China denied on Friday that its spies attempted to hack into the phone and computer of Australian Prime Minister Kevin Rudd during a visit to Beijing, amid growing unease in Canberra over Chinese investment.

The Australian newspaper said on Friday China directly targeted Rudd during a visit to China last August. It said Rudd and his staff were under constant cyber attack from authorities trying to access communications gear.

It is a totally groundless saying and not worth any comment, this so-called cyber spying, Chinese embassy spokesman Jin Liu told Reuters.

The newspaper, citing intelligence sources, said Beijing's blatant electronic espionage had alarmed Rudd's centre-left government and led to a tightening of communications security for senior government figures travelling to China.

Rudd, speaking in London after the G20 meeting of leading economies, said he had not been advised of a specific attack, but the government was wary of cyber espionage.

The (December) national security statement clearly identified the threat of cyber attacks, Rudd told reporters.

A defence planning paper due out later this month is expected to deal with cyber espionage, following concerns raised by former diplomat Rudd last year.

Anti-Chinese sentiment has been building in Australia with opposition lawmakers accusing the Mandarin-speaking prime minister of being a roving ambassador for China and too close to senior figures in Beijing.

China's Australia ambassador on Thursday defended Chinese investment in local resource firms as Canberra considers whether to approve a $19.5 billion tie-up between state-owned metals firm Chinalco and mining giant Rio Tinto (RIO.AX: Quote).

Opposition lawmakers have accused Rudd's Labor of being prepared to sell the farm, losing control of vital resource assets sought by energy-hungry China. Rio Tinto may also have been the target of a Chinese cyber attack in the early stages of Chinalco's bid for the Anglo-Australian miner, the Australian said, citing government figures, who called the attacks incessant and enduring.

The Chinalco deal with Anglo-Australian mining giant Rio is being considered by Australia's foreign investment watchdog, with some politicians from both the centre-left ruling party and the conservative opposition calling for it to be rejected.

An investment by another state-owned Chinese firm, Minmetals, in Australian miner OZ Minerals (OZL.AX: Quote) was rejected by Treasurer Wayne Swan last week on national security grounds, although a revised $1.2 billion bid that addresses those same concerns is back with the review board. (Reporting by Rob Taylor; Editing by Valerie Lee)

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