Australia’s parliament on Thursday approved a law giving the federal government powers to void foreign agreements entered into by state governments, local councils and universities.

The law establishes a public register of foreign agreements and empowers the foreign minister to review them and determine whether they are “inconsistent with Australia’s foreign policy objectives.”

The Australian government claims that the Act fulfills its constitutionally mandated role of representing Australia internationally. Previously, no clear legislative framework for the implementation of international agreements by subnational entities was present, nor was there any federal oversight, Foreign Minister Maurice Payne said.

However, China has specifically named the law in a list of grievances it has with Australia, suggesting that it is unreasonably “targeting” Chinese interests. China’s state media outlet has already labeled the legislation an act of “political paranoia” that will “undermine Australia’s economic interests.”

China-Australia relations have been deteriorating rapidly over the past week. On Tuesday, a senior Chinese government official posted a picture on Twitter that mocked the Australian government for its involvement in war crimes committed during the Afghanistan war. Prime Minister Scott Morrison subsequently demanded an apology from China’s government for the post.

The law also follows the signing of a memorandum of understanding with China’s government in 2018 by the Premier of state of Victoria, Daniel Andrews. The agreement, part of China’s flagship development and investment “belt and road” program, drew criticism at the time for opening the door to unwanted foreign interference in domestic affairs. The move surprised the federal government and is now likely to come under scrutiny following the passage of the Act, which also governs existing agreements.

The Act eventually passed parliament with bipartisan support from the opposition, following debate over whether universities should be included in its provisions. The opposition party and the Greens argued that they should not be, as it would significantly hamper the ability of universities to engage internationally. Ultimately, the government agreed to limit their oversight to agreements between institutions that they deemed to lack adequate domestic
“institutional autonomy.”

Despite its passage through parliament, the Act may still encounter challenges before courts. The question of whether the legislation constitutes an overreach of the foreign minister’s powers in Australia’s strict federal system is likely to be posed.