Australia and China are at loggerheads over Beijing's attempt to influence politics Down Under.
Last week a prominent Australian lawmaker was forced out amid accusations about his involvement with Beijing, and, earlier this week, Australian Prime Minister Malcolm Turnbull cited "disturbing reports about Chinese influence" while announcing proposals to clamp down on foreign meddling in domestic politics.
"Foreign powers are making unprecedented and increasingly sophisticated attempts to influence the political process," Turnbull told reporters in Canberra on Tuesday. The leader's proposals include banning donations from overseas.
The Chinese embassy in Australia released a retaliatory statement on Wednesday, saying that "China has no intention to interfere in Australia's internal affairs or exert influence on its political process through political donations."
The statement urged Australia to reevaluate its relationship with China in "an objective, fair and rational manner," warning against "irresponsible remarks to the detriment of political mutual trust" between the two countries.
Earlier this year, local media reported on a supposed campaign by China to influence Australian domestic politics and thereby promote its own agenda.
Australian opposition lawmaker Sam Dastyari stepped down from some duties last week over comments that defended China's position in the South China Sea territorial dispute, deviating from his party's official line. Dastyari is also reported to have tipped off Chinese businessman and political donor Huang Xiangmo that Australian intelligence authorities were likely monitoring his phone.
Turnbull told reporters that his proposals signify the "most significant reforms to Australia's foreign interference laws in decades." Meanwhile, the Chinese embassy statement describes "reports, which were made up out of thin air and filled with cold war mentality and ideological bias, [that] reflected a typical anti-China hysteria and paranoid [sic]."
Turnbull's reforms encompass extending foreign interference offenses and forcing political donors to register if they are acting on behalf of a foreign power.
Andrew Shearer, who served as a national security advisor under former Australian Prime Ministers Tony Abbot and John Howard, told CNBC via e-mail that he had "become increasingly concerned over the past decade" about the Chinese government building leverage over Australian domestic politics.
Shearer described Turnbull's proposals as "a good start," but he warned that a "resourceful foreign power will work hard to find ways around the news laws," such as targeting Australian citizens rather than foreign nationals.
According to Reuters, approximately one third of countries worldwide permit foreign donations to political parties — including Australia and New Zealand. By contrast, the process is outlawed in the U.S. and the U.K. Turnbull's latest overhaul is in part based on the U.S. Foreign Agents Registration Act.
Earlier this year, it was reported that a China-born New Zealand lawmaker was being investigated for being a Chinese spy, which he denies.
Australia and New Zealand, alongside the U.S., the U.K. and Canada, comprise the Five Eyes intelligence gathering alliance.
In his Tuesday address, Turnbull said that his proposed reforms "are not about any one country."