China assailed Australia's decision this week of banning a major Chinese firm from participating into the $36-billion roll out of the national broadband network (NBN), labelling the move as discriminatory and unfair trade practices.

Attorney-General Nicola Roxon declared on Tuesday that Huawei's application to bid for a supplier contract on the NBN project will be processed, citing security concerns.

The decision, Ms Roxon said, was made with recommendations forwarded by Australia's intelligence officials, which reportedly have been probing on allegations that Chinese hackers perpetrated the security breaches detected in 2011 on major government ministries.

The hacking attacks, authorities said, tried accessing sensitive files from the Prime Minister's office, as well as that of the Foreign and Defence ministries.

However, China's Foreign Ministry said in a statement on Wednesday that locking out Huawei from playing a role on the multi-billion NBN implementation was unnecessary and allegations that the telecommunication firm was a security risk were "groundless and made out of ulterior purposes."

"We hope competent authorities of Australia will provide a level and indiscriminate market environment for Chinese companies instead of wearing coloured glasses and obstructing Chinese companies' normal operations in Australia in the name of security," the Australian Associated Press (AAP) reported Chinese Foreign Ministry spokesman Hong Lei as saying.

The Chinese official noted too that prior to the surprise actions displayed by Canberra this week, the nations have been maintaining a productive trade partnership, with Australia enjoying steady commodities orders from China.

That relationship was largely responsible for Australia's resources boom, which in turn, insulated the country's economy from the ill-effects of the last global financial crisis in 2008, experts said.

"In recent years, China-Australia investment cooperation has not only provided opportunities to Chinese companies going global but also injected strong impetus into economic and social development, and people's well being in Australia," Mr Hong reminded.

But Prime Minister Julia Gillard stood by her government's action and insisted that "we would make all of the prudent decisions to make sure that that infrastructure project does what we want it to do and we've taken one of those decisions."

Experts said Huawei's troubles could be traced on its CEO and founder, Ren Zhengfei, who was once a military officer in the Chinese Army handling tech-related matters.

Mr Ren's reported close ties with Beijing spawned security worries in the United States that U.S. regulators had blocked previous efforts by Huawei to expand its operations in North America.

Notwithstanding, Huawei has made its mark as major telecommunication company, recently becoming the second biggest in China and earning the attention and respect of global industry players.

Network specialist Cisco recently said that it counts Huawei as a major competitor.

Also, Huawei Australia chair John Lord, a retired Australian Navy admiral, has assured that the tech firm he now serves poses no "security risk to Australia."

Mr Lord told the Australian Financial Review on Tuesday that his meetings with Mr Ren convinced him of the company's integrity, a belief that he espoused following "extensive due diligence."

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