China Australia. Photo: VCG

The Chinese Embassy in Australia on Wednesday criticized a move by the Australian government to cancel an agreement signed between the state of Victoria and China to cooperate under the Belt and Road Initiative (BRI), warning that the move will bring further damage to bilateral ties and will only hurt Australia.

In a statement on Wednesday evening, Australian Foreign Minister Marise Payne said that a memorandum of understanding and framework agreement Victoria signed with China in relation to the BRI had been cancelled under new Commonwealth veto laws, claiming "the arrangement is inconsistent with Australia's foreign policy or hurts its foreign relations."

It is the first time the Australian federal government has used the new veto law, which permits it to cancel agreements states and territories strike with other countries, media reports. The law has been widely regarded as a move targeting China.

Responding to the move, a spokesperson from the Chinese Embassy in Australia said that the move is another "unreasonable and provocative" move taken by Australia against China.

"It further shows that the Australian government has no sincerity in improving China-Australia relations. It is bound to bring further damage to bilateral relations, and will only end up hurting itself," the spokesperson said. 

The Australian move came as China-Australia bilateral relations is at near freezing point, and trade and economic ties have also been seriously disrupted, after Canberra launched a series of anti-China policies.

The latest move could further plunge already-frosty bilateral relations into an even lower abyss and threatens further serious disruptions to trade and economic ties, analysts said. That might warrant a corresponding response from China, they added.

"To tear up the BRI cooperation agreement from the federal perspective is a gross intervention in the development policy of the state, which will inevitably have a negative impact on the economic development of Victoria in the future," Song Wei, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday.

Joining the BRI has brought considerable economic benefits to Victoria and created a large number of employment opportunities for the region. Victorian Premier Daniel Andrews also defended the agreement as "more jobs and more trade and investment for Victorians."

Furthermore, economic and trade relations between China and Australia will plunge even further, Song noted.

Following serious damage to Australian businesses due to tense diplomatic relations, Australian officials have said that they have been reaching out to Chinese officials to address trade issues but have not received any response. Chinese officials criticized Australia for its anti-China policies and urged Canberra to take concrete actions to rectify its mistakes.   

The latest move is in the opposite direction and could further complicate the relationship, Chen Hong, a professor and director of the Australian Studies Center at East China Normal University, told the Global Times on Wednesday, noting that it completely disregarded the mutually beneficial and comprehensive strategic partnership between Australia and China.

"It was of major benefit to Victoria that the agreement at the time did not deal with any sensitive sectors or national security," noted Chen.

While the Australian government's decision is very damaging, it was expected, experts said.

"There was a belief that the agreement was targeting the BRI agreement when the federal government passed its Foreign Relations Bill, which allows the federal government to override any state agreement under the so-called national security threat," Chen said, adding that if Australia continues on the wrong path, "China will surely respond accordingly."