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U.S. Defense Secretary Lloyd Austin said on Thursday the process of removing all contractors from Afghanistan working with the United States was under way as part of President Joe Biden's withdrawal of forces from the country.

The remarks are the clearest indication yet that Biden's April order to withdraw all U.S. forces from Afghanistan by Sept. 11 extended to U.S.-funded contractors.

Asked whether the Pentagon had issued orders to withdraw not just American troops but also contractors, Austin said: "We're going to responsibly retrograde all of our capabilities that we are responsible for and the contractors fall in that realm as well."

Speaking with reporters, Austin said the contractors could, however, renegotiate their contracts in the future.

As of April, there were nearly 17,000 Pentagon contractors, including about 6,150 Americans, 4,300 Afghans and 6,400 from other countries.

The departure of thousands of contractors, especially those serving the Afghan security forces, has raised concerns among some U.S. officials about the ability of the Afghan government and military to sustain critical functions.

'NOT A FOREGONE CONCLUSION'

Austin said the drawdown was going according to plan so far.

But Afghan security forces are locked in daily combat with the Taliban, which has waged war to overthrow the foreign-backed government since it was ousted from power in Kabul in 2001.

In just two days, the Taliban captured a second district in the northern province of Baghlan on Thursday.

The Afghan government says the Taliban have killed and wounded more than 50 troops in attacks in at least 26 provinces during the last 24 hours, while its forces killed dozens of Taliban over the same period.

The Chairman of the Joint Chiefs of Staff, General Mark Milley, said there had been sustained levels of violent attacks against Afghan security forces but none against U.S. and coalition forces since May 1.

Milley, in the same news conference, said it was too early to speculate on how Afghanistan would turn out after the withdrawal of U.S. forces given that Afghanistan had a significantly sized military and police force and the Afghan government was still cohesive.

"It is not a foregone conclusion, in my professional military estimate, that the Taliban automatically win and Kabul falls or any of those dire predictions," Milley said. (Reuters)

Australia's international borders might not fully reopen until the middle or second half of 2022, Trade Minister Dan Tehan said on Friday, in a blow to airlines and the tourism sector.

Asked in a Sky News interview when borders might open, Tehan said "the best guess would be in the middle to the second half of next year, but as we've seen throughout this pandemic things can change."

Tehan said he hoped more travel bubbles could be opened similar to the one between Australia and New Zealand. (Reuters)

China "indefinitely" suspended on Thursday all activity under a China-Australia Strategic Economic Dialogue, its state economic planner said, the latest setback for strained relations between the two countries.

"Recently, some Australian Commonwealth Government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination," China's National Development and Reform Commission (NDRC) said in a short statement on the decision.

The commission did not say in the statement what specific measures prompted the action.

China's foreign ministry spokesman, Wang Wenbin, told a daily conference the suspension was a "necessary and legitimate" response to Australia "abusing" the concept of national security to pressure cooperation with China.

"Australia must bear full responsibility," he said.

The Australian dollar fell sharply on the news and was as low as 0.7701 to the U.S. dollar from Wednesday's $0.7747.

Bilateral ties were strained in 2018 when Australia became the first country to publicly ban Chinese tech giant Huawei from its 5G network. Relations worsened last year when Australia called for an independent investigation into the origins of the novel coronavirus, prompting trade reprisals from China.

Australian Trade Minister Dan Tehan said the commission's decision was disappointing because the economic dialogue was "an important forum for Australia and China to work through issues relevant to our economic partnership".

"We remain open to holding the dialogue and engaging at the ministerial level," he said in a statement.

The last meeting was in Beijing in 2017, when Australia's trade minister signed an agreement on cooperation on Belt and Road projects in third-party countries.

Australia has, however, declined to sign agreements on direct participation in China's flagship foreign policy initiative.

In April, Canberra cancelled two Belt and Road cooperation deals struck by the state of Victoria, prompting the Chinese embassy to warn that ties were bound to worsen.

Australia's federal parliament granted veto power over foreign deals by states in December amid the deepening diplomatic dispute with China, which has imposed a series of trade sanctions on Australian exports ranging from wine to coal.

Successive Australian trade ministers have been unable to secure a phone call with Chinese counterparts since diplomatic tensions worsened in 2020.

In the 12 months to March, Australia exported A$149 billion ($115 billion) worth of goods to China, excluding services, of which iron ore was by far the largest product.

Experts expect the bilateral strains would not have a major impact on the iron ore trade, but could have an impact on Chinese investment in Australia.

"We believe the iron ore trading relationship between Australia and China will remain ring-fenced in relation to current political tensions between the two nations," said Atilla Widnell, managing director at Singapore-based Navigate Commodities Ptd Ltd.

"This is a co-dependent relationship whereby either party cannot survive without the other."

