China has reacted angrily to the Morrison government's decision to block Victoria's Belt and Road Initiative deal, branding the decision "provocative" and "unreasonable".
In what is another move to stifle Chinese investment in Australia after the Commonwealth introduced new laws last year, two deals agreed to in 2018 and 2019 between the Victorian state government and China have been shelved.
The deals were a part of Chinese President Xi Jinping's signature trade and infrastructure scheme to improve maritime and land trade routes, often dubbed China's modern-day Silk Road.
The Victorian agreement pledged greater cooperation in certain areas including increased participation of Chinese companies in Victoria's infrastructure construction program as well as the promotion of Victorian businesses in China.
But the federal government has used its new veto powers for the first time.
"We express our strong displeasure and resolute opposition to the Australian Foreign Minister’s announcement on April 21 to cancel the Memorandum of Understanding on Cooperation within the Framework of the Belt and Road Initiative and the related Framework Agreement between the Chinese side and Government of Victoria," the Chinese Embassy said in a statement on Wednesday night.
Treasurer Josh Frydenberg months earlier had expressed his concern over the agreement between China and the Victorian government, with Wednesday's move not wholly unexpected.
Yet the decision will undoubtedly fan the flames in an increasingly fiery relationship that has dramatically worsened during 2020 following clashes between Beijing and Canberra on multiple issues.
Move comes after China's call for global cohesion
It comes just hours after China’s Deputy Head of Mission in Australia Wang Xining spoke at the National Press Club and echoed Xi's words promoting global cohesion at the Boao Forum for Asia (BFA) Annual Conference.
"Yesterday President Xi made a very important speech on our forum and again stressed the importance on the international cooperation in bringing economy back, bringing the health back and with an aim to build a community of shared future for the whole mankind," Mr Wang said.
Australia has faced the wrath of China for what they believe is interference in its internal matters such as Taiwan and Hong Kong, while the push to block Chinese investment in the name of national security, including the rejection of Hauwei's 2018 5G rollout, has only enraged Beijing further.
The federal government granted the veto power over foreign deals by states in December amid the deepening diplomatic spat with China, which has imposed a series of trade sanctions on Australian exports ranging from wine to coal and lobster.
Australia warned of further repercussions
Australia's latest move "is bound to bring further damage to bilateral relations, and will only end up hurting itself," the Chinese embassy said in yet another threat.
Foreign Minister Marise Payne announced the move by saying she believes the arrangements were "inconsistent with Australia's foreign policy or adverse to our foreign relations".
Mr Wang however called for an end to a "discriminatory business environment" in Australia, and if that was achieved, he suggested diplomatic relations could improve.
"We should value our friendship between our peoples and no obstacle should be be laid intentionally to obstruct people-to-people exchange programs," he said.
Yet Prime Minister Scott Morrison has routinely stressed Australia would not make any concessions in its bid to protect national security and its own interests and principles.
China accuses Australia of 'no sincerity'
Foreign Policy deputy editor James Palmer told Yahoo News Australia last month Beijing was frustrated with the resistance of "smaller nations" such as Australia.
"There's a real feeling they should be able to coerce and bully these countries and I think there's almost a disappointment that they haven't. I think they thought they had it sewn up and they hadn't," he said.
Despite some of Australia's top ministers indicating they were seeking relationship-improving talks, the Chinese embassy said the latest move shows "the Australian government has no sincerity in improving China-Australia relations".
On Thursday morning speaking to ABC Radio, Ms Payne denied the introduction of the laws enabling the move was to target any specific country but rather to protect sovereignty and national interests.
Victorian Premier Daniel Andrews has previously advised against the cancellation of the deal, saying it would place Victorian jobs at risk.
The move is also expected to worsen he rift between the prime minister and the Victorian premier.
Do you have a story tip? Email: firstname.lastname@example.org