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China threatens to retaliate after Australia cancels two Belt and Road agreements

Helen Davidson in Taipei and Daniel Hurst in Canberra
·5-min read
<span>Photograph: Hagen Hopkins/Getty Images</span>
Photograph: Hagen Hopkins/Getty Images

China has threatened to take further action against Australia after the Morrison government cancelled Victoria’s two Belt and Road agreements, in a sign the diplomatic dispute between the two countries may worsen.

China’s foreign ministry said on Thursday it had lodged a “solemn” protest with Australia and reserved the right to take further action, just hours after the Chinese embassy in Canberra warned Australia would “only end up hurting itself”.

The message was amplified by Chinese state media, with the nationalistic tabloid the Global Times stating Australia had fired a “major shot” in what could be another trade war.

But the Australian government insisted on Thursday it was simply defending its national interests by blocking the two agreements between the Victorian state government and China’s reform commission.

Related: Federal government tears up Victoria’s Belt and Road agreements with China

The Australian defence minister, Peter Dutton, said he would be “very disappointed” if China retaliated against the decision.

“We aren’t going to be bullied by anyone; we are going to stand up for what we believe in and that’s exactly what we’ve done here,” Dutton told 2GB radio.

The prime minister, Scott Morrison, said he would protect Australia’s national interests and ensure “that there is one foreign policy of this country”.

He said the foreign veto laws that the government pushed through parliament last year were merely designed to ensure that agreements struck by the states and territories and local councils did not conflict with the national interest.

“So we have followed through,” Morrison told reporters in Canberra. He added that the decision was in line with Australia’s desire for “a free and open Indo-Pacific and a world that seeks a balance in favour of freedom”.

But the Global Times warned on Thursday that Australia could face consequences for “unreasonable provocation”.

The report cited “observers” as saying: “By tearing up the agreements, Australia’s federal government is not only going over its head to provoke China but also stepping over its state jurisdiction for its own political interests which could be a serious blow to both federal and local economies.”

On Twitter, the paper’s editor, Hu Xijin, pondered whether Australia was “a uncivilized rogue that deserves stern admonition and punishment?”

A related hashtag on Weibo had been viewed more than 260m times by Thursday afternoon, drawing sarcastic comments about Western approaches to contracts, and warning Australia not to “lift a stone and hit yourself in the foot”.

“The Western countries with double standards only talk about the ‘spirit of the contract’ when it is in their favour,” said one.

However, comments on the Australian embassy’s account remained at fewer than a few hundred across various posts, primarily making accusations of disloyalty, and references to the alleged war crimes by Australian soldiers in Afghanistan.

While Chinese officials routinely threaten vague “consequences” during international disputes, it has taken direct action against Australia in the past year, enacting sudden tariffs and bans on Australian products including wine, beef, barley and coal imports.

The Australian foreign minister, Marise Payne, who is visiting New Zealand, revealed late on Wednesday that she would use the foreign veto laws, for the first time, to tear up Victoria’s Belt and Road agreements with China.

She argued the agreements were “inconsistent with Australia’s foreign policy or adverse to our foreign relations”.

Speaking in Wellington on Thursday, Payne denied the decision singled out China, noting she had simultaneously cancelled two older agreements between the Victorian government and Iranian and Syrian entities.

The Victorian state government’s agreements with Beijing aimed to promote cooperation between the two sides under the banner of Xi Jinping’s signature infrastructure program, the Belt and Road Initiative.

Related: China's belt and road initiative: what is it and why is Victoria under fire for its involvement?

The two sides had pledged to focus on infrastructure, with the goal of increasing the involvement of Chinese companies in Victoria’s construction program and also promoting a greater role for Victorian firms in China.

The framework agreement also set out a goal of boosting two-way trade between China and Victoria, especially for agricultural products, food, alternative medicines and cosmetics.

They pledged to explore cooperation in high-end manufacturing, biotechnology and agriculture technology and to discuss how to tackle the challenges of an ageing population.

But the arrangement was in an early stage with no specific projects agreed and the Victorian government had repeatedly promised to “consider both Victoria’s and the national interest before agreeing to any specific activity”.

Xi’s Belt and Road Initiative has long drawn concerns among some western politicians and security agencies. They have previously raised concerns about the conditions Beijing has imposed in return for its economic assistance, and have accused it of ensnaring poorer countries in “debt traps”.

China denies those accusations, and argues the Victorian deals were intended to “promote economic growth and the well-being of the people of Victoria”.

Payne did not respond directly to a question about whether the Australian government wanted the New Zealand government to take a stronger line against China, after Wellington raised concerns about expanding the remit of the Five Eyes western intelligence alliance.

But Payne said it was important to “acknowledge that China’s outlook and the nature of China’s external engagement, both in our region and globally, has changed in recent years”.

“An enduring partnership [with New Zealand] requires us to adapt to those new realities, to talk with each other,” Payne said alongside her NZ counterpart, Nanaia Mahuta.

“And what we have offered is clarity, and consistency and confidence.”