Relations have been on the decline since Australia called for a probe into the origins of the virus and banned Huawei from building its 5G network.
The Australian dollar fell sharply on the news, and was as low as 0.7701 to the USA dollar from Wednesday's $0.7747.
China said today it had suspended an economic agreement with Australia, in an apparent tit-for-tat response to Canberra's scrapping a Belt and Road infrastructure pact and threat to undo a deal leasing Darwin Port to a Chinese company. But it has failed to force Prime Minister Scott Morrison's government to offer concessions.
China's state economic planner said on Thursday it has "indefinitely" suspended all activities under the China-Australia Strategic Economic Dialogue, amid strained relations between Beijing and Canberra.
According to Beijing, the Australian Commonwealth Government's policy toward China constitutes ideological discrimination and reflects the Cold War mindset.
This decision comes a few weeks after Australia scraped the controversial Belt and Road (BRI) agreement with China citing the deal as against its national interest.
China holds such dialogues with Australia, the United States and some other governments to discuss trade disputes and other economic issues. "It's got to be on both countries' terms".
James Laurenceson, the Director of the Australia-China Relations Institute said Beijing's move appears to be extending that diplomatic freeze. In 2018, Australia became the first country to ban China's tech giant Huawei from its national 5G network, while previous year, the country called for an independent probe into the origins of the COVID-19 pandemic.
Successive Australian trade ministers have been unable to secure a phone call with Chinese counterparts since diplomatic tensions worsened in 2020.
"We remain open to holding the dialogue and engaging at the ministerial level", he said in a statement.
China is Australia's No. 1 foreign market, but the sanctions impact has been limited because Chinese steel mills still buy Australian iron ore, the country's most valuable export.
The Australian foreign minister said the step didn't target "any one country", but Beijing warned it might retaliate.