The Australian Federal Government recently vetoed two Belt and Road memorandums of understanding (MOUs) signed between the state of Victoria and China's National Development and Reform Commission.

Foreign Affairs Minister Marise Payne said the arrangements were considered to be "inconsistent with Australia's foreign policy or adverse to Australia's foreign relations."

Newly appointed Defense Minister Peter Dutton thundered that "China and others need to understand that Australia is not going to be bullied and we're standing up for our beliefs."

The reactions seem a bit over the top when the MOUs did not actually commit Victoria to specific projects and were not legally binding. They were only about potential future cooperation.

Australia is well aware of the disruption this announcement would cause and the way this decision would further chill bilateral relations. There are some in the federal government who welcome this attack. There is an active cohort of hawks who want to contain and confront China.

In this sense, this announcement serves an Australian foreign policy agenda that very much takes its lead from the United States. Though this doesn't mean following every step the U.S. takes, particularly under former President Donald Trump, it does mean that Australia looks to the U.S. for guidance and support.

This was the key message Australia took from the China-U.S. high-level strategic dialogue, in Anchorage, Alaska in the U.S., in March, where the U.S. reportedly brought up "China's treatment of Australia."

Australia interpreted U.S. Secretary of State Antony Blinken's comments in Anchorage to mean that the United States has Australia's back. Basking in this sunshine, it was perhaps inevitable that an emboldened Australia would take the next step and veto the MOUs.

There is another aspect of this foreign policy as it relates to international relations rather than just relations with China. Australia has aspirations to play a leadership role in the newly created Regional Comprehensive Economic Partnership (RCEP), the free trade agreement signed by 15 economies including China and Australia.

However, Australia's rejection of the Belt and Road Initiative puts it out of step with many of the RCEP and Association of Southeast Asian Nations (ASEAN) members, who are all signatories to the RCEP. These are countries that have actively embraced the initiative and see this as a way to increase their engagement with China. They are wary of Australia's less than nuanced approach to China.

Part of the reason for the veto was to send an international message. But judging by the level of commitment made by many ASEAN nations to the initiative, it would seem that this message is obsolete.

Australian businesses have watched on as clumsy domestic politics spills over into already fraught China relations and the relationship with other nations in the region. Worried by the increasing anti-Chinese rhetoric, many in the business community have chosen to remain largely silent.

Chair of the Australia China Business Council David Olsson has said Australian businesses "prefer to look beyond the politics of the Belt and Road Initiative and focus on the genuine commercial opportunities that will emerge from infrastructure investments."

The veto of the Victorian agreement is largely about domestic politics, but it also signals a change from benign acceptance of the initiative to active pushback against it. Many in business believe this is a foolish change that will further damage the foundations of Australia's prosperity.

The Belt and Road Initiative is too large and has too much momentum to be hindered by the Australian decision.

The Australian Government may have rejected it but smart Australian businesses know that this is where the future lies.

The author is a national board member of the Australia China Business Council. The views expressed in this article, first published on Cnfocus.com, are the author's own and do not represent those of the council

Copyedited by Sudeshna Sarkar

Comments to yanwei@bjreview.com