Peter Dutton has declared Australia will never surrender its sovereignty or compromise its values to appease China.
China has threatened to launch fresh action against Australia after the federal government tore up Victoria's Belt and Road Initiative agreements with Beijing.
The Chinese government said it would "reserve the right to take further action" after lodging a formal protest with the Department of Foreign Affairs and Trade.
Foreign Ministry spokesman Wang Wenbin accused the Morrison government of "political manipulation and bullying" and warned cancelling the agreements would make already strained China-Australia relations worse.
Mr Dutton said Australia had been clear with China throughout the long-running diplomatic stoush.
"We're not going to have our values compromised, we aren't going to surrender our sovereignty," the defence minister told Nine on Friday.
He said Victorian Premier Daniel Andrews had done the wrong thing in signing the agreements with China.
"He shouldn't be entering into agreements that aren't in our national interest," Mr Dutton said.
"We are standing up for who we are. We've got very important diplomatic relations with many countries including China, but we aren't going to be compromised by the principles of the Communist Party of China."
Mr Dutton also took aim at China for building up military bases in the region and launching cyber attacks.
"All of that is not the actions of a friend," he said.
"We need to make sure that yes, we've got an important trading relationship, but China and others need to understand that Australia is not going to be bullied."
