The Chinese government has swiftly rejected claims it interferes in Australian politics, with the foreign ministry, state media and Chinese embassy accusing Australia of bias.
The Turnbull government's foreign interference laws prompted the strong response.
China had "no intention to interfere in Australia's internal affairs or exert influence through political donations", said foreign ministry spokesman, Geng Shuang, in Beijing.
The backlash to the foreign interference legislation, unveiled by Prime Minister Malcolm Turnbull on Tuesday, is far tougher than China's response to the foreign policy white paper last month.
The China Daily, seen as a state mouthpiece, devoted its Wednesday editorial to criticising Mr Turnbull for "pandering to anti-China bias".
While the newspaper supported a ban on foreign political donations, it said Mr Turnbull was wrong to attribute the crackdown to what he said were "disturbing reports about Chinese influence".
It also accused Fairfax Media and the ABC for "jointly whipping up an anti-China backlash" and accused Mr Turnbull of buying into "an orchestrated media falsehood".
The Chinese embassy in Canberra issued a testy statement saying the country does not meddle in Australian democracy and accusing "some Australian politicians and government officials" of making "irresponsible remarks to the detriment of political mutual trust".
An embassy spokesperson said "non-interference" in other countries' internal affairs was a central plank of Chinese foreign policy.
The embassy also accused Australian media of peddling racism, saying the reports had "unscrupulously vilified the Chinese students as well as the Chinese community in Australia with racial prejudice, which in turn has tarnished Australia's reputation as a multicultural society."
Recent stories about Chinese influence were "made up out of thin air and filled with Cold War mentality and ideological bias".
Macquarie University Professor of Asia-Pacific Security Studies Bates Gill said in Beijing it was striking to have Chinese colleagues ask him why Australia was being so negative about China.
"It is always a good idea to recalibrate your resilience to improper foreign interference. It needs to be done in a way that doesn't single out any particular country, including China," Mr Gill said.
Chinese media have closely followed Mr Turnbull's comments amid the Sam Dastyari scandal and the introduction of the foreign influence legislation.
The hawkish Global Times editorialised on Wednesday that the "exaggerated" measures the Turnbull government was taking against China were reminiscent of the McCarthyism of the US in the 1950s.
"Australia has gone insane regarding issue of China," the newspaper wrote.