A veto-wielding permanent member of the Security Council, China has repeatedly blocked India's move to put a ban on the Jaish-e-Mohammed (JeM) chief under the Al-Qaeda Sanctions Committee of the Council.
The JeM, founded by Azhar, has already been in the UN's list of banned terror outfits.
China had in August extended by three months its technical hold on the US, France and UK-backed proposal to list Azhar as a global terrorist by the UN after having blocked the move in February this year at the United Nations.
The move came hours before the 3 PM deadline today at the UN headquarters in New York, wherein they informed the Security Council about its decision citing lack of unanimity.
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Notably, China was the only country opposing the designation of Azhar by the Security Council as a terrorist.
All other 14 of the 15 members of the UN Security Council were supporting the move by the US and France.
If they Chinese "did not have blocked" the proposal in this regard, "it would have been adopted", official sources said, adding that this is very similar to the process that Beijing previously adopted to the Indian proposal earlier to first delay it to the maximum possible time and then block it.
The Permanent Mission of US to the UN did not immediately respond to a question in this regard.
India and the US would now have to discuss about the next course of action.
The two countries have a new process about highest level consultation between Prime Minister Narendra Modi and President Donald Trump about designation of terrorists.
India's Permanent Representative to the UN Syed Akbaruddin was not immediately available for comments.
Previously, Akbaruddin had publicly said that "this process of unanimity and anonymity leads to impunity".
Earlier today, sources in the Chinese Foreign Ministry told PTI in Beijing that "China has rejected the move as there is no consensus".
The official's comment indicated that China has vetoed the application in the 1267 Committee of the UN Security Council to allow it to lapse.
Like last year, China first blocked the US application backed by France and the UK, also veto wielding members, with a six-month technical hold followed by another three months as per the rules of the Committee.
The application would now lapse as there is no consensus.
Diplomatic sources say China's recurring veto preventing the UN ban on Azhar poses a major challenge for India, the US and other countries.
China has been defending Pakistan, saying that the world should respect its sacrifices with regard to counter terrorism.
This is the second year in succession that China has blocked the resolution. Last year, China had done the same to stall India's application before the same Committee.
Earlier, Chinese Foreign Ministry spokesperson Hua Chunying told a media briefing: "we raised a technical hold so as to allow more time for the committee and its members to deliberate on this matter. But there is still absence of consensus on this matter."
"We will continue to follow the mandate of the Committee and its rules of procedure and remain in constant communication and coordination with the members of the Committee," she said.
To the follow-up questions, Hua said the Committee has its rules and "the Committee is yet to reach an agreement. This is a fact".
China continued its policy to block moves by India and other countries led by the US to block Azhar's listing during the second term of Chinese President Xi Jinping.
Last year in March, China was the only member in the 15- nation UN organ to put a hold on India's application with all other 14 members of the Council supporting New Delhi's bid to place Azhar on the 1267 sanctions list that would subject him to an assets freeze and travel ban.
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