Professor Kam Louie also hit out at the idea that Chinese students were anti-democratic or loyal to China rather than Australia.

The Chinese community was concerned about the attitude that Chinese students "are loyal to China - and some even say they could be spies and so on - and many also claim that they are seen as anti-democratic".

Professor Louie, former president of the Hong Kong Academy of the Humanities and former professor of Chinese at the Australian National University, was speaking at an inquiry into nationhood and democracy in Australia.

He said the Chinese community was frustrated by "that whole idea that democracy is Australian".

"Many of them are much more pro democratic, pro the idea of democracy than people in Australia," he said. "Of course, some of them would be against the Australian system, but most of them actually see Australia as home."

Many students planned to settle here or were second generation Australians.

Professor Louie said Australia was in danger of losing its Chinese diaspora, who were successful businesspeople and very international in their outlook.

"Many are quite dissatisfied with the situation in Australia where people in the upper echelons, for example in directorships of companies .. they find the glass ceiling, as it were, very hard to break through," he said.

"What we've found was many of them say well look ... people in power, directorships, and particularly when we look at the political class, people in Canberra, they find that every time they walk into a room people are generally, they say, male, pale and stale."

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But Professor Louie said it was to Australia's advantage to have people who spoke other languages, understood other countries and had a world view.

"The real problem for Australia is these people say to us "look, if we're not appreciated here we will go, America Singapore, Hong Kong wherever ...

"That's a real problem because ... it is an advantage to have that diaspora, they know many languages, culturally, whether by luck or whatever, my children have some idea of Chinese culture even though they have spent their whole lives here.

"That advantage is often wasted and that advantage is extremely important for Australia."

Labor Senator and inquiry chairman Kim Carr said the distrust of Chinese extended to the academic world where the legitimacy of researchers with Chinese names was being challenged, despite Australia have more rigorous security oversight than the United States. Australia had encouraged research collaborations which had brought life-saving benefits, he said.

Australia was "turning on people" without evidence.

"There is this constant challenge now about the loyalties of our researchers. I find it highly offensive and it is reminiscent of the worst days of the cold war in which people are slandered," he said.

"I'm not surprised that ... highly distinguished scholars have chosen to leave if they're treated in that way."

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Australian National University linguist Professor Nicholas Evans said Chinese people in Australia were among the most pro democratic and pro Australian people he knew, having chosen to come here because of Australia's values and with ideas about how to bring about democratic change in China.

There were compelling economic reasons why Australia should maintain the languages and communities of other countries, including the ability to communicate in giant markets such as China and India.

Multilingualism was also linked to mental flexibility and empathy, with multilingual countries able to achieve enviable social cohesion, he said.