China has openly warned Australia to stay out of the South China Sea issue to ensure that bilateral relations are not damaged.
China's Foreign Ministry said the remarks made by Julie Bishop, the Australian Foreign Minister, on Wednesday regarding China's decision to ignore the UN ruling were shocking.
China refused to recognise arbitration court ruling on Tuesday and did not take part in its proceedings. Beijing referred to the ruling as a piece of waste paper and said that it was an American conspiracy.
Ahead of the regional summit in Mongolia, both Chinese Premier Li Keqiang and Laos Prime Minister Thongloun Sisoulith discussed the verdict on Thursday.
"Thongloun said that Laos supports China's position, and is willing to work with China to maintain peace and stability in the South China Sea region," the Chinese ministry told Reuters.
However, Laos' foreign ministry has not responded to this statement and its state media made no mention of Thongloun's comments to Li.
China reacted furiously to the calls by Western countries for the decision to be adhered to and now it has turned rhetoric and threats on Australia and Bishop.
"Frankly speaking, I was shocked by the remarks from the Foreign Minister Bishop," Lu Kang, Chinese Foreign Ministry spokesman said.
"Australia should not treat the illegal ruling from an illegal arbitration court as international law," he added.
He said: "Carefully talk and cautiously behave. Australia should not do anything which will damage regional peace, stability and security as well as the relations between China and Australia."
The Chinese Foreign Ministry said that they hope "Australia should firmly abide by the promise not to hold a position when there is a territorial dispute".
In response to the other threats, China said it would decisively respond to anyone who threatens its security interests in the South China Sea. The ministry said it has the right to establish an air defense zone to protect its rights.