Foreign Minister Marise Payne said the contracts [linked to the Belt and Road project] were "inconsistent with Australia's foreign policy or adverse to our foreign relations," invoking powers created by legislation passed last year that allows the FM to veto agreements with other nations.

In response, Beijing said the move was "bound to bring further damage to bilateral relations," making good on that prediction with Thursday's decision to scrap the economic dialogue.

While relations have been frosty for some time, halting the negotiation channel could spell further trouble for Canberra as it seeks to resolve trade disputes that affect $20 billion in Australian exports, including in key industries such as coal, timber, seafood, wine and barley. As of March, trade between the two countries had dropped by 40% overall, compared to the period before the commerce battle, with Beijing maintaining tariffs on a number of goods.

Spokesman Wang Wenbin called on the G7 to take concrete action to "promote the recovery of the global economy," rather than undermine the post-Covid-19 rebuilding process.

"The foreign ministers of the 'Group of Seven' make unfounded accusations against China, openly intervene in China's internal affairs, and engage in group politics that reverses history."

The spokesman described comments by the G7 relating to Taiwan's independence from China, as well as remarks about alleged repression in Hong Kong and Xinjiang, as the

"wanton destruction of the norms of international relations, groundless accusations that go against the trend of the times of peaceful development, cooperation and win-win cooperation. China strongly condemns this. All issues relating to Taiwan must be considered in accordance with the one-China principle."

He concluded that attempts to "interfere in China's internal affairs, damage Beijing's sovereignty, and smear the country's image" will be unsuccessful.

On Wednesday, after the G7 summit in London, the group released a communiqué which was heavily critical of Beijing, its alleged coercive economic practices and, among other things, its claims to the island of Taiwan.

The communiqué backed Taiwan's participation in World Health Organization forums and the World Health Assembly, as well as raising concerns about "any unilateral actions that could escalate tensions" in the Taiwan Strait.

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