Former prime minister Malcolm Turnbull has no doubt the expulsion of two Australian reporters from China is a direct response to ASIO raids on Chinese journalists.
Beijing has accused Australian security agencies of “blatant irrational acts” over the June raids.
Up to six journalists and schools suspected of being Chinese agents have since left Australia or been banned from coming back.
Beijing appeared to retaliate this week by effectively expelling the final two Australian correspondents working on the ground in China.
Another Australian journalist, Cheng Lei, has been detained in Beijing for almost a month, accused of endangering national security.
Mr Turnbull is confident the connection is clear.
“What (China) appear to be admitting is that they’ve kicked out two of our journalists because ASIO investigated two of theirs who left, right? So it’s tit for tat,” he told ABC radio on Thursday.
“The relationship with China is of vital importance but we have to be able to defend our sovereignty.
“And if a foreign government or political party is seeking covertly or corruptly or coercively to meddle in our affairs, then we have to call that out.”
Mr Turnbull, who enraged Beijing by introducing foreign interference laws in 2017, said China meddled in other countries’ affairs on a bigger and more industrial scale than any other nation.
“They have very elaborate foreign influence operations,” he said.
“We don’t have a problem with somebody here representing an agency of the Chinese Communist Party, as long as they are up front about it.”
Australian businesses operating in China are growing increasingly concerned about the rising diplomatic tensions.
David Olsson from the Australia China Business Council is worried the spiralling relationship could cause lasting harm to two-way trade worth $200 billion.
“It’s no longer business as usual,” he told ABC radio.
As Australia-China relations continue to sour, Mr Olsson is calling for a major reset.
“We certainly don’t expect the Australian government to bow to Beijing’s pressure but we need voices of moderation on all sides to be heard,” he said.
“Somehow we’ve got to take the heat out of all the discussions and de-escalate the rhetoric that’s around.”
Mr Olsson believes the only way the relationship can be repaired is through a head-to-head meeting between Prime Minister Scott Morrison and Chinese President Xi Jinping.