Foreign Minister Julie Bishop has gone into damage control over a diplomatic row concerning China's aid to Pacific Island nations.
International Development Minister Concetta Fierravanti-Wells criticised China's assistance to tiny Pacific island nations for building "white elephant" projects and "roads to nowhere".
She also expressed concerns about the sustainability of China's loan arrangements with the island nations.
Beijing has reacted angrily to the remarks lodging an official protest with Australia's embassy in Beijing.
Ms Bishop said the Australian government welcomes investment in developing nations in the Pacific that supports sustainable economic growth, and which does not impose onerous debt burdens on regional governments.
"Australia works with a wide range of development partners, including China, in pursuit of the goal of eliminating poverty in our region and globally," she said.
China media commentary from the Xinuhua newsagency warned Australia should "refrain from behaving like an arrogant overlord".
Labor's foreign affairs spokeswoman Penny Wong has labelled as clumsy the government's approach to bilateral relations with China.
The Lowy Insitute estimates China has poured $2.3 billion in aid to the South Pacific since 2006.
The Institute's Pacific Islands program director Jonathan Pryke said the senator had made a legitimate point but the value of projects had to be assessed on a case-by-case basis.