The sentence is expected to be converted to life behind bars after two years.
Prime Minister Anthony Albanese condemned the national security sanction handed to the Chinese-Australian dual citizen.
Dr Yang's family, including his wife Yuan Xiaoliang, maintain the writer is innocent. (AP PHOTO)
"We have conveyed, to China, our dismay, despair, our frustration and to put it simply our outrage at this verdict," Mr Albanese told reporters in Canberra on Tuesday.
"This is a very harsh sentence on Dr Yang, who is a man who is not in good health and we'll continue to make the strongest representations."
Opposition Leader Peter Dutton said all Australians were shocked by the decision and "egregious behaviour" from China needed to be called out.
"I stand shoulder to shoulder with the prime minister in condemning the situation that Dr Yang finds himself in," he told reporters.
"Medical assistance needs to be provided as a matter of urgency.
"The president and others would do well to reconsider this matter because I think it not only has a very negative impact personally on Dr Yang but it also tarnishes the reputation of the People's Republic of China as well."
Opposition Leader Peter Dutton joined the prime minister in condemning Dr Yang's treatment. (Lukas Coch/AAP PHOTOS)
Foreign Minister Penny Wong said Australia's ambassador to China would not be recalled as the government worked to keep open lines of communication.
International law expert Don Rothwell said Dr Yang's saving grace was his dual nationality.
"Once capital punishment has been imposed, execution follows very soon thereafter," he told AAP, referencing China's legal system.
"So there's a bit of wriggle room in terms of this two-year period that allows China to save face by saying, 'We have this good behaviour period in place'."
But China was notorious for having an exceptionally low successful appeal rate, Professor Rothwell said.
The case was likely to become a "thorn in the side" of the diplomatic relationship but Australian governments had been loath to retaliate in other areas such as trade.
Assistant Defence Minister Matt Thistlethwaite said the stabilisation of the diplomatic relationship with China meant ongoing talks could be productive.
"It meant that we have been able to get some results with Cheng Lei being released," he said, referring to another Australian journalist who had been detained and was able to return home last year.
"We'll do as much as we can to try and to have that sentence reduced."
The court's decision was a reality check about the bilateral relationship, with little changing beneath the surface, Liberal senator James Paterson said.
Chinese President Xi Jinping would continue to flex his muscle on national security and would not worry about appeasing a nation like Australia, he said.
China ambassador Xiao Qian was summoned to a meeting with the foreign affairs department secretary. (Lukas Coch/AAP PHOTOS)
China's ambassador to Australia Xiao Qian was summoned to a meeting with foreign affairs department secretary Jan Adams on Monday.
Dr Yang's procedural and consular rights were respected during the trial before he was found guilty of espionage and had his property confiscated, China foreign ministry spokesman Wang Wenbin said.
"The People's Court heard the trial in strict accordance with the law," he said.
Australian officials were allowed regular consular visits and to attend the sentencing, he said.
Dr Yang's family maintained the writer's innocence, with a spokesperson saying he was in jail "because he represents truth, democracy, respectful exchange of rational ideas".
The use of the death sentence and secrecy surrounding the trial was extremely distressing, the Law Council of Australia said.
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