'Directly controlled'

Labor leader Bill Shorten visited Mr Huang at his Sydney home in March, 2016, seeking a political donation for last year's election, The Sydney Morning Herald and The Age reported Monday.

Labor Party officials had been warned several months earlier Mr Huang was of interest to ASIO over links to the Chinese government, the article said.

Mr Huang has previously denied he has done any work for the United Front Work Department.

"Dastyari is clearly developing a close relationship," with Chinese interests, said Dr Babbage, now an Australia-based senior fellow at a US think tank, the Centre for Strategic and Budgetary Assessments. "But they are very heavily involved in this activity which is part of the United Front Work Department and directly controlled by it.

"You shouldn't assume it's not being investigated," Mr Turnbull said when asked on Sky News Sunday if he would order an investigation into Senator Dastyari's behaviour. AAP

"It is engaged in international propaganda and international espionage. It is not just political warfare. They are engaged in economic persuasion too. "

Senator Dastyari didn't respond to text messages on Sunday. When asked by The Australian Financial Review last September if he was a Chinese agent, he laughed off the question.


Possible investigation

Generating political capital out of the affair ahead of the high-stakes Bennelong byelection in two weeks, Prime Minister Malcolm Turnbull implied the senator might be the target of law enforcement agencies.

"You shouldn't assume it's not being investigated," Mr Turnbull said when asked on Sky News Sunday if he would order an investigation into Senator Dastyari's behaviour.

Chinese political donor Huang Xiangmo with Malcolm Turnbull and Bill Shorten. James Brickwood

The Australian Security Intelligence Organisation, which is responsible for monitoring and countering foreign spies, declined to comment.

"He has betrayed Australia's interest," Mr Turnbull said. "How Shorten can stick with Dastyari and represent himself as a fit and proper person to be prime minister of Australia is utterly beyond me.

"It's time for Bill Shorten to show he's really on Australia's side and boot Dastyari out."

Treason petition


Mr Shorten can't remove Senator Dastyari from the Senate. Expelling one of his allies and a leader of Labor's biggest faction, the NSW right, from the party would be hugely controversial and could undermine Mr Shorten's leadership.

A petition on the change.org website calling on the government to charge Senator Dastyari with treason had 2600 signatures a few hours after Mr Turnbull's comments.

ASIO's official historian, John Blaxland, reflected the view among experts that Senator Dastyari was being used by the Chinese to influence policy, not steal secrets.

"Some serious influence peddling has been going on and the revelations are a helpful reminder that we should not be naive about the intentions of others to gain and wield such influence," said Professor Blaxland, the head of the Strategic and Defence Studies Centre at the Australian National University.

"But there are no indications his actions involved divulging classified information or material that would be prejudicial to Australian national security."

Major political donor

Mr Huang has emerged as a major political donor and has close links to the Chinese Communist Party, ASIO believes, according to a report in Fairfax Media newspapers six months ago.

Until recently president of a pro-Beijing lobby group, Mr Huang used the promise of a $400,000 donation to pressure the Labor Party to adopt policies more sympathetic to China, the report said.


Both sides of politics have been willing to accept his money, and Mr Huang has been photographed with Mr Turnbull, and his predecessors Tony Abbott and Kevin Rudd.

Senator Dastyari tried to help Mr Huang obtain Australian citizenship, an application that was held up by ASIO, the Fairfax Media report said.

In the future Australians lobbying government on behalf of foreign governments will have to publicly disclose their work under legal changes planned by Attorney-General George Brandis. Political donations from foreigners will also be banned.

Despite the changes, some experts think Chinese efforts to influence Australian policy and public opinion will increase.

"I suspect that will continue and will likely intensify in the future," said Bates Gil, a professor of Asia-Pacific Security Studies at Macquarie University.