SYDNEY (Reuters) - China is behaving in a way that is inconsistent with Australian values by targeting political parties and universities in Australia, a senior government minister said on Friday in comments that threaten to further inflame bilateral tensions.

Australian Minister of Home Affairs Peter Dutton inspects the St.Sebastian's church where two Australian citizens died in the Easter Sunday bombing, during his visit in Negombo, Sri Lanka June 3, 2019. REUTERS/Dinuka Liyanawatte/File Photo

Relations between Australia and China have deteriorated in recent years amid accusations that Beijing is meddling in domestic affairs and Australian fears that China is seeking undue influence in the Pacific region.

Australian lawmakers had sought to improve the relationship by refraining from public criticism of China in recent months but Peter Dutton, the minister for home affairs, said Australia would not be silent despite the importance of their trading relationship.

China is Australia’s largest trading partner, with two-way trade worth more than A$180 billion ($122 billion) last year.

“We have a very important trading relationship with China – incredibly important,” Dutton told reporters in Canberra.

“But we are not going to allow university students to be unduly influenced, we are not going to allow theft of intellectual property, and we are not going to allow our government bodies or non-government bodies to be hacked into,” he said.

China’s embassy in Canberra did not respond immediately to a request for comment. Beijing has previously denied any improper activities, accusing Australia of adopting a “Cold War mentality”.

Reuters reported earlier this month that Australian intelligence had determined China was responsible for a cyber-attack on the national parliament and three largest political parties before a general election in May, according to five people with direct knowledge of the matter.

China’s Foreign Ministry denied involvement in any hacking attacks and said the internet was full of theories that were hard to trace.

The attack on Australia’s parliament and political parties came as hackers were also targeting the country’s most prestigious university, an official report by the Australian National University (ANU) showed, which stoked fears that China could influence research and students.

The ANU said last week its investigators were unable to identify who was responsible for the cyber-attack earlier this year.

Foreign students are worth about A$35 billion a year to the Australian economy, with Chinese students accounting for about a third of that figure.

Australian universities are financially dependent on overseas students, raising fears that foreign governments could exert undue influence.

As a result, Australian universities will now be required to work with security agencies to ensure they guard against undue foreign interference.

Reporting by Colin Packham; Editing by Paul Tait