Prime Minister Scott Morrison is concerned about the impact a Chinese anti-dumping inquiry could have on Australian wine exports worth more than $1 billion a year.
China has launched an investigation into whether Australian winemakers are flooding the country with cheap wine and drowning out local producers.
Chinese authorities are also considering an investigation into whether Australian wine exports are unfairly benefiting from government subsidies.
“We are taking it seriously but we completely reject any suggestion that Australian wine is subsidised,” Mr Morrison told Seven’s Sunrise program on Wednesday.
“We completely reject any suggestion that there is dumping of Australian wine in China.”
The Chinese market accounts for almost 40 per cent of Australian wine exports.
The trade strike is the latest in a series of blows from Beijing as diplomatic relations continue to sour.
After slapping tariffs on Australian barley, China has since made good on its threats to target the beef, wine, education and tourism sectors.
There are fears Australia’s powdered milk or minerals industries could be next.
Some have described the wine inquiry as a weapon wielded by China and accused the global superpower of flexing its muscles through economic coercion.
“If that’s the suggestion, then Australia would never be influenced by anything like that,” Mr Morrison said.
“But it is for others to to to label this as as they might and for others to defend any suggestions they might be doing that.”
The relationship has been heavily strained by disputes over coronavirus, territorial claims in the South China Sea, Beijing’s security crackdown on Hong Kong and the decision to ban Huawei from Australia’s 5G network.
The anti-dumping investigation is expected to run for about 18 months.