'If you make China the enemy, China will be the enemy': Beijing's fresh threat to Australia

Beijing has issued an extraordinary attack on the Australian government, accusing it of "poisoning bilateral relations" in a deliberately leaked document that threatens to escalate tensions between the two countries.

The government document goes further than any public statements made by the Chinese Communist Party, accusing the Morrison government of attempting "to torpedo" Victoria's Belt and Road deal, and blaming Canberra for "unfriendly or antagonistic" reports on China by independent Australian media.

Chinese President Xi Jinping delivers an address to the opening ceremony of the China International Import Expo in November.Credit: AP

"China is angry. If you make China the enemy, China will be the enemy," a Chinese government official said in a briefing with a reporter in Canberra on Tuesday.

The dossier of 14 disputes was handed over by the Chinese embassy in Canberra to Nine News, The Sydney Morning Herald and The Age in a diplomatic play that appears aimed at pressuring the Morrison government to reverse Australia's position on key policies.

The list of grievances also includes: government funding for "anti-China" research at the Australian Strategic Policy Institute, raids on Chinese journalists and academic visa cancellations, "spearheading a crusade" in multilateral forums on China's affairs in Taiwan, Hong Kong and Xinjiang, calling for an independent investigation into the origins of COVID-19, banning Huawei from the 5G network in 2018 and blocking 10 Chinese foreign investment deals across infrastructure, agriculture and animal husbandry sectors.

In a targeted threat to Australia's foreign policy position, the Chinese official said if Australia backed away from policies on the list, it "would be conducive to a better atmosphere".

The dossier was delivered shortly before China's Foreign Ministry spokesman Zhao Lijian laid the blame on Australia for the state of the relationship at a press conference in Beijing.

"The Australian side should reflect on this seriously, rather than shirking the blame and deflecting responsibility," he said.

The Morrison government has rejected Beijing's characterisation and called for the Chinese government to answer its phone calls.

"The ball is very much in China's court to be willing to sit down and have that proper dialogue," Trade Minister Simon Birmingham said on Wednesday.

But the Chinese government official, who spoke on the condition of anonymity because they are not authorised to speak publicly, said "why should China care about Australia?" and that phone calls would be "meaningless" while the "atmosphere is bad".

The document also takes aim at "thinly veiled allegations against China on cyber attacks without any evidence" and claims Australia was the first country without a maritime presence in the South China Sea to condemn China's actions at the United Nations. Australia followed the United States in July in branding China's claims to the disputed area "unlawful".

It also accuses MPs of "outrageous condemnations of the governing party of China and racist attacks against Chinese or Asian people" after Liberal Senator Eric Abetz demanded Chinese-Australian witnesses at a parliamentary inquiry condemn the Chinese Communist Party.

The leaked list and comments by Mr Zhao signal a significant tactical shift from Beijing. Australia has not backed away from its criticism, despite months of escalating Chinese rhetoric and verbal instructions to state-linked traders to stop importing Australian products.

The trade strikes on up to a dozen products including wine, beef, barley, timber, lobster and coal now threaten $20 billion worth of Australian exports.

China accounts for up to 40 per cent of Australia's exports and one in 13 Australian jobs, leading to rising anxiety among business figures and diplomats grappling with competing objectives: balancing Australia's national security, maintaining a military deterrent to China's regional aggression through a new defence agreement with Japan, and keeping economic lines with China open.

Prime Minister Scott Morrison on Wednesday said China should not be threatened by the signing of a landmark defence treaty between Australia and Japan, which paves the way for the two nations to conduct more joint military exercises throughout the Indo-Pacific.

The list of grievances from the Chinese embassy.

"This is a significant evolution of this relationship, but there is no reason for that to cause any concern elsewhere in the region," Mr Morrison said. "I think it adds to the stability of the region, which is a good thing."

Reserve Bank governor Philip Lowe on Wednesday urged Australia to maintain a strong relationship with China.

In his most direct comments on the multibillion-dollar diplomatic dispute to date, Dr Lowe said it was in the economy's interest for the relationship between Australia and its largest trading partner to get back on track.

"China has benefited from our natural resources exports and we have benefited from its manufacturing imports," he said.

"We need to keep that strong relationship with China going. It is mutually advantageous for both of us."

BHP chief executive Mike Henry told The Australian's Strategic Forum on Wednesday that Australia was an export dependent economy.

"Other nations may aspire to succeed in self-sufficiency and autonomy. Australia simply isn't built to succeed under this model," he said.

"While we are ultimately reliant on countries acting in good faith, we have to ensure we are doing absolutely everything in our power to secure Australia's continued prosperity through mutually beneficial trade and co-operation."

In a sign the government is attempting to separate economic outcomes from security and military ones, Treasurer Josh Frydenberg said on Wednesday Australia stood ready to engage in "respectful and beneficial" dialogue with the Chinese Communist Party.

Treasurer Josh Frydenberg.Credit: Alex Ellinghausen

But added that, as part of any dialogue, Australia's national interest would be "non-negotiable".

The 14 items identified by the Chinese embassy document are seen by the Department of Foreign Affairs as key to Australia's national interest and non-negotiable, leaving the two countries facing the prospect of an extended diplomatic and economic dispute.

The Department of Foreign Affairs and Trade said the Australian government makes "sound decisions in our national interest and in accordance with our values and open democratic processes."

"We are a liberal democratic society with a free media and a parliamentary democracy, where elected members and media are entitled to freely express their views," the department said in a statement.

"The Australian government is always ready to talk directly in a constructive fashion about Australia's relationship with China, including about our differences, and to do so directly between our political leaders.

"Such direct dialogue enables misrepresentation of Australia's positions to be addressed in a constructive manner that enables our mutually beneficial relationship."

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