The security pact with the Western powers, including access to US nuclear submarine technology, will be seen by Beijing, which is embroiled in a long-running trade spat with Canberra, as a threat, said Michael Sullivan, International Relations Lecturer at Flinders University.
'China will view the decision to expand defence cooperation with the US and UK and, in the future, base US strategic strike capabilities in Australia as confirmation that we are a growing military threat to its interests, such as the Belt and Road Initiative,' said Mr Sullivan.
China has in recent years imposed hefty tariffs and restrictions on Australian exports including wine, beef and barley, and outright banned coal imports to express its displeasure over Canberra's foreign policies, though with only limited success so far.
The sums at risk are massive as Australia exported a record AUD173 billion (US$127 billion) of mostly resources to China in the 12 months to July, accounting for more than 35 per cent of Australia's total exports. Australia bought just AUD87 billion of, mostly manufactured, goods from China in the same period.
By far the biggest export earner has been iron ore as China's demand for steel drove prices for the mineral to all-time highs in May. Australia's metal ore exports in July alone reached AUD19 billion, or more than 40 per cent of total earnings.
China has partly turned the tables in recent months by clamping down on steel output and warning of stricter controls on major carbon emitters, steps that have seen iron ore prices plunge 45 per cent from their peaks.