NO nation makes a greater espionage effort directed at Australian military and commercial technology than does China.

It was because of China's massively increased espionage activities in recent years that in 2004 the Australian Security Intelligence Organisation set up a new counter-espionage unit.

But the problems China poses for a country such as Australia in the security and espionage field extend far beyond what might be regarded as traditional espionage.

Beijing has the most unified and co-ordinated sense of national power of any big nation on Earth. Modern China is not a democracy, but it is a very effectively functioning modern state.

It has a highly competent bureaucracy that seeks to penetrate all sectors of Chinese society and serve what the ruling Communist Party regards as the broader national interest. This includes monitoring, and where possible influencing, Chinese business people and students in their activities overseas.

This is a highly elusive matter, extremely difficult to quantify.

The overwhelming majority of people of Chinese ethnic background living in Western societies such as Australia or the US have no relationship with the Chinese state.

And most of those who do have any relationship with the Chinese state have an entirely wholesome one, such as doing business with the Government or promoting cultural exchange.

But the Chinese Government seeks to use every resource it can to gain information and to exercise power. That includes, on the testimony of Chinese defectors and Western intelligence agencies, often using business people and students as agents where it can recruit them.

This may often be fairly trivial, such as reporting that some Australian political activists took a trip to Taiwan, which Beijing regards as a renegade province, or expressing some support for Tibet's Dalai Lama, whom Beijing regards as an enemy of its national sovereignty.

But where it can, the Chinese state undoubtedly uses agents of all kinds to gain serious political and financial influence, and serious and otherwise confidential information.

It is impossible to regard a big Chinese company, especially one operating in a strategic or sensitive sector, in the same light as you might regard a big private company from Japan or South Korea.

Large Chinese companies will often have whole sections devoted to relations with the Chinese Communist Party. And senior personnel will have a seamless transition from a state-owned enterprise into a role in government.

Throughout China's long national history, the international diaspora has often been a force in Chinese politics itself. Central Chinese governments will always want to monitor that diaspora closely. But the present Chinese Government makes a far greater effort to monitor that community and recruit agents from its diaspora than any of its predecessors, or any administration of any other nation.

In 2005, a Chinese consul based in Sydney, Chen Yonglin, defected amid a blaze of publicity. He alleged there were 1000 Chinese agents in Australia, mainly involved in monitoring and manipulating students and business people of Chinese origin.

Beijing also takes a strategic approach to politicians it likes and doesn't like. Those who focus on human rights, such as the Australian Democrats' former leader Natasha Stott Despoja, or Labor's Michael Danby, the chairman of parliament's foreign relations committee, find it virtually impossible to visit China.

Beijing's interest in Australia stems from two main sources: one is that it needs our mineral resources; the second is that as a close ally of the US, we have access to high-end military and especially communications technology.

Australia has an absolute necessity to protect its secrets and to make sure that the influence of foreign governments is obtained legitimately and with as much public scrutiny as possible.

When Defence Minister Joel Fitzgibbon took free trips to China and did not declare them to the parliamentary register, he made that harder.