Australian tycoon Clive Palmer on Tuesday apologised for calling the Chinese government "mongrels" who "shoot their own people" after a fierce backlash from Beijing and politicians in Canberra.

The billionaire coal baron, who was elected to parliament last year as head of the Palmer United Party, had also called the Chinese "bastards" who "want to take over this country" in a televised tirade earlier this month.

China is Australia's largest trading partner and his comments were slammed as "hugely damaging" by senior Australian politicians, while Chinese state media urged Beijing to "teach Canberra a lesson".

"I most sincerely apologise for any insult to Chinese people caused by any of the language I used during my appearance on the ABC television programme Q&A," Palmer said in a letter to China's ambassador to Australia, Ma Zhaoxu.

"I regret any hurt or anguish such comments may have caused any party and I look forward to greater peace and understanding in the future."

The Chinese embassy said any criticism of Beijing would not win support.

"Ambassador Ma stressed that the Chinese people are never to be insulted," it said in a statement to AFP.

"Any remarks attacking or slandering China would not gain support and were doomed to failure.

"The healthy and stable development of China-Australia relations is in the fundamental interests of the two countries and peoples, and cannot be overturned by any individual," it added.

- Long-running dispute -

Palmer is locked in a long-running legal dispute over royalties and port operations with Hong Kong-based Citic Pacific relating to the Sino Iron magnetite project, a partnership with China's state-owned Metallurgical Group Corporation.

Earlier this year Citic Pacific president Zhang Jijing warned that legal issues with Palmer could have broader implications for Chinese business in Australia.

Palmer said he had come to realise "that what I said was an insult to Chinese people everywhere and I wish to assure them that they have my most genuine and sincere apology, that I am sorry that I said the things I said".

"All citizens of both countries must work towards a prosperous future by working together," added the mogul, who has long had business dealings with China.

The apology did little to placate outraged Chinese social media users, with one saying: "There are always some Westerners such as Palmer who look at current China using the condescending and overbearing thinking of the colonial era."

Other users of the Twitter-like Sina Weibo claimed it as a victory for Chinese public opinion. "Palmer felt unprecedented pressure this time," one wrote. "This cannot be done without us pushing on social media."

China's state-run Xinhua news agency took a more measured tone, saying Palmer's apology marked not only a victory for the Chinese view but also one for Australians who condemned his comments.

"The past days have shown that China and Australia won't allow any irresponsible individual to destroy the bridges that have been built over many years," it said in a commentary.

"When this important relationship was threatened, Australians, just like Chinese, stood up together and without hesitation voiced their strong views."