission said in a statement Thursday, blaming some officials for a “Cold War mindset “and ideological discrimination”.
Beijing will “suspend all activities under the agreement indefinitely,” the statement said.
Australia called the decision “disappointing,” with Commerce Secretary Dan Tehan saying the dialogue had provided an important forum for the two countries – although he added that no such talks have taken place since 2017.
The Australian dollar fell 0.6 percent shortly after the news, before recovering later in the day.
It was not immediately clear whether the feud would affect a free trade agreement between the two that went into effect in 2015.
Canberra has previously described the avenue for talks – designed to boost trade between the two sides and introduce major Chinese investors – as one of the “most important bilateral economic meetings with China”.
It declared the first meeting in 2014 an opportunity for “closer economic ties”, but relations between the two have since been deeply frozen.
“It is mainly a symbolic move, yet the trend (of) discussion and dialogue being suspended at lower and lower levels is a real concern,” said James Laurenceson, director of the Australia-China Relations Institute at the University of Technology. Sydney.
“Overall, we see in Canberra and Beijing that both sides are doubling down and hardening their position,” he said.
Last month, Prime Minister Scott Morrison’s government scrapped a Belt and Road deal between Beijing and the state of Victoria.
Chinese President Xi Jinping’s signature initiative is a massive trillion-dollar plan for a network of investment and infrastructure in Asia and the world.
Beijing reacted with anger to the Victoria state’s move, warning that taking the ax in the deal would do “serious damage” to relations.
But critics have argued that the deadlock between the two sides provides cover for China to create geopolitical and financial leverage.
This week, Australia joined the discussion saying that a Chinese company’s controversial 99-year lease on Darwin Port is also under review and may be scrapped.
Darwin is the main port on Australia’s north coast, closest to Asia and a base for United States Marines rotating in and out of the country.
Defense Secretary Peter Dutton told the Sydney Morning Herald that his department had been asked to “come back with some advice” on the 2015 deal and refused to rule out the possibility of the Chinese firm of Landbridge being forced to divest for national security reasons.
The deal – negotiated by local authorities in Australia’s Northern Territory – had raised serious concern in Canberra and Washington, where it was seen as a strategic commitment.
Two sides are also engaged in an ongoing feud over espionage, with Beijing accusing Australia of invading the homes of Chinese journalists.
Meanwhile, China has accused Chinese-born Australian writer Yang Hengjun of espionage and has arrested Australian TV presenter Cheng Lei for “supplying state secrets abroad”.