The Chinese government has warned Australian "protectionism" could harm ties and threaten future investment between the two countries in the wake of the federal government's preliminary decision last week to block the sale of Ausgrid to buyers from China and Hong Kong.

Treasurer Scott Morrison is widely expected to follow through in a final decision later this week and block the state-owned China State Grid and Hong Kong's Cheung Kong Infrastructure from acquiring a majority stake in the NSW electricity provider via a 99-year lease based on national security grounds.

"This kind of decision is protectionist and seriously impacts the willingness of Chinese companies to invest in Australia," Chinese Commerce Ministry spokesman Shen Danyang said at a regular news briefing in Beijing on Wednesday.

"China hopes Australia will create a fairer and more transparent environment for Chinese investment."