Prime Minister Malcolm Turnbull has defended Qantas's decision to relent to pressure from Beijing on references to Taiwan, despite the Foreign Affairs boss last week labelling it "economic coercion".

Qantas confirmed it would adjust references on its website and in advertising material, to reflect Taiwan is part of China.

Earlier this year, China's civil aviation authority issued demands to more than three dozen airlines to remove references suggesting the island was an independent country.

Beijing's concerns were levelled at any mention of Taiwan, such as in drop-down destination menus on websites accessed when passengers book flights.

Qantas chief executive Alan Joyce defended his airline's decision, arguing it was merely in step with Australian foreign policy at the International Air Transport Association (IATA) annual general meeting in Sydney.

"Airlines don't decide what a country is called, governments do," Mr Joyce said.

"At the end of the day, the Australians — like a lot of countries — have a 'one China' policy.

"So we're not doing anything different than the Australian Government is doing in that case, and I think that's the case for a lot of airlines."

Sorry, this video has expired Alan Joyce defends Qantas bowing to pressure from the Chinese Government

Mr Turnbull agreed with the Qantas boss, and said it was a matter for the company.

"Our diplomatic relations are with China, and the People's Republic of China, and our embassy is in Beijing," he said.

"We deal with Taiwan of course, but we have a 'one China' policy."

Defence Minister Marise Payne earlier suggested China should not interfere with the operations of independent businesses.

British Airways appears to have taken heed of the warning, now listing 'Taiwan — China' on its website.

American Airlines confirmed to the ABC it had received a letter from Chinese officials, but would not comment further. The airline's website had not been changed.

Singapore Airlines would not comment on discussions with Chinese regulators, while German carrier Lufthansa had adopted new terms.

"As a company operating globally, Lufthansa considers general laws, regulations, local customs and practices in markets we serve when designing online interfaces to customers," a spokesperson said in a statement to the ABC.

"This includes taking customs of the international clientele into consideration."

Opposition Leader Bill Shorten described it as a "pretty complex issue" for Qantas to consider.

"I'd probably rather that hadn't happened," he said.

"But having said that, that's a business decision for Qantas, I'm not going to start running their airline for them."

China exercising 'economic coercion', DFAT boss says

DFAT secretary Frances Adamson blasted the Chinese authorities for their demands, when asked at a Senate Estimates committee in Canberra last week.

Sorry, this video has expired Australia cannot tolerate "economic coercion" from China, says DFAT boss

"I just want to be clear that while we may express views in a variety of ways — sometimes very publicly, sometimes behind the scenes — the Government cannot be in a position to tolerate the exercise of economic coercion," Ms Adamson said.

White House press secretary Sarah Huckabee Sanders was also scathing when the initial demands were made.

"The United States strongly objects to China's attempts to compel private firms to use specific language of a political nature in their publicly available content," she said in a statement last month.

"This is Orwellian nonsense and part of a growing trend by the Chinese Communist Party to impose its political views on American citizens and private companies."

The Taiwanese Government refers to the island as the Republic of China (ROC), after the Chinese Nationalist government fled to Taiwan during the Chinese civil war in 1949.

Australia's Department of Foreign Affairs and Trade website states: "The Australian Government does not recognise the ROC as a sovereign state and does not regard the authorities in Taiwan as having the status of a national government."

Taiwan is one of Australia's largest trading partners, with exports worth about $8.7 billion.

Despite the 'one China' approach, DFAT separates trade data to the island from that of the mainland.