Australia will ban foreign interference in its politics either through espionage or financial donations in a move motivated largely by Russia's alleged involvement in last year's USA election and China's growing influence on the global political landscape.
"Foreign powers are making unprecedented and increasingly sophisticated attempts to influence the political process, both here and overseas", Turnbull told reporters in Canberra, Australia's capital.
"China has no intention to interfere in Australia's internal affairs or exert influence on its political process through political donations".
One of the reforms in the Australian legislative package will require people working to influence Australians on behalf of foreign governments to declare themselves as foreign agents. It followed scrutiny over his links to a Chinese businessman.
Australian Prime Minister Malcolm Turnbull reportedly said that the country's new laws would ban foreign political donations to avoid external interference in domestic politics, citing "disturbing reports about Chinese influence".
The optics are bad for the Labor Party, and Dastyari has been demoted again.
In a statement released on Wednesday the Chinese embassy said that reports about "so-called Chinese influence and infiltration in Australia ... were made up out of thin air and filled with cold war mentality and ideological bias". This included asking for a Huang-owned company to pay a $1,250 travel bill and giving Huang counter-surveillance advice saying he and Huang should leave their cellphones inside Huang's house during a meeting past year while walking and talking outside.
The new laws, should they pass parliament, would ban foreign donations to political parties or any political group that has spent more than A$100,000 ($76,350) campaigning in the past four years - a rule that could also likely affect environmental and other campaign groups.
Attorney General George Brandis said the fact that Dastyari's conduct had not breached any laws showed a need for a review.
Espionage will carry a penalty of up to life in prison.
"Foreign intelligence services are engaged in covert influence and interference on an unprecedented scale", Turnbull said.
Turnbull explained that the reforms would aim to protect and strengthen democracy in Australia and would ensure that Australians make decisions based on their own wishes.
Why didn't the Australian government support legislation the opposition Labor Party put forward a year ago to curb foreign donations?
The government is banning foreign political donations, except when they're intended for charities.
The chief of Australia's primary intelligence agency, the ASIO, warned in October that foreign powers are "clandestinely seeking to shape" public opinion by manipulating the media and institutions of higher education, a warning widely interpreted as referring to Chinese Communist cells.
"Some Australian politicians and government officials also made irresponsible remarks to the detriment of political mutual trust between China and Australia", an embassy spokesman said.