Scott Morrison has tried to downplay a stoush between his home affairs minister and China, saying their comments simply reflect the differences between the two countries.
However, the prime minister said there is also much Australia and China share in common.
But Labor frontbencher Andrew Leigh said comments by Home Affairs Minister Peter Dutton were "deeply unhelpful" when millions of Australians rely on the China relationship for their prosperity.
Mr Dutton drew the wrath of the Chinese Embassy on Friday after saying the policies of the Communist Party of China are inconsistent with those of Australia.
While Mr Dutton acknowledged the important trading relationship between the two countries, he said Australia is not going to allow university students to be unduly influenced by China, the theft of intellectual property or the hacking of government or non-government organisations.
The Chinese embassy in Australia rejected Mr Dutton's comments, calling them "irrational", "shocking" and "baseless".
"We strongly condemn his malicious slur on the Communist Party of China, which constitutes an outright provocation to the Chinese people," it said in a statement.
"Such ridiculous rhetoric severely harms the mutual trust between China and Australia and betrays the common interests of the two peoples."
The Australian prime minister warned against any sort of over-reaction to those comments.
"I think they just simply reflect the fact that we're two different countries," Mr Morrison told reporters in Suva on Saturday during his whistlestop visit to Fiji.
He said more importantly there is much the two countries share in common through the comprehensive strategic partnership and that is what his government remains focused on.
"That's why I think our relationship with China will always remain positive, because it's focused on the things that we agree on and that benefit each country, not on the areas that I think there are clear differences," he said.
But Dr Leigh believes Australia's relationship with China is "as bad as it has ever been".
"This is a complicated relationship, it needs to be handled with a sense of deftness and care that has been lacking from the Morrison government," he told reporters in Canberra.
But his backbench colleague Peter Khalil was more blunt, likening Mr Dutton to Frankenstein's monster clumsily talking tough and "bellowing out his talking points".
"They've botched this relationship. There's something called diplomacy, diplomatic language. I wish there were more adults in the coalition party room and government," Mr Khalil told ABC television.
"They're saying these things for domestic political point-scoring, not for Australia's national interests."