Australia halts infrastructure agreements with China

Australia's federal government has cancelled agreements between China and Victoria's state government under Beijing's infrastructure development programme the Belt and Road Initiative (BRI), calling the pact inconsistent with Australia's foreign policy and adverse to Canberra's foreign relations. The move comes after a period of strained relations between the two countries, which has particularly affected their coal trade.

Australia's federal government made the decision after a review of existing arrangements with foreign national governments between Australian states, territories, local governments and Australian universities covering around 1,000 agreements. The review came under new rules that provide the federal government with enhanced powers over all foreign agreements. Canberra gained its enhanced powers in December after ushering in new legislation.

Canberra cancelled four arrangements, including two agreements signed by the Victoria government and Beijing under the BRI, said Australian foreign minister Marise Payne. These were an initial deal between Victoria and China's main economic planning agency the NDRC on co-operation under the BRI, signed in October 2018, along with a second agreement jointly promoting it that was signed a year later. The two other arrangements cancelled were Victoria's initial deals with Iran and Syria on education.

Trade tensions have affected coal exports from Australia with no thermal coal exports to China in February for the second successive month. But their iron ore trade has been largely unaffected with around 80pc of Australia's iron ore exports shipped to China. Iron ore is Australia's largest export commodity by value and volume.

China has imposed various trade sanctions on an expanding group of Australian exports, including barley, beef, coal, copper, lobster, certain wood products and wine since Canberra last year called for an independent inquiry into the origins of the Covid-19 coronavirus. This followed Australia banning Chinese telecommunications company Huawei from building 5G telecommunications networks.

By Kevin Morrison