AUD/USD falls after China says to end 'strategic economic dialogue' with Australia

Lawrence Kim
May 6, 2021

Australia on Thursday described China's decision to freeze regular bilateral trade talks as "disappointing", but insisted Canberra was still willing to talk despite ties reaching a new low.

Relations between Beijing and Canberra plummeted a year ago after Australia called for an global inquiry into the origins of the COVID-19 pandemic and introduced foreign interference legislation.

"China indefinitely suspends all activities under the framework of the #China-#Australia Strategic Economic Dialogue held by the Chinese National Development and Reform Commission and relevant Australian ministries", China Global Television Network (CGTN) said in a tweet.

Until now China has mostly expressed its displeasure through trade measures, which have affected a dozen key Australian industries, including wine, barley and coal.

The dialogue was formed in 2014 and works to foster investment and trade between Australia and China and last met in 2017.

"We believe the iron ore trading relationship between Australia and China will remain ring-fenced in relation to current political tensions between the two nations", said Atilla Widnell, managing director at Singapore-based Navigate Commodities Ptd Ltd.

China said today it had suspended an economic agreement with Australia, in an apparent tit-for-tat response to Canberra's scrapping a Belt and Road infrastructure pact and threat to undo a deal leasing Darwin Port to a Chinese company.

Australia's Prime Minister Scott Morrison speaks during an address at the Australia-Israel Chamber of Commerce luncheon in Melbourne on May 6, 2021.

Mr Laurenceson said Beijing appears to be a responding directly to the Australian government's cancellation of two deals that the state of Victoria struck with China as part of its flagship Belt and Road Initiative.

Canberra has been locked in an ongoing trade war with Beijing for several months as China has slapped sanctions on various Australian products.

But critics have claimed the stand-off between the two sides is cover for Beijing to create geopolitical and financial leverage. Defence Minister Peter Dutton has also said war with China should not "be discounted".

It will take immediate effect.

The deal - brokered by local authorities in Australia's Northern Territory - had raised serious concern in Canberra and Washington, where it was seen as a strategic liability.

Other reports by Click Lancashire

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