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People exercise along a promenade in Melbourne. Victoria state is pushing ahead with the message that it is open to trade with China. Photo: EPA-EFE

Australia’s state of Victoria pushing ahead with belt and road plans, despite Canberra’s objections

  • Victoria plans to sign agreements for investment under China’s Belt and Road Initiative within weeks, as Beijing ramps up trade tensions with Australia
  • Home Affairs Minister Peter Dutton asked the state government to justify taking part in a ‘propaganda exercise’ for Beijing
An Australian state is continuing with its plans to participate in China’s signature infrastructure drive regardless of opposition from Canberra, amid growing divisions between state and federal leaders over how to handle relations with Beijing.
Victoria’s bid to sign a road map for investment under China’s Belt and Road Initiative within weeks comes as state and national government figures clash over Canberra’s handling of escalating trade tensions with Beijing.
Beijing earlier this month restricted beef imports and slapped an 80 per cent tariff on Australian barley, in moves widely seen as retaliation for Australia’s push for an independent international inquiry into the coronavirus pandemic.
A seeder sows barley seed at a farm in Balliang, Victoria, as China slapped anti-dumping duties on Australian barley for five years as diplomatic tensions escalate between the two trading partners. Photo: Bloomberg

Home Affairs Minister Peter Dutton on Thursday called on the Victorian government, led by the opposition centre-left Labor Party, to justify taking part in a “propaganda exercise” for Beijing.

“This is gravely concerning, and Victoria needs to explain why it is really the only state in the country that has entered into this relationship,” Dutton said.

The remarks came after Victorian Treasurer Tim Pallas accused the federal government, led by the centre-right Liberal Party, of “vilifying” China, suggesting its push for an inquiry had led Beijing to retaliate against Australian exporters.

Pallas’ comments drew condemnation from government MPs for “parroting” Beijing, as well as resistance from even some federal members of his own Labor Party.

Although the trade measures are widely seen as punishment for the inquiry, Canberra has refrained from directly linking the two issues and insisted they be resolved separately.

Beijing has denied any link, insisting the measures were introduced in response to quarantine and inspection violations and unfair trade practices.

Victorian Treasurer Tim Pallas accused the federal government of vilifying China, which resulted in it retaliating against Australian exporters. Photo: EPA-EFE

On Wednesday, Victorian government and opposition MPs clashed over the infrastructure initiative after state Transport Infrastructure Minister Jacinta Allan refused to answer questions on whether A$24 billion (US$15 billion) in new spending to deal with the pandemic would include funds borrowed from China.

Peter Jennings, executive director of the Australian Strategic Policy Institute, said the Victorian government was “undermining a bipartisan position” on the belt and road strategy and stepping beyond its authority into the realm of foreign affairs.

As China’s beef with Australia deepens, will Canberra be cowed?

“The focus of state politicians tends only to be on investment and trade and they have little conception of the downside risks of engagement with the People’s Republic of China,” Jennings said.

“Very few state officials have security clearances or the need to access information from our intelligence agencies and the national security establishment. The result is state and territory governments tend to be incredibly naive when it comes to dealing with the PRC.”

Victorian Premier Daniel Andrews speaks during a media conference about Covid-19. Photo: DPA
Victorian Premier Daniel Andrews, who has made six trips to China as state leader, signed up to join Beijing’s US$1.4 trillion infrastructure drive in October 2018, hailing it as an “Australian first” that would lead to “more trade and more Victorian jobs and an even stronger relationship with China”. Both sides agreed to work out specific investment details by the middle of this year.

Victoria, home to Australia’s second biggest city Melbourne, sold A$10 billion (US$6.5 billion) worth of exports to China in 2018, more than to any other country, and received more than a quarter of Chinese investment into the country.

‘No trade war’ with China, says Australia, despite barley tariff escalation

Prime Minister Scott Morrison rebuked the premier at the time for not properly consulting the federal government, which under the constitution is tasked with managing foreign affairs.
Beijing’s initiative, which envisages the creation of a new “Silk Road” linking China to Europe, Asia and Africa, has been viewed with suspicion in Canberra amid concerns about its strategic ambitions for the region and allegations of Chinese meddling in domestic politics.
Australian Prime Minister Scott Morrison. Photo: EPA-EFE

Nick Bisley, a professor of international relations at La Trobe University in Melbourne, said state leaders lacked a “national security perspective” on China and were likely to see even greater need to court new investment due to the trade dispute at the national level.

“These tensions are certainly making states feel as if the government’s focus on the strategic risk of China is putting economic welfare in some states under threat, and as such they are likely to try to do what they can to improve economic ties,” said Bisley. “Given how dire the economic consequences of Covid are likely to be, there will be added incentive to do so.”

Opinion: Australia has dug itself into a hole with China. It’s time to find a way out

Pradeep Taneja, a lecturer in Chinese politics and international relations at the University of Melbourne, said the Victorian premier saw ties with China from the “parochial point of view” of investment opportunities in part because the state was on a major infrastructure drive, including an expansion of Melbourne’s rail network.

But Taneja said there would be limits to Chinese involvement in projects in the state as the federal government retained a veto over large international investment.

“Premier Andrews knows that – that he’s unlikely to get any major investment from China,” Taneja said, explaining that the state leader hoped to send the message that Victoria was open to trade. “It’s not just about investment, it’s also about the trade relationship.”

The Victorian government was contacted for comment.

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This article appeared in the South China Morning Post print edition as: Victoria moves on China plan despite tensions