Prosecutors allege Di Sanh Duong, 67, made the donation to the Royal Melbourne Hospital in 2020 as a way to interfere with a federal minister on behalf of the Chinese Communist Party.
Duong, a former member of the Liberal Party, was charged with preparing for, or planning, foreign interference in November 2020 following an AFP and ASIO investigation.
The 67-year-old, who is the first person charged under Australia's foreign interference laws, is denying the allegations in Melbourne Magistrates Court.
The court was told Duong spoke to former federal minister Allan Tudge in May 2020 after his Chinese community organisation raised $37,000 for the Royal Melbourne Hospital.
He asked Mr Tudge to attend an event handing over the hospital cheque as a way to gain publicity for the donation, the court was told.
Duong wanted to draw attention to the fundraising effort only to reduce rising anti-Chinese sentiment in Australia, defence barrister Neil Clelland QC said on Monday.
Duong's barrister referred to media releases from the state and federal governments in February and March 2020, which spoke of racist incidents against doctors and other people of Chinese heritage.
In phone intercept transcripts read to the court, Duong and two associates spoke in March 2020 about raising funds to purchase about 20,000 face masks for the Australian government.
When Chinese suppliers told the group the delivery of such masks would be delayed until late May, they instead decided to give the money directly to a Victorian hospital.
Duong's organisation raised the funds as a way to give back to Australia and to show the Chinese community cared, Mr Clelland said.
"There is a recurrent theme (in the conversations) to show Australia that we're good citizens and we care," the defence barrister summarised.
The organisation had previously donated to Australian bushfire appeals and other causes, the court was told.
But an AFP informant, known under the pseudonym witness three, told the court Duong had ulterior motives.
"There's nothing illegal about the donations," the witness said in their evidence. "But (Duong) used the donations to get access to the minister.
"He has broad and deep connections to a foreign principal."
Duong, the Liberal candidate for the seat of Richmond in the 1996 Victorian elections, resigned from the party following the charges in 2020.
He remains on bail and is set to appear again in court on Tuesday, as the committal hearing continues.
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