China suspends economic dialogue mechanism with Australia as relations curdle

Bilateral ties were strained in 2018 when Australia became the first country to publicly ban Chinese tech giant Huawei from its 5G network

  
An Australian national flag flutters next to a Chinese national flag in front of the Great Hall of the People at the Tiananmen Square during Australian Prime Minister Julia Gillard's visit to Beijing April 9, 2013. Australia is hoping to see trilateral naval exercises with China and the United States and is pursuing new strategic partnership with Asia's biggest economy, Gillard said on Tuesday.

An Australian national flag flutters next to a Chinese national flag in front of the Great Hall of the People at the Tiananmen Square during Australian Prime Minister Julia Gillard's visit to Beijing April 9, 2013. Australia is hoping to see trilateral naval exercises with China and the United States and is pursuing new strategic partnership with Asia's biggest economy, Gillard said on Tuesday.

REUTERS/Petar Kujundzic

BEIJING - China "indefinitely" suspended on Thursday all activity under a China-Australia Strategic Economic Dialogue, its state economic planner said, 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 the decision.

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

The Australian dollar fell sharply on the news, and was as low as 0.7701 to the U.S. dollar from Wednesday's $0.7747.

Bilateral ties were strained in 2018 when Australia became the first country to publicly ban Chinese tech 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 for comment on China's decision.

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.

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 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 A$149 billion ($115.04 billion) 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 major impact 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, managing director at Singapore-based Navigate Commodities Ptd Ltd.

"This is a co-dependent relationship whereby either party cannot survive without the other." ($1 = 1.2952 Australian dollars)

(Reporting by Gabriel Crossley and Kirsty Needham; Additional reporting by Enrico Dela Cruz in Manila, Gavin Maguire in Singapore, Shivani Singh in Beijing and Wayne Cole in Sydney; Writing by Se Young Lee; Editing by Christian Schmollinger and Sam Holmes) ((vincentsy.lee@thomsonreuters.com; follow me on Twitter @Rover829;))

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