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China has begun a second investigation into imports of Australian wine, in a move seen as further escalating tensions between the two nations.

The year-long investigation into subsidies follows Beijing announcing a separate "anti-dumping" inquiry into Australian wines two weeks ago.

Australia has denied allegations of subsidising or dumping wines in China.

China has been accused of imposing a series of economic blows on Australia this year following political tensions.

Australia's backing of a global inquiry into the origins of the coronavirus in April had effectively singled out China and "hurt the feelings" of its people, a top Chinese diplomat said last week.

In recent months, Beijing has targeted Australian barley, beef and wine products with various actions which have been interpreted as retaliatory. It has also advised students and tourists against travelling to Australia, citing the threat of racism.

Last week, Australia's federal government said it planned to enact legislation which would allow it to cancel local government deals with foreign countries - a move widely seen as aimed at China.

'China is an important market'

China is Australia's largest trading market - accounting for 32.6% of the value of all national exports.

China's enactment of an 80% tariff on Australian barley exports followed a year-long "anti-dumping" investigation.

A similar investigation under World Trade Organization rules was being conducted on Australian wine exports, said Beijing's announcement two weeks ago.

The new "anti-subsidy" investigation would apply to all wine in containers holding two litres or less, Chinese state media reported.

Australian Trade Minister Simon Birmingham said he rejected claims that any national initiatives "equate to a subsidy of our wine exports".

Australian Grape and Wine - a representative body for winemakers - said they were "well placed to respond to this investigation" and would co-operate fully.

"China is an important market for Australian wine and our wine is in demand from Chinese consumers," it said in a statement.

The bulk of Australia's export wealth in China is tied to rare commodities such as iron ore, gas and coal - sectors which have not been affected so far amid the deteriorating relations.

But several smaller Australian industries which rely on China's consumer market - such as wine, seafood, education and tourism - have expressed fears that they are exposed to political tensions.