Australia Cancels Victoria’s Belt And Road Deal With China

On Wednesday, April 21st, the Australian government cancelled two agreements signed by its state of Victoria and China on Beijing’s flagship Belt and Road Initiative, escalating the already deteriorating ties between Beijing and Canberra.


Victoria, Australia’s second-largest and wealthiest state, signed a memorandum of understanding with the Chinese government on the Belt and Road Initiative (BRI) in October 2018, making it the only government in Australia to open itself to Chinese President Xi Jinping’s signature trade and infrastructure initiative.


Although the deals had been signed, under a new foreign relations law passed by parliament in December, the Australian government has been given the power to review and veto international agreements made at the state and local level if deemed to negatively impact the country’s foreign policy. In a statement from Australia’s Department of Foreign Affairs and Trade, under the new process, Foreign Minister Marise Payne said she had decided to cancel four agreements, including the two between Victoria and China in 2018 and 2019 regarding the BRI.


Payne said the decision was not directed at any particular country and the federal government reviewed “more than 1,000” agreements signed between Australia’s states and foreign governments. Of the four cancellations, two were with China, and one each with Syria and Iran, all made with the state of Victoria.


“I consider these four arrangements to be inconsistent with Australia’s foreign policy or adverse to our foreign relations,” Payne said in a statement.


However, despite the Australian government’s statements, Beijing remains infuriated and doubtful of the true intentions of cancelling its BRI agreements. The Chinese embassy in Australia quickly denounced the cancellations in an official statement, citing Beijing’s “strong displeasure and resolute opposition.”


“This 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,” The spokesman stated. “It is bound to bring further damage to bilateral relations and will only end up hurting itself.”


The Belt and Road Initiative is the Chinese President Xi Jinping’s signature plan to boost global trade and infrastructure but has been heavily criticized by several nations as forcing host countries into debt traps. This accusation has been strongly rejected by Beijing.


In regards to the BRI cancelling, Australia’s Prime Minister Scott Morrison told reporters in a statement, “We will always act in Australia’s national interest to protect Australia, but to also ensure we can advance our national interest in a free and open Indo Pacific and a world that seeks a balance in favour of freedom.”


China and Australia have been embroiled in a diplomatic crisis over the past year, with relations between the two countries plummeting to new lows since Canberra’s call for a global inquiry into the origins of COVID-19 in April 2020. Since then, Beijing has targeted Australian exports such as beef, wine, and coal by imposing high tariffs. The Chinese government has even confirmed in March that Australian wine alone was facing tariffs of up to 218 per cent for the allegations. Chinese investment into the country has also dropped by 61 per cent, but still remains dependent on Australia’s iron ore, accounting for 60 per cent of China’s total supply.


While it should be applauded that escalating tensions between Australia and China have been diplomatic it must be noted that the reactions from Australia’s cancelling of the BRI deal have likely stalled improved relations between the two countries for at least another year. According to Clive Hamilton, a professor at Charles Sturt University in Canberra, Beijing must recognize that while it may take retaliatory measures for the decision, it will have no effect on Australia’s resolve to resist foreign interference by China. Retribution will only provoke further negative views towards China in Australia and weaken the friends they have in the country.