China Thursday called Australia's decision to scrap a Belt and Road Initiative agreement "unreasonable and provocative" and said it would further "damage to bilateral relations."
Australia this week canceled an agreement between China and Victoria state saying it goes against the country's national interest, according to local news reports. The agreement was signed between the state government of Victoria and the National Development and Reform Commission of China in 2018.
China's embassy in Australia said: "It further shows that the Australian government has no sincerity in improving China-Australia relations," the embassy said. "It is bound to bring further damage to bilateral relations, and will only end up hurting itself," it added.
Australia is concerned China is using the agreement as propaganda and using the BRI to load up poorer countries with debt and reduce Australia's influence in the region, trade and political experts said.
China-Australia relations have been in a downward spiral since April last year when Canberra infuriated Beijing by proposing an independent international inquiry into the origins of the COVID-19 pandemic.
China Thursday threatened serious consequences for its "unreasonable provocation," China experts said according to reports in Global Times and other state-controlled news media.
"Australian officials are fully aware of the consequences of the move, but they went ahead with it. That clearly shows Australia's intention to further escalate tensions with China rather than deescalate," according to Chen Hong, a professor and director of the Australian Studies Center at the East China Normal University.
Some Australian businesses, including winemakers and timber companies, have already reported losses in trade with China as a result of tense diplomatic relations. In March, China imposed up to 218% antidumping duty on Australian wines for five years. China also suspended imports of timber and beef from Australia. It said those measures were taken in accordance with its domestic law and regulations to protect Chinese consumers.
"China has not officially responded to Australia's actions against China in terms of trade and investment," Chen said. However, Australia's intention to pick up a trade conflict with China is clear which warrants a response from China, according to Chen.
