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‘Firmly and forcefully’: China threatens Australia over Belt and Road decision

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Mar 30, 2020
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China has threatened retaliation over the federal government’s decision to cancel Victoria’s Belt and Road agreement as the move secured support across the political and security spectrums in Australia.

But senior Australian officials who were not authorised to speak on the record said Australia was prepared to wear China’s response given how the nation had survived the past year of economic coercion.

In the first official comments from the Chinese government since Wednesday night’s decision, Chinese Foreign Ministry spokesman Wang Wenbin said the move would deepen tensions between Canberra and Beijing. Australia is the first country to have scrapped a signed BRI agreement.

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Xi Jinping raises his glass for a toast during the Belt and Road forum in Beijing in April 2019. CREDIT:AP


“China has made solemn representations to the Australian side and reserves the right to react further,” Mr Wang said.

“China urges Australia to immediately correct its mistake, immediately revoke the relevant wrong decision, and not to continue to rub salt on the wound of the already difficult Sino-Australian relations. Otherwise, China will definitely respond firmly and forcefully.”
The Victorian government largely remained silent on the issue on Thursday. Employment and Small Business Minister Jaala Pulford said the cancelling of the agreement would not have an adverse impact on the state’s pipeline of infrastructure projects.
Ms Pulford refused to be drawn on whether Victoria erred in signing the deal and whether it was, as the Commonwealth contends, inconsistent with Australia’s foreign policy. She said she assumed the Commonwealth made its decision with an understanding of any potential ramifications, which could include further Chinese trade strikes against Australian exporters.
China “could not be angrier. But they have got themselves into a bit of a problem ... There is not much they can do to Australia any more.”
Perth USAsia trade expert Jeffrey Wilson
“It’s a matter for the Commonwealth government,” she said. “Our people in our trade offices work day and night ... to make sure Victorian businesses have every opportunity to succeed in global trade. That will continue.”

Foreign Minister Marise Payne said the government made “no excuses for strongly protecting the national interest”.

“It is the federal government that decides the foreign policy settings of our country and determines what’s in our national interests in terms of bilateral partnerships with other countries,” she said.

Opposition foreign affairs spokeswoman Penny Wong said cancelling the agreement was the right move, but the Morrison government now needed to manage the fallout with Beijing and deliver on diversifying Australia’s trade and economy.

“The Victorian government has accepted this veto decision and that’s a good thing,” she said. “The Morrison government should now engage constructively with states to manage the impacts of these new laws.”

The move leaves key Australian exports vulnerable to further strikes from China after trade sanctions on $20 billion worth of products over the past year.

“By using this domestic law, Australia basically fired the first major shot against China in trade and investment,” Chen Hong, a director of the Australian Studies Centre at the East China Normal University, told state media outlet the Global Times on

Thursday
. “China will surely respond accordingly.”
Perth USAsia Centre trade expert Jeffrey Wilson said China “could not be angrier”.

“But they have got themselves into a bit of a problem with all the trade sanctions. There is not much they can do to Australia anymore,” he said. “Once you’ve thrown the kitchen sink at someone, in a tactical sense the Australian government is liberated to do whatever the hell it wants.”


But Mr Wilson said the long-term economic prospects from an extended fallout were ominous and education remained vulnerable once borders re-open.

“You do need an exit visa to get out of China to go and study overseas,” he said. “So they could basically deny them. It’s certainly not on the table today, but there is a different environment in the future where there would be new options for them.“_

Up to 60 per cent of Australia’s international $5 billion-a-year student intake is from China.

Senator Payne said Australia’s agriculture sector had shown it was able to diversify its customer base after multiple trade strikes last year over human rights and national security disputes. Australia’s largest export, iron ore, worth $80 billion a year, remains untouched by Chinese trade sanctions.

“China, the world’s largest steelmaker also benefits greatly from the quality and the quantity of our iron ore,” she said. “I’m confident that that relationship, despite the challenges we have today, will continue to promote job creation in our country.”

Michael Shoebridge, director of the Australian Strategic Policy Institute’s defence program, said Australia now had a more coherent national policy on economic engagement with China. He said the BRI decision recognised it was not in Australia’s interest to help the Chinese government “create a more Sino-centred global economic order where it has more economic leverage over others including us”.


“The BRI was President Xi’s signature policy to creating that Sino-centred global economy, and not helping implement that dream of global economic power is a good thing,” he said._

“Politically it helps Daniel Andrews because this was a running sore for him because he was out of step with the public and the federal government. This gives him an out. This decision is a graphic illustration of the fact that security and diplomatic interests are now intertwined with economic interests, and any decision that misses that point leads to really bad decisions like Victoria’s two BRI agreements.”_

James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney, said the Morrison government was right to be annoyed with Beijing for striking the deal with a state government, but said it could have just waited for the deal to expire instead of striking it out. He said the decision has come after “several months of relative restraint from both sides” following relations between the two countries last year deteriorating to their worse level in decades._

“Let’s be clear what has been ‘cancelled’: a non-legally binding agreement that didn’t commit the Victorian government to doing anything, let alone the national government,” Professor Laurenceson said.

“Canberra’s annoyance with Beijing for striking this deal with a state government is understandable. If the shoe was on the other foot Beijing wouldn’t cop it. But acting as Beijing would act isn’t a model Australian foreign policy should be aspiring to.”_


 

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