'Scrapping Deal Harms China-Australia Relations'

China on Thursday said Australia's sudden scrapping of a Belt and Road Initiative deal risked "serious harm" to relations and warned of retaliatory actions against a country that insisted it would not be bullied.

Canberra pulled the deal with Victoria state late on Wednesday, in a move destined to provoke Beijing but justified by Defence Minister Peter Dutton as necessary to prevent Australia hosting a giant infrastructure scheme "used for propaganda".

Australia overruled Victoria state's decision to join the Belt and Road Initiative (BRI) – the flagship of President Xi Jinping's geostrategic vision for the Asia-Pacific region – saying the agreement was inconsistent with Australia's foreign policy.

As relations nosedive – following spats over the origins of the coronavirus and Canberra's blocking of Chinese telecoms giant Huawei – Dutton said Canberra was "worried" about local governments entering into such agreements with Beijing.

Beijing laid into the the Australian government on Thursday, saying it would damage trust between the two countries, and warning it could take further actions in response.

The move "recklessly interferes in and destroys normal exchange and cooperation, and seriously harms China-Australia relations and mutual trust between the countries," said foreign ministry spokesman Wang Wenbin at a briefing in Beijing.

"China reserves the right to take further action in response to this." (AFP)