China rebukes Australia for 'Cold War mentality' after Belt and Road accords cancelled

Australia said on Thursday (Apr 22) that it cancelled two accords between Victoria state and China on the Belt and Road Initiative because these were out of line with the federal government's foreign policy, which sees a "free and open Indo Pacific" as an integral goal.

A Chinese foreign ministry spokesman responded by urging Australia to abandon its "Cold War mentality and ideological bias" and "immediately correct its mistakes and change course".

The Chinese embassy earlier criticised the move by Foreign Minister Marise Payne to veto two agreements signed by Victoria state as "provocative" and said it would further damage ties.

Prime Minister Scott Morrison told reporters on Thursday the accords were cancelled because his authorities did not want other levels of government to enter agreements that conflict with Australia's foreign policy.

"We will always act in Australia's national interest to safeguard Australia, but to also ensure we can advance our national interest in a free of charge and open Indo Pacific and a global that seeks a balance in favour of freedom," he said.

Under a new process, states must talk to with the foreign minister before signing agreements with other nations.

Payne earlier told local radio the policy was "not targeted at any one country". Wang Wenbin, a spokesman at the Chinese foreign ministry, expressed doubt over that claim during a regular news conference in Beijing.

"The Australian side reviewed a lot more than 1,000 deals and only decided to cancel four, and two of these were agreements with China, so Australia's declare that your choice doesn't target any particular country will not hold water," Wang said.

The spokesman warned Australia against travelling "further down the incorrect way to avoid making the already strained China-Australia relations worse".

Speaking to reporters in New Zealand after ending up in her counterpart Nanaia Mahuta, Payne said Australia sought a clear-eyed and practical engagement with China, particularly as the world emerged from COVID-19.

"We also need to acknowledge that China's outlook, the nature of China's external engagement, both inside our region and globally, has changed recently, and an enduring partnership requires us to adjust to those new realities," she said.

China is the most significant trading partner of New Zealand and Australia.

Mahuta on Thursday repeated comments that New Zealand valued the Five Eyes security alliance - which also contains Australia, Britain, Canada and america - but questioned whether it had been the proper platform for New Zealand to speak from human rights issues.

The comment, first made on Monday, has been widely interpreted as referring to recent Five Eyes joint statements criticising China.

In a joint written statement that did not mention China, Payne and Mahuta said that they had "reaffirmed their intent to work together to preserve the liberal international order that has underpinned stability and prosperity in your community, and foster a sustainable regional balance where all countries - large and small - can freely pursue their legitimate interests".

Australia's conservative coalition government had declined to consent to a country-level memorandum of understanding (MOU) with China on the Belt and Road Initiative.

But Victoria Labor Premier Dan Andrews signed an MOU to promote the infrastructure development initiative in 2018 and a framework agreement in 2019, saying it could bring Chinese investment to his state.

Hans Hendrischke from the University of Sydney Business School said the cancellation of the agreements would have minimal commercial impact because no projects had begun.

"It had no legal force and there were no specific deals," he told Reuters.

Diplomatic relations between Australia and China have worsened since Canberra needed an international inquiry in to the origins of COVID-19, prompting trade reprisals from Beijing.

Fitch Ratings said financial co-dependencies between Australia and China will restrain Beijing from targeting major exports such as for example iron ore.