WA's China debate rages on as minister warns of region's 'grey area' aggression

The debate raging in Western Australia over the nation's relationship with China has intensified as Defence Minister Linda Reynolds called out domestic critics of the federal government's foreign policy and said Australia would stand up to nations operating in the "grey zone".

At a business forum in Perth on Friday, Senator Reynolds said Australia was facing "the most consequential strategic realignment since the end of World War II".

Australian Defence Minister Linda Reynolds during the Business News breakfast. 

Without naming China, she said the nation had entered a critical phase of its strategic history.

"I say this not as a cause for alarm but for cleared eyed and deliberate whole of government and also whole of nation action," Senator Reynolds told the Business News Politics and Policy breakfast.

"Major regional powers have become more assertive.

"Across the Indo-Pacific, nations are modernising their militaries and accelerating their preparedness for conflict.

"And regional military forces are developing and adopting disruptive technologies at a faster rate than ever before."

Senator Reynolds called out the "grey zone tactics" of some nations in the region, which include cyber attacks, foreign interference, supply chain disruption and economic coercion.

"These are the new ways of interfering with a nation's sovereignty," she said.

"In this grey zone the screws are tightened, influence becomes interference, co-operation becomes coercion and investment becomes entrapment."

Asked about business interests in Western Australia who advocate for appeasement with China and criticise the federal ministers and MPs for "megaphone diplomacy", Senator Reynolds said the government was "standing up for our nation's interests".

"Shouldn't we be standing up and dealing with foreign interference? Shouldn't we be dealing with cyber incursions?" she said.

"What exactly do they think we shouldn't be doing to defend our own national interests?"

She said Trade Minister Simon Birmingham was working to deal with trade issues that had arose with China.

"He's not doing that with a megaphone, the Foreign Minister is not doing that with a megaphone, and our Prime Minister is not," Senator Renolds said.

"But what we are saying very, very clearly – and it's not nation-specific, because there are a number of nations who are in the grey zone, who seek to influence our nation – we will stand up.

"That is what I believe all Australians want us to do. They want us to stand up for our nation's interests and protect our sovereignty."

WA Labor politicians have been vocal critics of the federal government's China foreign policy. On Wednesday, outgoing Treasurer Ben Wyatt used his last parliamentary speech to lash "commentators and some elected representatives" for attacking "our major trading partner".

Mr Wyatt said it was ridiculous to suggest Australia should maintain strong relationships with "only those countries that share our values".

"China is by no means a perfect nation, but few nations are," he said.

Mr Wyatt suggested China would buy its commodities from other nations if Australia was "unfriendly or abusive", which could cost "hundreds of thousands of Australian jobs".

"In the same way that I can choose from which cafe to buy my coffee, many of Australia’s trading partners make choices about where they buy their barley, wine, meat and other commodities," he said.

"If my local cafe owner were unfriendly or abusive, I would probably go to the cafe down the road."