The secret agreement to station Chinese troops and weapons in the region is a new test for the relationship between Australia and China, after Liberal MP Andrew Hastie stoked fury by likening an inability to contain the emerging superpower to the "catastrophic failure" to stop the rise of Nazi Germany.

The Chinese embassy in Canberra accused the chair of Parliament's powerful intelligence and security committee of a "Cold-War mentality" but Mr Hastie was praised by many Coalition and Labor MPs who believe Australia should take a more aggressive approach to its largest trading partner.

Former foreign minister Julie Bishop agreed Australia must take a long-term view of China but rebuked her former colleague for referencing the Nazis.

"We should be careful in drawing historic parallels, particularly when it refers to one of the darkest chapters in human history," Ms Bishop told The Sydney Morning Herald and The Age.

In an incendiary opinion piece, Mr Hastie warned Australia would face an unprecedented economic and national security test over the next decade as China tightens its grip over the Indo-Pacific.

China strongly denied reports last month of a deal for a 30-year lease over Cambodia's 62-acre Ream Naval Base. The facility would represent Beijing's second overseas military post and offer it extraordinary influence over the heavily disputed South China Sea.

The reports, which Cambodian Prime Minister Hun Sen dubbed "the worst distorted news", prompted Australia to urgently seek more information but officials are deeply unsatisfied with the response and believe the base could go ahead.

Foreign Minister Marise Payne on Thursday noted Cambodia's government had denied the plans.

"Australia and others in the region will monitor developments closely and continue to make enquiries of the government of Cambodia on this issue," she said.

"Australia has a strong interest in regional stability, security and prosperity, and is engaging closely with our partners in support of this goal.

"We would be concerned at the establishment of new military bases that could pose a risk to the sovereignty of countries and undermine the strategic balance in the region."

Senator Payne discussed the Cambodian base with US Secretary of State Mike Pompeo in Sydney on the weekend and agreed to stay in close contact on developments.

One senior national security official said the base plan was "seriously disturbing" and had triggered alarm. The Indonesian government was so concerned by last month's reports that it dispatched an official from Phnom Penh to seek first-hand information.

Australia, the Unites States and a number other countries in the region are quietly working behind-the-scenes to prevent any Chinese military installation on Cambodian territory.

Prime Minister Scott Morrison on Thursday said he was confident Australia's relationship with China could withstand any challenges.

In a notably muted response, Mr Morrison said Mr Hastie was "entirely entitled to provide his perspective.

But a Chinese embassy spokesman suggested the comments could harm "mutual trust" between the two nations.

"We urge certain Australian politicians to take off their 'coloured lens' and view China's development path in an objective and rational way," he said.

Liberal senator James Paterson said senior diplomatic and national security figures were "relieved the political class has finally woken up to this very serious threat".

"Five years ago this would have been a controversial thing to say but not anymore. Andrew's concerns are widely shared."

Labor's foreign affairs spokeswoman Penny Wong condemned the comments and shadow treasurer Jim Chalmers said linking China to Nazi Germany was "extreme, overblown and unwelcome".

But Labor MP Brian Mitchell praised the former SAS captain for a "considered and thoughtful" contribution and others privately supported him.

While not opposing Senator Wong's response, Labor MP Anthony Byrne defended Mr Hastie's right to speak out.

"If anyone has earned the right to articulate his views about threats to Australia's security, that young man has earned his right by his service to our country," said Mr Byrne, the deputy chair of Parliament's intelligence and security committee.

Australian Strategic Policy Institute defence strategy and capability senior analyst Malcolm Davis backed Mr Hastie's assessment.

"At what point do we carry on with these self-denials of what is really happening in the world before we accept reality?" asked Mr Davis.

"There is a risk that if we continue on pretending there's no problem, that we emulate the experience of the mid 1930s. In that period we almost left it too late to respond and we shouldn't be caught short again."

Other government MPs including Tim Wilson and Amanda Stoker also supported their colleague.

"If we are to have a constructive relationship with China in the future than we need to understand their national thinking, goals and psyche and the ways in which they challenge Australian values," Senator Stoker said.

Labor MP Peter Khalil, a former foreign affairs advisor under prime minister Kevin Rudd, suggested Australia should play a bigger role in mediating tension between the US and China.

"Australia no longer suffers the tyranny of distance. In fact, it's the inverse now. We are right in the middle of the centre of what is going to be important for a peaceful and prosperous latter half of the 21st century."