The Chinese embassy recently criticised that move as "provocative" by Foreign Minister Marise Payne to veto two agreements signed by Victoria state as it would further damage ties with Australia
Payne said Australia would like a easy to understand and practical engagement with China, certainly as the world emerges from COVID-19.
"We also have to acknowledge that China's outlook, the nature of China's external engagement, both in our region and globally, has changed in recent years, and an enduring partnership requires us to adapt to those new realities," she said.
China is one of the largest trading partners of New Zealand and Australia.
Mahuta on Thursday repeated comments that New Zealand valued the Five Eyes security alliance - which also includes Australia, Britain, Canada and the United States - but questioned whether it was the right platform for New Zealand to speak out on human rights issues. read more
The comment, first made on Monday, has been widely interpreted as referring to recent Five Eyes joint statements criticising China.
Payne said the Five Eyes was an important strategic alliance and Australia wishes to solidify cooperation with its liberal democracies partners.
In a written statement without mentioning China, Payne and Mahuta said they had "reaffirmed their intent to work together to preserve the liberal international order that has underpinned stability and prosperity in the region, and to foster a sustainable regional balance where all countries- large and small – can freely pursue their legitimate interests" and agreed on the need for coordinated regional and global action on human rights and climate change, the statement said.
Australia's conservative coalition government declined to agree to a country-level MOU with China on the Belt and Road Initiative. However, Victoria Labor Premier Dan Andrews signed an MOU to promote the local development initiative in 2018 and a framework agreement in 2019,saying it would bring Chinese investment to his state.
Hans Hendrischke from the University of Sydney Business School said the cancellation of the agreements would have very small commercial impact because no projects had begun.
"It had no legal force and there were no specific deals," he told Reuters.
Diplomatic relations between Australia and China have plumetted since Canberra called for an international inquiry into the origins of the coronavirus, prompting trade reprisals from Beijing.
Fitch Ratings said economic co-dependencies between
Australia and China will restrain Beijing from targeting major exports such as iron ore.
On Wednesday, the Australian government said it will cancel agreements between the state of Victoria and China in regard to cooperation with Beijing's Belt and Road infrastructure initiative in a move likely to stoke tensions between the two nations.
This records the first time a decision was made to cancel a deal under a law enacted in December, according to the federal government. That law grants the foreign minister authority to cancel an agreement made between a local government in Australia and another country if such a deal goes against the federal government's foreign policy.
Foreign Minister Marise Payne said that four documents signed by the southeastern state of Victoria will be canceled.
"I consider these four arrangements to be inconsistent with Australia's foreign policy or adverse to our foreign relations in line with the relevant test in Australia's Foreign Relations Act 2020," Payne said in a statement.
Two of those -- a 2018 memorandum of understanding and a 2019 agreement on the Belt and Road Initiative -- were signed with the National Development and Reform Commission, China's top economic planning body.
Australian Foreign Minister Marise Payne said that four deals signed by the southeastern state of Victoria will be canceled. © AP Another is a 1999 agreement on education signed with Syria, and the last one is a 2004 memorandum of understanding with Iran on job training.
Victoria -- led by the Labor Party, an opposition party at the national level -- signed the 2018 memorandum on its own with China. Prime Minister Scott Morrison of the Liberal Party publicly expressed dissatisfaction with the deal.
The granting of veto powers to the foreign minister last year came in response to growing concerns in Australia that China was trying to exert influence through its investments. In particular, some took issue with how Beijing was growing close to local governments.
Relations between Canberra and Beijing have soured. After Morrison last April called for an independent probe into the origin of COVID-19, China retaliated by suspending some imports of Australian meat and imposing high tariffs on barley and wine.
Australia brought the issue to the World Trade Organization in December, arguing that the additional duties on barley were inconsistent with WTO rules. The latest move by Australia is likely to cause tensions to rise further.