MARK COLVIN: It's emerged that China was so angry at Australia's decision to grant an exiled Uighur leader a visa, that it cancelled a high-level visit to Australia.

A vice minister for Foreign Affairs He Yafei was supposed to attend the Pacific Islands Forum in Cairns two weeks ago.

This is the same man whom the Foreign Minister Stephen Smith and the Prime minister have recently met in overseas forums, to discuss the detention of Rio Tinto executive Stern Hu.

Mr Smith confirmed to Parliament this afternoon, that China had cancelled Mr He's visit, because Australia had granted Rebiya Kadeer a visa, to attend a film festival.

From Canberra, Sabra Lane reports.

SABRA LANE: Chinese officials made several attempts to stop Rebiya Kadeer from visiting Australia. A film about the exiled Uighur leader had top billing at the Melbourne Film Festival.

Chinese authorities tried to stop the documentary from being shown, and it emerged last week that officials had also tried to stop Ms Kadeer from speaking at the National Press Club last Tuesday.

In Parliament, the shadow foreign minister Julie Bishop wanted to know if China had threatened retaliation, in the form of non-cooperation on Kevin Rudd's pet-project: a plan for a new regional body.

JULIE BISHOP: Will the Minister confirm that China has withdrawn cooperation from the Prime Minister's Asia-Pacific community proposal?

SABRA LANE: The Foreign Affairs Minister Stephen Smith told Parliament the Chinese had made several presentations to him, requesting he reject Ms Kadeer's application to visit.

STEPHEN SMITH: And as a consequence of Australia granting her a visa, the Chinese authorities made it very clear to Australian officials that they were most unhappy with her visit; most unhappy with her visit.

And as a consequence of her visit, they indicated to Australia that the proposed visit to Australia of Vice Minister He to attend the Pacific Island Forum's post dialogue would not occur and that China would be represented by an ambassador.

SABRA LANE: The high-level official was one of China's Vice Foreign Ministers He Yafei.

He's the same official Mr smith and the Prime Minister have previously met, face to face, to discuss the detention of Rio Tinto executive Stern Hu.

STEPHEN SMITH: Australia very much regrets that China has decided to affect that response; we very much regret it. Whether China proposes to affect any further responses as a result of our decision to allow Rebiya Kadeer to enter Australia, is entirely a matter, entirely a matter, for the exercise of China's discretion. That's entirely a matter for China.

SABRA LANE: A planned high-level meeting after the forum was also cancelled. The Minister was silent on implications for the Prime Minister's plans for a new Asia-Pacific Community.

STEPHEN SMITH: From time to time in any bilateral relationship there will be difficulties. These difficulties need to be managed carefully and successfully as Australia is currently managing difficulties that we have in our relationship with China, in particular, the visit of Rebiya Kadeer to Australia and the Stern Hu case.

If of course China takes any further action in response to our decision, that will be for us a matter of regret, but we will deal with that matter sensibly and we won't resort, we won't resort, to the flip flop politicking that the Opposition makes of our relationship with China.

I vaguely remember...I vaguely remember the Leader of the Opposition saying to the Government some time ago that we should stand up to China; we did on the Rebiya Kadeer issue.

SABRA LANE: Liberal Senator Russell Trood is the chairman of the Senate Foreign Affairs, Defence and Trade References Committee.

RUSSELL TROOD: Australia should be staunchly defending our entitlement to allow people to enter the country whom we decide are appropriate to enter. I think it's important that we defend our interests and resist the inclinations of states to push us around to put it colloquially, I suppose.

So I agree with that position, but I am deeply alarmed about the state to which the relationship with China seems to have fallen. This seems to be a sign of the deterioration of relations that's been taking place over the period the Rudd Government has been in office.

SABRA LANE: Senator Trood says the cancellation of the high-level visit shouldn't be viewed in isolation.

He argues it's the final straw; that it's Beijing's retaliation at how Australia's former diplomat to China, Kevin Rudd is now handling Australia's relations with China.

Senator Trood says Mr Rudd and Mr Smith need to urgently get the relationship back on track.

RUSSELL TROOD: They ought to be undertaking a comprehensive whole of government review of the relationship and working out how quickly and determinedly they can get it back on track.

MARK COLVIN: Liberal Senator Russell Trood ending that report by Sabra Lane.