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China’s government has announced it is indefinitely suspending all activities under the China-Australia Strategic Economic Dialogue – the first formal freeze of a diplomatic mechanism since relations between the two countries soured.

Key points:

  • Analysts say the move is likely retaliation for the federal government tearing up two Belt and Road agreements
  • Beijing accused Australia of having a “Cold War mindset” and practising “ideological discrimination”
  • Relations between the two countries have deteriorated since Canberra called for an inquiry into the origins of the COVID-19 pandemic

Analysts say the move, by China’s main planning body, the National Development and Reform Commission, is likely retaliation for the federal government’s recent announcement that it was tearing up two Belt and Road agreements between Beijing and Victoria.

In a statement, the commission accused Australia of unfairly targeting China.

“Recently, some Australian Commonwealth government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination,” the commission said.

Chinese flags fly high outside the Australian Parliament House in Canberra

However the decision is likely to have little practical impact on Australia.

The last China-Australia Strategic Economic Dialogue was held back in 2017, when then-trade minister Steve Ciobo travelled to Beijing for talks.

But the bilateral relationship has deteriorated since then, and took an even sharper dive last year after Canberra called for an international inquiry into the origins of the COVID-19 pandemic, prompting trade reprisals from Beijing.

All high-level ministerial communications have now been effectively frozen by China’s government.

A Chinese and Australian flag o a conference table
The decision is likely to have little practical impact on Australia.(Reuters: Jason Lee)

Analyst Jeffrey Wilson, from the Perth USAsia Centre, said Beijing’s decision to suspend the dialogue was an “act of pure symbolism” with “zero substantive effect”.

“The Strategic Economic Dialogue has been in abeyance for nearly four years; not to mention the fact that official interactions across the board have been wholly suspended by the Chinese side since April 2020,” he said.

“Specifically, it retaliates against the cancellation of Victoria’s two [Belt and Road Initiative memorandums of understanding], and the announcement of another review of the Darwin Port lease”. 

Mr Wilson said the announcement might also indicate that China had “run out of ammunition” to aim at Australia.

“China has placed sanctions against practically all major Australian exporters that it can, bilateral investment has collapsed, and intergovernmental discussions are non-existent.

“By going thermonuclear in 2020, China now has no substantive forms of leverage over Australia, and has to resort to largely meaningless acts of symbolism.”

Federal Opposition Leader Anthony Albanese said the decision was “regrettable” and said Australia’s trade with China could not be on Beijing’s terms alone.

But he also said the episode highlighted the importance of building relations with other major powers in the region, accusing the government of damaging ties with India by bungling the announcement of its ban on travel from the country.

“What’s also regrettable is that the government says it wants to have better relations with countries including the Quad and that of course includes the US, Japan and India [as well as Australia],” he said.

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