China’s Belt and Road Initiative faces fresh challenge from Australian laws on investment deals

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China has urged Australia not to discriminate against its Belt and Road Initiative, as a new set of laws puts Beijing’s agreements with local governments in Canberra’s cross hairs.

Frigid ties between the two countries slipped lower this week with the passage of laws on Tuesday that could allow Australia’s foreign ministry to scrap agreements made between local authorities and foreign states.

“The cooperation between China and Victoria under the framework of the Belt and Road Initiative is conducive to enhancing the well-being of the people on both sides,” ministry spokesman Zhao Lijian told a press conference. The passing of the laws follows a slew of clashes between Beijing and Canberra on issues as varied as Australia banning Chinese telecommunications giant Huawei Technologies Co., to Chinese restrictions on Australian food, wine and raw materials.

James Laurenceson, director of the Australia-China Relations Institute at University of Technology Sydney, said Canberra’s move was a result of years of dispute. “What has likely caused the shift is not only the sinking public opinion of China in Australia, but Beijing’s increasing use of economic punishment against Canberra,” Laurenceson said.

“If the federal government chooses to strike down agreements that concern China, like the Victoria MOU, it would invite Chinese counteractions,” said Zhang Baohui, a professor of political science at Lingnan University in Hong Kong.

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