He said it was his view that the Australian government needed to be pragmatic in its response, and ensure it attracted investment from other countries.

"It is not for the Australian government or indeed any government to dictate to the Chinese which sectors they should or shouldn't be allowed to invest in, pursuant to their domestically imposed capital controls," he said.

Mr Ciobo said foreign investment in Australia was "highly diversified", with the United States as the biggest single investor, and "strong pipelines of investment" from Singapore and the United Kingdom.

"Yes, China is a player in this space, but what will ensure the Australian economy deals with this well is the fact we have a very diversified investment base, which means, as the old saying goes, we don't put all our eggs in one basket."

According to the Foreign Investment Review Board, although the United States was the largest holder of direct investment stock in Australia last year, followed by Japan, China has been the biggest investor of new money for several years.