China could hurt Australian unis by cutting the flow of international students, as tensions between the two nations rises.

The Prime Minister says there is increased tension between Canberra and Beijing in the wake of Australia’s decision to crack down on foreign interference.

Malcolm Turnbull would not say how many ministers had requests for Chinese visas refused or delayed but did admit that “there clearly had been some misunderstandings and mischaracterisations of our foreign interference legislation in some of the Chinese media".

Prime Minister Malcolm Turnbull has admitted tensions with China are escalating over the foreign interference crackdown. (AAP) (AAP)

“There is certainly some tension,” Mr Turnbull said. “There has been a degree of tension in the relationship that has arisen because of criticism in China of our foreign interference laws.

"But it is very important that the Australian Government that only Australians are influencing our political processes and where foreigners seek to influence they do so openly and transparently".

Australian Strategic Policy Institute executive director Peter Jennings said Chinese interference in Australia could take many forms, such as cyber espionage, intellectual property theft, and exerting undue influence on political parties.

China President Xi Jinping speaking at the Boao Forum for Asian Annual Conference earlier this week. (AAP) (AAP)

Concerns also exist that Beijing might halt students attending Australian universities, which could strip billions of dollars from cash-strapped campuses.

The Government announced a major rewrite of Australia’s laws on political donations and foreign interference in the wake of mounting evidence that some big political donors to both major parties have links to the Chinese Communist Party .

In the wake of the revelations Opposition leader Bill Shorten ordered Labor to reject donations from two billionaire benefactors.

Former Labor Senator Sam Dastyari was forced to quit his post over revelations of his conversations with a billionaire donor from China. (AAP) (Supplied)

There is also concern that Beijing now effectively controls all Chinese language media in Australia and that it is exerting undue influence on Australian university campuses through the Chinese Students and Scholars Associations.

The most high profile casualty in the debate was Labor Senator Sam Dastyari. He was forced to resign after Nine News played a recording of the then Senator disavowing Australia’s foreign policy on the South China Sea at a press conference called for Chinese language media and standing beside a billionaire donor.

The government’s laws would expand the definition of espionage, stop foreign nations from donating to political parties and force lobbyists working for a foreign power to declare their interests.

Chinese Ambassador Chen Jongye has accused the media of stirring up a "China Panic". (AAP) (AAP)

The proposals have been roundly criticised by media companies, charities, universities and business as being heavy handed and imposing absurd limits on foreign collaboration.

The Turnbull Government has always said that the laws aren’t aimed at any one country but the Chinese Government and its media reacted with fury to being singled out in public statements.

The Chinese Ambassador, Cheng Jingye, accused the media of trying to stir up “China Panic” and state owned media accused Australia of becoming an “anti-China pioneer”.

Mr Turnbull repeated today that the foreign interference laws were not aimed at China.

“We have a very strong and respectful relationship with China and like every nation we do everything we can to ensure that any foreign influence in our politics is open and declared,” he said.