Australian writer and political commentator Yang Hengjun is potentially facing the death penalty or years in jail after Chinese authorities formally arrested him on suspicion of spying.
Dr Yang, 54, had been under investigation for harming China's national security, but Australian diplomats have now been notified that he is under suspicion of committing crimes of espionage.
ABC correspondent Bill Birtles said Dr Yang has now been formally arrested, which is another step towards being charged in China's opaque and secretive legal system.
He has been detained without access to family or lawyers since January.
Australia's Foreign Affairs Minister Marise Payne said government efforts to gain additional information had been difficult.
"The government is very concerned and disappointed to learn that Australian citizen and academic Dr Yang Hengjun was formally arrested in China on suspicion of espionage on 23 August and will continue to be criminally detained," she said.
"Our thoughts are with Dr Yang and his family at this very difficult time.
"Dr Yang has been held in Beijing in harsh conditions without charge for more than seven months. Since that time, China has not explained the reasons for Dr Yang's detention, nor has it allowed him access to his lawyers or family visits."
The ABC has contacted the Chinese embassy in Canberra but is yet to receive a response.
Under Chinese law, the penalties for espionage charges range from three years in jail to the death penalty.
Dr Yang had been living with his family in New York, where he was a visiting scholar at Columbia University.
He flew to the Chinese city of Guangzhou with his wife and child in January this year.
Dr Yang's family were allowed to board their connecting flight to Shanghai, but authorities escorted him from the airport.
Later that month, the Chinese Foreign Ministry confirmed the arrest, saying Dr Yang was suspected of "engaging in criminal acts that endangered China's national security".
The Australian Government has grown increasingly critical of China's treatment of Dr Yang in recent months, with Senator Payne saying she was "deeply disappointed" he had been moved to criminal detention in July.