Media reports on Chinese interference in Australia are racist and paranoid, China’s top newspaper said on Monday, stepping up a war of words over concerns about Chinese influence.

Malcolm Turnbull said last week he took reports very seriously that China’s Communist party had sought to interfere in his country.

The prime minister said that foreign powers were making “unprecedented and increasingly sophisticated attempts to influence the political process” in Australia and the world. He cited “disturbing reports about Chinese influence”.

The Chinese government has already protested against the remarks, and on Monday the ruling Communist party’s official People’s Daily stepped up the attacks.

The reports in Australian media had been full of imagination, making baseless attacks on the Chinese government and had maliciously slandered Chinese students and people living in Australia, the paper said in a commentary.

“This type of hysterical paranoia had racist undertones, and is a stain on Australia’s image as a multicultural society,” it said.

The commentary was published under the pen name Zhong Sheng, meaning Voice of China, which is often used to give the paper’s view on foreign policy issues.

China’s soft power has come under renewed focus since Labor senator Sam Dastyari was relieved of his official positions, having been found to have warned a prominent Chinese business leader and Communist party member that his phone was being tapped by intelligence authorities.

In June, Fairfax Media and the ABC reported on a concerted campaign by China to “infiltrate” Australian politics to promote Chinese interests.

Turnbull has vowed to ban foreign political donations to curb external influence in domestic politics.

People’s Daily said China had no intention of interfering in Australian politics or using financial contributions to curry influence.

China is Australia’s largest trading partner.

The two countries had no historical enmity or conflicts over each others’ basic interests and could absolutely forge good relations, it said.

China “urges the Australian government and media to cast aside political prejudice and bigotry and stick to the principle of using the facts in handling issues of relations with China”.