“It ruined the foundation for normal communication and cooperation. China had to take the necessary steps. Australia is responsible for all of this, ”a Foreign Ministry spokesperson said Thursday. “We urge Australia … not to tread further on the wrong track.”

The companies warned that the suspension of the economic dialogue would undermine business confidence in trading with China, while Trade Minister Dan Tehan called the move “disappointing.”

“The Strategic Economic Dialogue, which was last held in 2017, is an important forum for Australia and China to work on issues relevant to our economic partnership. We remain open to dialogue and engagement at ministerial level, ”he said.

Government sources said talks on economic issues would still take place through embassies and multilateral bodies such as the World Trade Organization.

But the end of the dialogue formally cuts off one of the few remaining channels open to high-level diplomacy. Analysts said they expected further retaliation from China if the Morrison government canceled a Chinese company’s 99-year lease on Darwin port as planned.

Beijing’s move also comes after Australia last month revoked Victoria’s participation in the China Belt and Road Initiative (BRI), after ruling that its agreements with Beijing were at odds with policy. foreigner from Canberra.

‘Drums of war’

China has also criticized recent talks over the military conflict. Defense Minister Peter Dutton said the conflict between China and Taiwan could not be ruled out, while Home Secretary Michael Pezzullo warned the drums of war were beating.

The Australian Financial Review Taiwan’s Foreign Minister Joseph Wu reported Thursday’s comments warning that the country was preparing for a “final assault” by China and called on Australia to help the disputed territory defend itself against expansionism of President Xi.

“It’s probably no surprise to the federal government. Chinese diplomats have made it clear in private that if the agreement with the BRI is canceled, the NDRC will respond, ”said Richard McGregor, senior researcher at the Lowy Institute.

“It’s symbolic but not without meaning. Every time we do something, there will be another response, so that’s not the end of the road. “

Craig Emerson, who was Labor’s trade minister when the dialogue deal was reached, warned that the loss of access to the NDRC “will have additional economic consequences.”

At the time of signing the deal, Emerson said Australia already had good access to key Chinese economic decision-makers, but ensuring a guaranteed annual meeting was an important diplomatic achievement and was not was appreciated only by a few countries.

“I would hate to think it’s seen as a bit symbolic now,” he said.

The Australia China Business Council said the suspension of dialogue “marks a new low” in the relationship and is of deep concern to the business community.

“There is little to be gained from pointing the finger at the blame. But this is a serious diplomatic challenge that cannot be dismissed as just another case of Beijing stepping up pressure on Australia, ”the council said in a statement.

“Some commentators describe Beijing’s announcement as largely symbolic with little immediate impact on trade. This misses the point. Businesses and consumers in China are taking inspiration from Beijing and there is no disguise of the alarming state of political relations with Australia.

“It will have an impact over time as businesses and consumers look elsewhere. And it further erodes the confidence of Australian companies doing business with China. “

International coronavirus investigation

As part of the economic dialogue, Australia’s treasurer and trade minister were expected to hold annual meetings with key Chinese economic decision-makers.

China virtually severed all high-level diplomatic contacts with Australia in April last year after the Morrison government angered Beijing by calling for an international investigation into the origins of the coronavirus.

Australian top ministers have said their Chinese counterparts will not answer calls. Government sources said diplomatic dialogue was continuing at the diplomatic level as well as in multilateral forums such as the World Trade Organization.

High-level forums for dialogue between leaders and foreign ministers of the two countries remain open. However, the last time the annual leaders’ summit was held was in Bangkok in November 2019, when Prime Minister Scott Morrison met with Prime Minister Li Keqiang on the sidelines of the East Asia summit. .

The last foreign and strategic dialogue was held in Beijing in November 2018, in the presence of Foreign Minister Marise Payne.

“The blow is that this extends the dialogue freeze to higher levels of the bureaucracy,” said James Laurenceson, director of the Australian China Relations Institute (ACRI).

“Political dialogues at leadership and ministerial level have already been a high-profile casualty in the bilateral fallout, but now Beijing is now signaling its willingness to expand this to levels where more practical and everyday challenges in bilateral economic relations. could be discussed. and potentially sorted. “

Although the abolition of the economic dialogue does not directly affect exports to China, analysts have warned that this is a sign of the tension in relations.

China could “go nuclear” by abandoning the China-Australia Free Trade Agreement (ChAFTA) altogether or targeting iron ore once the alternative supplier, Brazil, comes back online next year.

China’s latest actions do not directly undermine Abbott’s 2014 comprehensive strategic partnership with China, but analysts have warned that the deal could be targeted by Beijing in its next round of retaliation.

“While there is no indication that ChAFTA is under threat, China has a lot more leeway to act,” Laurenceson said. “There is the comprehensive strategic partnership. You can imagine affected dairy products and tourists once the borders open. “

Mr Laurenceson said Canberra could be relieved by China’s removal of an agreement in response to the BIS decision not involving further restrictions or bans on Australian exports.

Opposition Leader Anthony Albanese said the suspension was “regrettable”.

“We need a dialogue with China. It can’t be fair on their terms, however. This must be on the terms of both countries, ”he said.

China’s campaign has included punitive tariffs and other trade blockades on Australian exports, including barley, wine, lobsters, lumber and coal, for the past 18 months.

The framework for dialogue and ministerial cooperation was put in place under the government of Julia Gillard and announced during a visit to China by her then Foreign Minister, Bob Carr and Mr. Emerson in 2013. Besides economic dialogue, it included an agreement for annual meetings of leaders and an annual foreign and strategic dialogue.

In 2014, Australia and China elevated their bilateral relations to a “comprehensive strategic partnership” under the Abbott government, intended to deepen ties at a high level in the areas of economics, investment, education, culture. , security and strategic. This coincided with the finalization of the free trade agreement.

The NDRC said on Thursday that all activities in the economic dialogue had been “indefinitely suspended.”

“Recently, some Australian Commonwealth government officials launched a series of measures aimed at disrupting normal China-Australia trade and cooperation due to Cold War mindset and ideological discrimination », Indicates the short press release.

The decision is based “on the current attitude of the Australian Commonwealth government towards China-Australia cooperation.”

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