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China on Thursday suspended indefinitely all activities of the China-Australia Strategic Economic Dialogue.
Chinese Foreign Ministry spokesman Wang Wenbin reported that the suspension was a “necessary and legitimate” response to Australia “abusing” the concept of national security to pressure cooperation with China.
Bilateral ties were strained in 2018 when Australia became the first country to publicly ban Chinese tech giant Huawei from its 5G network. Relations worsened last year when Australia called for an independent investigation into the origins of the new coronavirus, prompting trade retaliation from China.
The last meeting was in Beijing in 2017, when Australia’s trade minister signed an agreement to cooperate on Belt and Road projects in third countries.
In April, Canberra canceled two Belt and Road cooperation agreements entered into by the state of Victoria, prompting the Chinese embassy to warn that ties were set to worsen.
In the 12 months to March, Australia exported A$149 billion ($115 billion) worth of goods to China, excluding services, of which iron ore was by far the main product.
Experts expect bilateral tensions will not have a big impact on iron ore trade, but could impact Chinese investment in Australia.
Executives at mining giant Rio Tinto reported that the tension between Australia and China is not hurting their business. The company sells more than half of its products in China, establishing a good relationship with the Asian country.
Rio Tinto president Simon Thompson reported that in relation to iron ore, there are relatively few alternatives available to China at the moment.
But the dispute will continue to impact Australia’s commodities sector, discouraging Chinese investment, and that effective bans on Australian imports are likely to continue.
China has effectively banned imports of Australian thermal coal. Since December, imports of copper concentrate into China have also plummeted.
Meanwhile, all major steels made in China have risen sharply
