The nation's top universities fear they are becoming collateral damage in the war of rhetoric with China after Beijing issued a blanket warning to current and potential students that Australia was an unsafe place.

The statement, written in Mandarin and published on the Chinese Embassy website and the Chinese Ministry of Education's official "Study Abroad Alerts" website, has alarmed the university sector which believes it is a veiled threat of financial retaliation should the Turnbull government continue to take a hard line against Beijing.