Shadow foreign minister Penny Wong says Australia needs to “define the boundaries” of its engagement with China now the relationship between the two countries is in a new phase.

Focusing on China policy in a Monday address – released ahead of delivery – Wong acknowledges the “substantial and growing differences” in the bilateral relationship.

“It is inevitable that Australia will make more decisions that China doesn’t like. This means that the way the relationship is handled will become even more important,” she says in the speech, to the Australian Institute of International Affairs.

“Although there continues to be convergence of interests, the divergences have become more apparent and acute – due to both Beijing’s increasing assertiveness and greater awareness in Australia as to the implications of the [Chinese Communist Party’s] behaviour and ambitions. We must look at how best to engage effectively with China while always standing up for our values, our sovereignty and our democratic system.”

Wong says where limitations around engagement are needed, the “boundaries should be as restricted as possible and as robust as necessary,” with opportunities and risks identified.

Boundaries and terms of engagement would differ between issues and between sectors.

Thus on research collaboration, engagement shouldn’t be ruled out across entire fields, but export controls and visa checks could be used for “a narrow set of the most sensitive defence oriented technology”.

Read more: 'Developing' rift points to growing divisions between Coalition and Labor on China

Wong says while the government has to provide the leadership all stakeholders, including the opposition, foreign policy community and business, “need to work together to identify those opportunities for deeper engagement where our interests coincide and to manage differences constructively”.

She puts the onus on the media “not only to hold the government of the day to account but to ensure they themselves don’t unthinkingly or inadvertently reinforce China’s tactics or narrative”, including by amplifying CCP claims.

Wong says Labor wants to engage in a bipartisan way on China policy, but the government isn’t willing to do so and Scott Morrison “has no plan for dealing with this new phase in Australia’s relations with China”.

“There’s no doubt Scott Morrison is the best political tactician in Australia right now… Is it enough to be a clever political tactician, when key relationships with our nearest neighbours are at stake? Is it enough to play short term political tactics on something so profoundly important as the integrity of our political system or the assertion of our national interests?

"Australia’s Prime Minister needs to look beyond the next manoeuvre, stop undermining his foreign minister and trade minister, and develop a serious long-term plan for Australia’s engagement in the region and the world.

"A serious and long-term plan that can proactively navigate us through the strategic competition between the US and China, and manage this new phase in our relationship with a more assertive China.”

Read more: View from The Hill: To go to China you have to be invited: Morrison

In a series of sharp criticisms of Morrison’s handling of the government’s policy towards China and foreign policy more generally, Wong includes as examples the PM’s claim Labor was using racism in its attack on Liberal MP Gladys Liu, his labelling of China a developed economy, and his attack on globalism.

Wong’s speech follows the blunt words on China on Friday from Home Affairs minister Peter Dutton, who said the government had a very important relationship with China, but it was going to “call out” instances where the wrong thing was done.

“We have a very important trading relationship with China, incredibly important, but we’re not going to allow university students to be unduly influenced. We’re not going to allow theft of intellectual property and we’re not going to allow our government bodies or non-government bodies to be hacked into,"he said.

Dutton stressed the issue was not with the Chinese people or the local Chinese community in Australia, but with the Chinese Communist Party.

The Chinese embassy reacted with an angry statement, saying that Dutton’s "irrational accusations” were “shocking and baseless”, and a “malicious slur on the Communist Party of China” and “outright provocation to the Chinese people”.

“Such ridiculous rhetoric severely harms the mutual trust between China and Australia and betrays the common interests of the two peoples,” the statement said.

Morrison at the weekend sought to play down the Dutton comments. “What Peter was talking about was the fact that there are differences between Australia and the People’s Republic of China. Of course there are,” he said. Australia was a liberal western democracy; China was a Communist Party state. “I would warn against any sort of over-analysis or over-reaction to those comments. Because I think they just simply reflect the fact that we’re two different countries”.