A policy brief from foreign affairs think tank the Lowy Institute, published on Monday, also said there was anecdotal evidence of resistance in one government agency against efforts to engage more with Chinese-Australian communities in recruitment drives.

The brief called for the Australian Public Service to recruit more Chinese-Australians and draw on their expertise to reverse a lack of understanding about China among policymakers.

It said Chinese-Australians remained under-represented within government agencies despite having knowledge and skills that would be valuable for policy relating to the rising superpower and Australia's largest trading partner.

Chinese-Australian public servants interviewed for the policy brief, speaking on condition of anonymity, said they were less likely to be offered a place working on China-related topics because of their Chinese heritage.

The policy brief said some public servants of Chinese heritage perceived their ethnic or cultural background was an impediment to working on China-related issues, even when that was their area of specialised knowledge.

"For the public service, that can lead to staff disengagement, higher attrition levels, and a resulting dearth of Chinese-Australians progressing to senior roles," the brief said.

One Chinese-Australian public servant said the public service "would never hire someone with my name [to work on national security]. It's just too risky".

Another said "even though I was best-placed [for China-related work], I suspect they didn't give it to me due to perceived conflict of interest, because of my ethnicity".

The report also said there was anecdotal evidence that efforts to engage with and recruit more Chinese-Australians may be "punished with suspicion of intentions and a huge amount of paperwork".

Public servants interviewed for the policy brief also reported resistance within their department against efforts to better capture data related to recruitment of Chinese-Australians.

The brief's author Yun Jiang said almost all government policy decisions today had a "China angle" and many documents that policymakers needed to understand were only available in a Chinese language.

Chinese-Australians were more likely to have language skills and cultural familiarity that would help improve the public service's understanding of China, she said.

"Broader historical and cultural knowledge is fundamental to both meaningful engagement with China as well as understanding how to push back against China when it is in Australia's national interest," Ms Jiang said.

Despite this, the public service had a deficit of Chinese-Australian staff and employees with expertise about China.

Only 2.6 per cent of Commonwealth public servants had Chinese heritage compared to 5.6 per cent of Australia's population.

At the highest levels of the public service, only two out of 577 people in first assistant secretary roles were Chinese-Australians.

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About 2 per cent of strategic policy roles were filled by Chinese-Australians.

Among government agencies, only Treasury and Austrade had higher representation of people with Chinese heritage than the general population.

In key foreign and security policy agencies, including the Department of Foreign Affairs and Trade and the Department of Defence, Chinese-Australians were under-represented among staff, the policy brief said.

Only 47 of DFAT's diplomats could speak Mandarin or Cantonese at a current tested professional level.

The brief said restrictive and lengthy security vetting, and a failure to engage with ethnically and culturally diverse communities in recruitment, were possible barriers to people of Chinese heritage joining the public service.

Interviews with Chinese-Australian public servants suggested the bureaucracy's lengthy security vetting process was even slower for job applicants with Chinese heritage, who may have spent time in China or have family there.

There was evidence the process took six months longer for Chinese-Australians.

The policy brief said agencies could better draw on the knowledge, experience, and skills of the Chinese-Australian population to build expertise.

"Australia will gain a competitive edge if it can harness the experience and skills of Chinese-Australians who speak a Chinese language fluently, understand the Chinese political system and its economy, and have significant cultural awareness," the brief said.

Its comments follow findings in the major review of the public service in 2019 that the bureaucracy lacked understanding and language skills needed for engaging with Asia.

Liberal MP and former diplomat Dave Sharma in December also called for a rethink of security vetting, saying Chinese-Australians moving up the ranks of the diplomatic corps and security agencies often chose to drop out of the system rather than face the difficulty of arduous checks.

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