Executives of mining giant Rio Tinto said the tension between Australia and China was not hurting their business.

"We sell more than half of our products into China and we have a good relationship and we are unaffected," Chief Executive Jakob Stausholm told reporters after the company's annual meeting in Perth.

Rio Tinto Chairman Simon Thompson said: "Specifically in relation to iron ore, at the moment there are relatively few alternatives available to China."

But the dispute will continue to have an impact on Australia's commodities sector by discouraging Chinese investment and it indicated that effective bans on Australian imports are set to continue, said Yanting Zhou, senior economist at Wood Mackenzie.

China has effectively banned imports of Australian thermal coal. Since December, copper concentrate imports to China have also slumped.

"We estimate that the volume impacted is around one million tonnes per annum of copper concentrate, which is looking for homes in other Asia-Pacific smelters," said Gillian Moncur, also at Wood Mackenzie.

Matt Bekier, CEO of No.2 Australian casino operator Star Entertainment Group Ltd (SGR.AX), which relied on Chinese tourists until Australia closed its borders due to the pandemic, told the Macquarie Australia Conference he was unconcerned about China's suspension of the Strategic Economic Dialogue.

"I'm probably a bit more optimistic that people will do what they'll do. That's not to say that (there won't be) a number of months of challenges in the government relations," he said. (Reuters)

Australian officials reinstated social distancing measures in Sydney as New Zealand partially suspended the pair's "travel bubble" on Thursday, amid fears an Indian variant case of COVID-19 could spur a significant outbreak.

The swift action was taken a day after a 50-year-old man became the first reported local transmission case in New South Wales state in more than a month, with the source of his infection baffling health officials.

Further testing determined the man was infected with a variant first detected in India and genomic sequencing had linked the case to a returned traveller from the United States, NSW Chief Health Officer Kerry Chant said on Thursday, but there was no clear transmission path between the two people.

"We can't find any direct link between our case, so what we're concerned about is there is another person that is as yet unidentified that infected our case," Chant said.

New Zealand's minister for COVID-19 response, Chris Hipkins, said his country was halting quarantine-free travel to and from New South Wales while authorities investigated.

"With several outstanding unknowns in the situation in Sydney it is safest to pause the QFT (quarantine-free travel agreement)," Hipkins said in a statement.

The so-called "travel bubble" between Australia and New Zealand opened less than a month ago. The NSW suspension comes into effect at midnight.

The case of the unidentified Sydney man, who passed the virus on to his wife, appeared to be the first time officials had reported the local transmission of an India virus variant in Australia.

Tests on the infected man had showed a higher viral load than typically seen in infected people, potentially increasing the chance that the man has spread the disease, officials said.

With many people expected to gather over the weekend for annual Mother's Day celebrations, the NSW state government restricted household gatherings to 20 guests and limited aged care facility visitors to two people per resident.

Masks will be mandatory on public transport and at indoor venues. All the restrictions, which cover around 5.3 million people in the country's biggest metropolitan area, take effect at 5 p.m. local time and are scheduled to last until Monday morning.

"We believe this is a proportionate response to the risk we have ahead of us," NSW Premier Gladys Berejiklian told reporters.

The measures will also cover Sydney's neighbouring regions of Wollongong, the Central Coast and Blue Mountains.

NSW Treasurer Dominic Perrottet entered self-isolation on Thursday after he visited a restaurant at the same time as the infected person, classifying him as a close contact, his office said. Perrottet, who attended a sitting of state parliament on Wednesday, has tested negative.

Authorities also asked thousands of residents in the city's inner west to seek testing for any mild flu symptoms after fragments of the coronavirus that causes COVID-19 were detected in the sewerage network used by several suburbs.

Separately, health authorities reported five new cases of blood clots in people who had received the AstraZeneca (AZN.L) COVID-19 vaccine, the inoculation being used for the majority of the country's population over the age of 50.

Australia has now recorded 11 blood clot cases after administering 1.4 million doses of the AstraZeneca vaccine.

INDIA BAN

Speedy tracing systems, movement curbs and border restrictions have largely reined in the spread of COVID-19 in Australia, which has recorded 29,865 cases and 910 deaths since the pandemic began.

The federal government is currently under some pressure to overturn a temporary travel ban on travellers, including its own citizens, from COVID-ravaged India. Australia has blocked all direct flights from the country until May 15.

A report in the Sydney Morning Herald newspaper on Thursday, citing unidentified sources, said at least two repatriation flights will be dispatched to India every week from the middle of this month to bring home around 9,000 Australians.

Prime Minister Scott Morrison, however, said the situation would be constantly reviewed.

"We are not going to commit to that at this point," Morrison told radio station 3AW on Thursday. (Reuters)