Australia cancels Belt and Road agreement signed with China

Australia cancelled the Belt and Road agreement signed by China, escalating trade and diplomatic tensions between Beijing and Canberra.

The state of Victoria signed a memorandum of understanding on the Belt and Road Initiative (BRI) with the Chinese government in October 2018, the only state government in Australia to sign up for Chinese President Xi Jinping’s signature global infrastructure initiative.

Part of Xi’s vision for China’s future economic growth, the BRI is intended to build new trade corridors between Europe and Asia, following the path of the historic silk road. While other countries that have joined the BRI have received large scale funding from Beijing, the deal between China and Victoria appeared to be aimed more at encouraging future investment and trade.

Foreign Minister Marise Payne in a statement said the federal government had evaluated “more than 1,000” deals between Australia’s states and territories and foreign governments.

In total, four deals were canceled, two with China and one each with Iran and Syria, all signed by the Victorian government.

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

Speaking to Australian radio on Thursday, Payne said the decision wasn’t directed at any particular country. However the Chinese embassy in Australia denounced the cancellation in a statement, expressing 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 statement said, adding that the cancellation will only “further damage” relations between the two countries.

China and Australia are already in the middle of a worsening diplomatic crisis, with relations between the two governments at record lows since Canberra’s call for an international investigation into the origins of Covid-19 in April 2020.