China suspends economic dialogue, accusing Australia of 'Cold War mindset'

China has "indefinitely" suspended all activity under a China-Australia Strategic Economic Dialogue, the latest escalation of tensions between the two countries.

"Recently, some Australian Commonwealth Government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination," China's National Development and Reform Commission (NDRC) said in a statement on the decision this afternoon.

The Australian dollar fell sharply on the news, and was as low as 0.7701 to the US dollar from Wednesday's $0.7747.

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 novel coronavirus, prompting trade reprisals from China.

Australia's trade minister, Dan Tehan, did not immediately respond to a request for comment on China's decision.

The last meeting under the mechanism, intended as a framework for economic cooperation, was in Beijing in 2017.

In the 12 months to March, Australia exported A$149 billion ($160 billion) worth of goods to China, excluding services, of which iron ore was by far the largest product.

Australia in April cancelled two deals struck by its state of Victoria with China on its flagship Belt and Road Initiative, prompting the Chinese embassy in Australia to warn that already-tense bilateral ties were bound to worsen.

Reuters reported this week that Australia is reviewing the 99-year lease of a port in its north to a Chinese firm, according to a government source.

Australia's federal parliament granted veto power over foreign deals by states in December amid the deepening diplomatic dispute with China, which has imposed a series of trade sanctions on Australian exports ranging from wine to coal.

-Reuters