China canceled plans for Vice-Foreign Minister He Yafei to visit Australia earlier this month, reportedly due to Canberra granting a visa to Rebiya Kadeer, the mastermind of the July 5 Urumqi riot.
The decision was the latest sign that ties between the two countries are strained.
"Australia very much regrets that China decided to take that response," Australian Foreign Minister Stephen Smith told Parliament yesterday.
China's Foreign Ministry yesterday refused to comment.
Kadeer, who lives in exile in the US, was allowed to visit Australia, despite strong protests from Beijing.
As a result, He did not attend a summit of 16 Pacific nation leaders nor a bilateral meeting in the northern city of Cairns in early August, Smith said.
Chinese officials told Australia of the decision via "diplomatic channels", Smith's office said in a statement. The Chinese delegation was led instead by a more junior envoy.
"We regret that the Chinese government has felt obliged to take these steps," the statement said, adding that Australia supports Chinese sovereignty over Xinjiang.
Beijing's displeasure over Kadeer's trip came after Canberra voiced concern at the detention of an Australian mining executive on charges of bribery and commercial espionage.
Four employees of the mining giant Rio Tinto Ltd, including Australian citizen Stern Hu, were charged with bribery and infringement of trade secrets in the multibillion-dollar iron ore trade.
Smith described the situations with Kadeer and Hu as "difficulties that we have in our relationship with China" that Australia was "managing".
Opposition leader Malcolm Turnbull accused Prime Minister Kevin Rudd, a Mandarin-speaking former diplomat to Beijing, of bringing bilateral relations to "the lowest ebb that they have been for many, many years".
"He obviously has no leverage with China left at all," Turnbull said.
Chen Fengying, an expert at the China Institute of Contemporary International Relations, said it was "natural" for China to have made the move because it was dissatisfied with Australia granting Kadeer a visa.
"This was not a surprise, because thousands of Chinese web users have voiced their anger at the Australian move," Chen said.
But she said there would be no permanent damage to bilateral relations, citing major common interests shared by the two nations.
Australia needs to maintain its relationship with China, which is its largest trade partner, she said.
Zhu Feng, a professor at Peking University's School of International Studies, said that given the tension between the two nations, it was not proper for He to visit Australia.
"China has valued its relations with Australia. But Australia did not show enough respect for China," he said, citing the Kadeer visit and the Rio Tinto case.
Shen Shishun, a former Chinese diplomat and now senior research fellow at the China Institute of International Studies, said he did not expect the friction to do lasting damage.
"The Chinese people feel very strongly about the July 5 riot, so there is anger about Kadeer going to Australia," Shen said.
Michael McKinley, an expert on global relations at Australian National University, said the relationship was stable because of underlying economic interests.
"Australia needs to sell stuff and the Chinese need to buy it," he said.
Yesterday, the two countries signed their biggest trade deal ever as ExxonMobil and PetroChina, the world's two most valuable listed oil companies, agreed on a $41-billion liquefied natural gas deal.
(China Daily August 19, 2009)