The attacks on Australian companies are in breach of an agreement struck between Premier Li Keqiang and former prime minister Malcolm Turnbull in April 2017 to not steal each other's commercial secrets.

Filing criminal charges against Chinese hackers, as the US has done over the past year, is one option open to Australia, although Mr Freeh believes a formidable cyber deterrence capability is the best defence.

Mr Freeh likened offensive cyber capabilities to the doctrine of mutually assured destruction during the Cold War, which he said ultimately prevented nuclear weapons being used.

"All the major powers, including Australia, they know the [cyber] capacity of their adversaries," he said. "They can assess pretty accurately the capacity of their adversaries and allies and that is the single most reason why we have not seen a cyber war …. it's the same reason nobody has fired a nuclear weapon in 75 years."

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Mr Freeh said countries had the capability to shut down power grids, transport networks and financial systems, but had not done so as it would potentially trigger a far larger retaliatory attack.

He said offensive cyber capabilities had been used after attacks in the past, but the response was proportionate.

"We've seen enough attacks that have given countries the basis to retaliate and they have in many cases, but the retaliation, if you look at it from 30,000 feet, is very proportionate and very measured given the initial attack."

Malcolm Turnbull acknowledged Canberra's offensive cyber capabilities in April 2016, but few other countries have followed this lead.

Since that announcement the government said the capability has been used against Islamic State in the Middle East, while also revealing it has established an information warfare division with the Australian Defence Force.

"Governments routinely engage in a wide spectrum of cyber operations, and researchers have identified more than 100 states with military and intelligence cyber units," Fergus Hanson and Tom Uren said in a report for the Australian Strategic Policy Institute.