The report, commissioned by the Australia-China Relations Institute at the University of Technology, Sydney, also found "clear evidence" Chinese propaganda has moved offshore from the mainland and become integrated with Chinese-language media in Australia, but questioned the effectiveness of that propaganda.

Wanning Sun, the report's author and a professor at UTS, said Chinese-language migrant community media in Australia had undergone a "profound transformation" due to demographic shifts brought on by recent mainland migrants.

Efforts to cater to that demographic had resulted in a "clear shift from media representations of China that are mostly critical to representations that are sympathetic or even supportive".

"This is largely due to the fact that the 'going global' expansionist initiatives of the Chinese state media have dovetailed with the business acumen of elite Chinese migrants in this country," she said.

But Professor Sun said the reasons for this shift were manifold and more complex than the sector simply being "bought off" or "taken over" by Chinese propaganda departments.

"Chinese audiences, including migrants from the PRC, tend to harbour an innate scepticism or even simply an indifference towards Chinese state media propaganda," she said. "Better-educated Chinese migrants typically access news and current affairs from a range of sources, and Chinese media are at best only one of these sources."

Nonetheless, the report warns the Australian government should monitor the ability for Chinese-language media online for its ability to fan nationalist sentiment, citing community outrage over the recent "demonisation" of Olympic swimmer Sun Yang in the mainstream Australian media, and the use of WeChat news outlets to rally support for a demonstration protesting the federal government's stance on the South China Sea.

She said the potential for tensions over these competing perspectives "become at best a source of cultural anxiety and frustration, at worst a potential trigger for social disharmony."

The online media outlets were mostly run by and for Chinese students and recent graduates, she said.

"A lot of them are PRC students who migrated to Australia or come here to study. I think they are quite ambivalent about Australia, and China. Culturally and emotionally they still identify with China, but they don't like the corruption, pollution, propaganda or the regime. So they migrate here and they have some perception about this country, that it's beautiful, clean, prosperous, there is press freedom and the media is objective, not like the propaganda in China.

"Here they expect the media to do a lot better than the media they're used to back there. When they realise that the media here is just as one-track mind about these things as the Chinese side but exactly the opposite, they find it really hard to reconcile with what they're experiencing.

"So they might come across being really visceral and emotional and angry, sometimes using emotional terms, very rude, then they get picked up by the sensationalist tabloid media and translated back to mainstream Australian society.

"So the war of words escalates between both sides. They become more and more alienated by the mainstream, because they feel treated as the other in this country, so they talk like the other as a result. It is quite a concern."

The report recommends the Australian government play a proactive role to reposition migrant media so they become more reflective of a "genuinely multicultural, multilingual mainstream media landscape".

Many Chinese-language online news outlets in Australia source and translate stories from the mainstream media, but often shy away from negative or politically sensitive news regarding China.

The Chinese-language Sydney Today, which originally reported Labor senator Sam Dastyari's support of China's stance on the South China Sea, has made no mention of the ensuing donations furore and subsequent resignation from the Opposition frontbench that has dominated headlines in the mainstream press.

The Australia-China Relations Institute itself has come under scrutiny for its self-described "unabashedly positive view" on relations with China.

ACRI is chaired by prolific political donor Huang Xiangmo, who helped set up the institute with a $1.8 million donation. Mr Huang also helped Senator Dastyari foot a legal bill, and helped organise the now infamous press conference at which Senator Dastyari made his South China Sea comments.

However Professor Sun said she had initiated the report and approached ACRI to support it, and her research would stand on its merits.

"I don't mind you raising the question, it's fair enough – but in all good conscience that hasn't been my experience at all. There's no interference," she said.