The Australian federal government has used its expanded powers to terminate a Belt and Road infrastructure agreement between China and the state of Victoria. The move, announced on Wednesday, came amid the latest war of words between Australian and Chinese officials. Beijing has again blamed Canberra for the months-long deterioration of relations between the two countries. At the same time, it offered praise for New Zealand this week, after the country’s foreign minister voiced opposition to the expansion of the “Five Eyes” intelligence alliance.

The Australian Associated Press reported on the decision to scrap the Victoria BRI deal on Wednesday:

The federal government has cancelled Victoria’s “Belt and Road Initiative” infrastructure agreement with China, saying it is inconsistent with Australia’s foreign policy goals.

The Morrison government in December granted itself the ability under the Foreign Relations Act to torpedo deals between individual states and foreign powers, with states and territories obliged to audit any existing agreements.

[…] Victoria signed a memorandum of understanding in relation to the Chinese regional infrastructure initiative in 2018 and then signed a “framework agreement” with Beijing in 2019.

[…] Beijing has previously raised Canberra’s foreign deal veto power as one of 14 grievances damaging to relations with Australia, and is likely to criticise Senator Payne’s decision. [Source]

Beijing reacted angrily to the cancellation. Earlier in the day, a senior Chinese diplomat at the embassy in Canberra offered sharp words for the federal government. As The Guardian’s Daniel Hurst reported, deputy head of the embassy Wang Xining accused the government of triggering the breakdown in relations with its ban on Huawei-made infrastructure in the country’s 5G network:

Wang Xining, the deputy head of the Chinese embassy in Canberra, told the National Press Club that China had “done nothing intentionally to hurt this relationship”, despite the Australian government’s complaints about Beijing trade actions against a range of export sectors over the past year.

Wang argued on Wednesday that China had observed “too many incidents over the past few years” where China’s interests were hurt, including the Turnbull government’s ban on high-risk vendors, such as Chinese companies Huawei and ZTE, from Australia’s 5G network in 2018.

[…] He said he did not see any obstacle for the resumption of a “normal” state of the relationship, so long as Australia provided “a fair and just and non-discriminatory business environment” to Chinese businesses and ensured it did not “obstruct” people-to-people exchange programs.

Wang observed that 2021 was the year of the Ox, a symbol of strength, resilience and perseverance.

“China is not a cow. I don’t think anybody should fancy the idea to milk China when she’s in her prime and plot to slaughter it in the end,” Wang said. “So we are open for collaboration and cooperation, but we’ll be very strong in defending our national interest.” [Source]

Meanwhile, over the weekend, the decision by New Zealand’s foreign minister to oppose an initiative by the Five Eyes alliance to take positions on issues including China’s human rights record was greeted warmly by Beijing. Bloomberg’s Tracy Withers reported that Foreign Minister Nanaia Mahuta opposed the expansion of the intelligence-sharing alliance’s remit, arguing that members should put out their own views instead:

“We have raised with Five Eyes partners that we are uncomfortable with expanding the remit of the Five Eyes relationship,” Mahuta told reporters Monday in Wellington. “We would much rather prefer looking for multilateral opportunities to express our interests on a number of issues.”

In recent years the alliance between the U.S., Canada, Australia, the U.K. and New Zealand, which has its roots in World War II, has expressed views on China-related issues, including Beijing’s treatment of Uyghurs in Xinjiang and political developments in Hong Kong. New Zealand has on occasion opted not to co-sign those statements and acted independently, which has fanned concerns that it is undermining the alliance’s solidarity.

[…] In January, New Zealand didn’t join a statement from the other Five Eyes partners following mass arrests in Hong Kong. Mahuta made a separate statement.

[…] While Mahuta said China can play a role in the long-term recovery of the Pacific region in the wake of the pandemic, she urged it to contribute greater investment to official multilateral development programs rather than through financing loans. [Source]

The divergent moves by Australia and New Zealand show how the two Oceanic countries have struggled to balance economic and security interests. While Australia has been caught in a bitter trade war with China, New Zealand “upgraded” its free trade agreement with China earlier this year.

But Wellington has also faced its share of challenges to the China-New Zealand relationship in the last year: in July 2020, it suspended its extradition agreement with Hong Kong over the city’s new National Security Law, while a disciplinary investigation into a New Zealand professor known for her research into the Chinese Communist Party drew broad criticism from the research community, amid concerns about its chilling effect on academic freedom.

As New Zealand embarks on its own path from Australia, some have criticized Wellington, arguing that it increasingly looks like a foreign policy path aimed at appeasement, not independence.

On the other hand, Beijing has welcomed New Zealand’s stance. In a recent Global Times op-ed, Qin Sheng, a Chinese researcher, warned Australia against “interfering” with New Zealand’s China policy:

Voices that accuse New Zealand of not being tough enough on China-related issues have been lately emerging in Western countries, especially Australia. New Zealand was even referred to as the “soft underbelly” of the Five Eyes alliance in a report written by the Canadian Security Intelligence Service as early as 2018. The term has been recently hyped up again by Australian media – news.com.au, which said, “There are concerns from New Zealand Five Eyes’ allies that it may be the weak link in dealing with China.”

[…] In the ongoing confrontation with China, Australia has repeatedly hurt Chinese companies and investments on the grounds of national security. This has been done at the expense of its own companies and people, and now Australia wants its neighbors to join in this lose-lose situation. After Australia issued the ban on Chinese tech giant Huawei, the company has terminated its millions of research and development investments in the country, and closed the research and development center there. High-tech workers lost their jobs, and the development of 5G technology in Australia lagged behind seriously. This decision has brought obvious negative effects on Australia’s economic development and technological progress.

New Zealand, by contrast, attaches more importance to win-win cooperation and seeks the greatest common ground in bilateral relations from the perspective of development. This is also an important reason for the continuous development and breakthrough of China-New Zealand relations. [Source]