SYDNEY • Australia's Parliament was yesterday set to pass legislation giving the federal government power to veto any agreement struck with foreign states, a move likely to anger China and intensify a bitter diplomatic spat between the two countries.

The law would allow the Commonwealth to block any agreement between Australian states, councils or institutions and a foreign government, such as a controversial 2018 deal between the state of Victoria and China.

"Australia's policies and plans, the rules that we make for our country, are made here in Australia according to our needs and our interests," Prime Minister Scott Morrison told reporters in Canberra.

Mr Morrison has stressed that the law is not aimed at any country, but it is widely seen by analysts as directed at China.

"It creates another trigger for the relationship to deteriorate," said Ms Melissa Conley Tyler, research fellow at the Asia Institute of the University of Melbourne.

Under the terms of the new law, the foreign minister can veto any agreement with foreign governments if it adversely affects Australia's foreign relations or is inconsistent with Australian foreign policy.

One deal expected to come under the spotlight is Victoria's parti-cipation in China's Belt and Road Initiative, which Mr Morrison said weakens the federal government's ability to control foreign policy.

Mr Morrison declined to comment on whether that arrangement would be vetoed.

Relations between Australia and China, its largest trading partner, have soured since Mr Morrison called for an independent international investigation into the origins of the coronavirus pandemic earlier this year.

REUTERS