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China’s ambassador to Australia insists Beijing does not infiltrate other countries or seek to interfere in their internal politics.

Relations with China have soured in the past year and Beijing is especially cranky about Australia’s new foreign interference laws due to be debated and passed in federal parliament in the next fortnight.

“China never interferes in the internal affairs of other countries, let alone carry out the so-called infiltration of other countries,” Cheng Jingye told the Australia China Business Council on Tuesday.

“Of course, the development of bilateral relations has not always been smooth. Sometimes there has been clouds and even rain and wind.”

Mr Cheng said to improve relations, the two countries need to have more interaction and inclusiveness with less “bias of bigotry” and “Cold War mentality”.

Former Victorian premier John Brumby, the council’s national president, told the conference the relationship needs a reboot.

“To put it bluntly, the relationship needs reset and repair,” he said.

Mr Brumby insists this would not mean compromising Australia’s values or interests.

“Rather, it is about how to protect our national interest, which includes a positive relationship with China,” he said.

But Prime Minister Malcolm Turnbull insists the situation is much rosier than portrayed.

“You can often see a lot more negativity presented than is actually the case,” he said.

“From time to time there will be differences … but the important thing is we deal with them as friends, with respect.”

Foreign Minister Julie Bishop characterised Canberra’s ties with Beijing as robust.

“Do we agree with China on everything? No. Does China agree with Australia on everything? No,” she said.

Labor foreign affairs spokeswoman Penny Wong called on the government to tone down its anti-China rhetoric in a speech to the conference.

Senator Wong warned the government was flirting with a “dangerous exercise” by politicising the relationship between Canberra and Beijing.

“It is possible for us to assert our interests and safeguard our sovereignty without being offensive and inflammatory,” she said.

Meanwhile, the government is encouraging Pacific nations to turn to Australia as their natural infrastructure partner as concerns mount over China’s influence in the region.

Ms Bishop says China’s construction of roads, ports, airports and other infrastructure could saddle Pacific nations with unsustainable debts, leading to loss of sovereignty.

But Labor argues Ms Bishop has presided over $11 billion in cuts to foreign aid, leaving Pacific nations to turn elsewhere.

“The government has created a vacuum … Australia has vacated the field,” Opposition Leader Bill Shorten told reporters.