Australia on Monday launched a high-level intelligence task force to combat what officials say is rampant foreign interference in the country and after claims of bold Chinese spying operations Down Under.

Prime Minister Scott Morrison said the new force would involve all the country's top intelligence agencies "to disrupt and deter anyone attempting to undermine our national interests".

One novelty of the force would see intelligence agencies, normally tasked with overseas threats, coordinate with federal police to identify and prosecute or expel foreign agents.

"We will be developing new specialist capabilities both from an investigatory capacity as well as being able to pursue investigations and bring them to either disrupt activity or, indeed, follow through and prosecute," Morrison said during a press conference in Canberra.

"This task force to counter foreign interference is about identifying it, disrupting and prosecuting."

Morrison did not explicitly mention China, saying "foreign interference comes from many, many different sources" and is "an evolving threat".

But Monday's announcement followed revelations that authorities were investigating a raft of explosive claims by Wang Liqiang, a would-be Chinese defector, about Chinese espionage and covert influence operations in Australia.

It also came after the recently retired head of the Australian Security Intelligence Organisation, Duncan Lewis, said China wanted to "take over" Australia's political system with an "insidious" and systematic campaign of espionage and influence peddling".

Australian authorities are also looking into a claim that China tried to recruit a Melbourne businessman and get him elected to parliament.

Bo "Nick" Zhao -- a 32-year-old luxury car dealer who was a member of Morrison's Liberal Party -- apparently rebuffed the offer and was found dead in a motel room in March.

Morrison described the allegations as "deeply disturbing and troubling".

China branded the claims "lies", accusing "some politicians, organisations and media in Australia" of "cooking up so-called China spy cases".

Morrison's government passed foreign interference legislation last year following revelations that wealthy Chinese businessmen with links to Beijing had been bankrolling local parties and candidates across the political spectrum.

The law notably required the registration of any person or organisation acting on behalf of a foreign government.

As part of that crackdown, the government barred a high-profile Chinese businessman who held permanent Australian residency from returning to the country.

China is also widely suspected of being behind major intrusions into the computer systems of Australia's parliament and a university with close ties to the government and security services.

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In an unusually frank statement, Marise Payne said she was "very concerned by reports from a recent consular visit to Australian citizen Dr Yang Hengjun".

Yang has been detained in China since January and was recently charged with spying, which could bring a lengthy prison sentence.

Payne said Yang is subject to "increased isolation from the outside world, with restrictions on his communications with family and friends, and the resumption of daily interrogation, including while shackled".

"This is unacceptable," she said, adding that repeated requests had been made for Yang to get "basic standards of justice, procedural fairness and humane treatment".

Prime Minister Scott Morrison has denied that Yang -- one of a string of foreign nationals recently arrested in China -- was a spy.

The arrests have been described by rights groups as politically motivated.

China's near-silence about Yang's fate has been a point of friction in relations with Australia.

Yang had initially been held in "residential surveillance at a designated location" before being moved to criminal detention in August.

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