The Home Affairs minister says Australia has the right to call out people or nations who are operating outside the law.

He had no beef with the "amazing Chinese diaspora" living in Australia.

"My issue is with the Communist Party of China and their policies to the extent that they're inconsistent with our own values," he told reporters in Canberra on Friday.

"We have a very important trading relationship with China, incredibly important, but we're not going to allow university students to be unduly influenced, we're not going to allow theft of intellectual property and we're not going to allow our government bodies or non-government bodies to be hacked into."

After mentioning cyber attacks by state and non-state actors and China's expansionist activities in the Indo-Pacific region, Mr Dutton said a frank conversation was the right one.

"The Australian government has a very important relationship with China but we are going to call out ... and attribute where we find in our national interest to do so, the people that have been behind these activities," he said.

The strong comments come as Australia's relationship with China is in the deep freeze.

Foreign policy experts say it's hard to see what the Australian government could do to get things back on track.

Immigration Minister David Coleman, who assists Mr Dutton's portfolio, agreed "in many cases" with the assessment that China's Communist Party's values were inconsistent with Australian ones, but declined to say whether he also agreed they responsible for hacking and intellectual property theft..

"We obviously had our own democratic values and we won't always agree on different matters," he said.

And Treasurer Josh Frydenberg said it was abundantly clear China and Australia had very different political systems.

The Chinese embassy in Australia rejected Mr Dutton's comments, calling them "irrational", "shocking" and "baseless".

"We strongly condemn his malicious slur on the Communist Party of China, which constitutes an outright provocation to the Chinese people," it said in a statement.

"Such ridiculous rhetoric severely harms the mutual trust between China and Australia and betrays the common interests of the two peoples."

Australian Associated Press