Prime Minister Malcolm Turnbull insists Australia's friction with China is modest, despite being given "disproporionate attention".
Mr Turnbull insists Australia has an independent foreign policy and does not have to choose between China and the US, amid growing tensions between the two super powers.
Ties with China, Australia's largest trading partner, would get closer and closer, insisting its rise was welcomed and embraced.
"Friction between us is very modest relative to the scale of the relationship," the prime minister told reporters in Hangzhou.
Points of difference between both nations were raised when Mr Turnbull met with Chinese President Xi Jinping on Sunday ahead of the G20 summit.
President Xi told Mr Turnbull he hoped Australia would continue to provide a fair, transparent and predictable policy environment for foreign investors, after the treasurer blocked the sale of NSW electricity distributor Ausgrid to Chinese bidders.
Mr Turnbull on Monday said all countries including China were expected to respect Australia's sovereignty when it came to foreign investment.
"We decide who invests in Australia and the circumstances in which they invest.
"That's our sovereign right."
Treasurer Scott Morrison meanwhile defended his decision to block the Ausgrid sale deeming it was not in Australia's national interest.
"If you wanted to do the same thing in China you wouldn't be allowed to do it," he told Ray Hadley on Sydney's 2GB radio.
Cabinet minister Josh Frydenberg insists the Australian door to Chinese investment is wide open despite China's complaint.
Australia was the second largest destination for Chinese investment in the world with hundreds of deals having been approved by the government.
"We've had a very open door," he told ABC radio.
Assistant Trade Minister Keith Pitt said Australia was one of the most open nations in the world.
But it was also a sovereign nation entitled to make decisions around its national security.
"We will continue to make decisions which are in the best interests of this nation," he said.
But Opposition Leader Bill Shorten, while supporting the treasurer's decision on Ausgrid, criticised how long it took to be made.
"If we were going to say that these assets were off limits for state-owned enterprises to purchase, we probably could've done it a lot earlier than we did," he told reporters in Melbourne.
"We've got to make sure that everyone knows the rules when they go in rather than surprise people a long way into a commercial transaction.
"That gives us a reputation for being unpredictable and that's not what we want in global markets."
