Business Day

Australia passes law that can scrap Belt and Road deals

- Jason Scott

Prime Minister Scott Morrison has new powers to veto or scrap agreements that state government­s reach with foreign powers under laws that could stymie China’s Belt and Road Initiative in Australia and further inflame tensions between the trading partners.

The laws passed by parliament on Tuesday will give the foreign minister the ability to stop new and previously signed agreements between overseas government­s and Australia’s eight states and territorie­s, and with bodies such as local authoritie­s and universiti­es.

Morrison ’ s government will be able to block or curtail foreign involvemen­t in a broad range of sectors such as infrastruc­ture, trade co-operation, tourism, cultural collaborat­ion, science, health and education. An early target is likely to be an agreement the Victoria state government signed in 2018 to join President Xi Jinping’s signature Belt and Road Initiative.

The laws could further worsen ties between Australia and its largest trading partner, which have been in free fall since April, when the prime minister called for an independen­t probe into the origins of the coronaviru­s. Beijing has since inflicted trade reprisals including imposing crippling tariffs on Australian barley and wine while blocking coal shipments.

Relations hit a fresh low last week when a Chinese diplomat tweeted an image purporting to show an Australian soldier holding a knife to the throat of an Afghan child.

After Morrison called for an apology for the “repugnant ” post, a senior Chinese foreign ministry official dismissed the demand, questionin­g whether the Australian leader “lacks a sense of right and wrong”.

Victoria premier Daniel Andrews told reporters last week that his government was not considerin­g withdrawin­g from its Belt and Road Initiative agreement as a result of the worsening relationsh­ip.

China’s co-operation with Victoria on the initiative has brought benefits to both sides, Chinese foreign ministry spokespers­on Zhao Lijian said in August. “Australia should have an objective view of such cooperatio­n, and not set up impediment­s for ChinaAustr­alia co-operation.”

Beyond the deal signed by Victoria, which aims to increase Chinese participat­ion in new infrastruc­ture projects, the law may allow the federal government to review and overturn memorandum­s of understand­ing between Beijing and the government­s of Western Australia, South Australia and Tasmania.

The states and territorie­s have at least 130 agreements across 30 nations that could be affected by the new law, according to Morrison.

The law will establish a public register to provide transparen­cy to the foreign minister’s decisions, and states and territorie­s will be given three months to deliver a stocktake of their existing agreements.

Partnershi­ps between Australian universiti­es and Beijingspo­nsored bodies could be scrapped. There is mounting concern in intelligen­ce circles about China’s influence in universiti­es and a programme under which academics sign over intellectu­al property rights to their work in return for research grants.

Under the law, Morrison will not be able to scrap deals between state government­s and commercial companies or stateowned enterprise­s. That means the lease of a strategic port in Darwin, used by the US military, to a Chinese company by the Northern Territory government in 2015 cannot be overturned.

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