A Chinese state-run newspaper on Wednesday called on Beijing to "teach Canberra a lesson" after Australian tycoon and politician Clive Palmer labelled the Communist government "mongrels" who "shoot their own people" in a televised tirade.

The flamboyant mining baron, who is locked in a long-running dispute over royalties and port operations with a state-controlled Chinese company, also called the Chinese "bastards" who "want to take over this country".

In an editorial, the Global Times, a newspaper owned by the Communist Party's mouthpiece the People's Daily, urged Beijing to take "solid actions to punish him".

It labelled the billionaire's comments as "rampant rascality" showing "Australian society has an unfriendly attitude toward China".

"China must let those prancing provocateurs know how much of a price they pay when they deliberately rile us," it said.

Beijing should cut off all business contacts with Palmer, ban him and his senior executives from China, and could impose sanctions on all Australian firms that have dealings with him, it added.

The paper's Chinese edition carried a similar editorial.

It also ran a news story about Palmer's comments on its front page -- including his description of the authorities as killing their own citizens, which could be taken as a reference to the Tiananmen Square crackdown of 1989, rarely mentioned by Chinese official media.

Palmer was elected to parliament last year as head of the Palmer United Party.

China is Australia's biggest trading partner, and Canberra's foreign minister Julie Bishop called Palmer's outburst "offensive, unnecessary and unacceptable for a member of parliament", while Treasurer Joe Hockey said the comments were "hugely damaging".

The Global Times, which often takes a nationalist tone, said that China "must teach Canberra a lesson for sabotaging a bilateral relationship".

It accused Australia of engaging in "hooligan politics" by politically "embracing the US and Japan", which is embroiled in bitter rows with China over wartime history and disputed islands, while "raking up economic profits" from Beijing.

"This situation is making it a radical 'double-dealer' among all the nations which have relationships with China," it said, adding Australia "must be marginalised in China's global strategy".

"Canberra boasts about itself having so-called strategic values, most of which, however, are created out of its own delusions," it said.

China's official Xinhua news agency also slammed Palmer as a "rotten apple", but adopted a softer tone on Sino-Australian relations.

The politician's outburst was "out of personal interests and by no means represents the mainstream voice of Australia", it said in a commentary.

The mining magnate had changed his opinion on China depending on his business interests, it said, adding that in 2011 he even blasted Canberra for "radically" discriminating against Chinese investment when he "received large amounts of money" from a partnership with Chinese firms.

"From this perspective, Palmer's irresponsible outburst should be taken with a grain of salt," it said.

State-owned Citic is mining for magnetite iron ore on Palmer's sprawling Australian Mardie Station cattle farm under a 25-year lease.

But the two sides have clashed over what share of the proceeds are owed to the Australian businessman and whether his company, Mineralogy, is the legal operator of the project's export terminal at Port Preston.

Citic has also accused Mineralogy of siphoning off millions of dollars from a business bank account to fund Palmer's election campaign, which the mogul has denied.