The Coalition has accused Labor of targeted payback against a think tank for its criticism of China and has warned that the recommendations of a review into strategic policy advice will weaken engagement with Washington just as Donald Trump returns to the White House.

The review of $40 million of annual think-tank funding suggests that block funding of four institutions – including the Canberra-based Australian Strategic Policy Institute – should be replaced by competitive bids in the coming years. It also wants to close the ASPI office in Washington that was opened with a $5 million grant just a few years ago.