"Our criteria is only one, we need solid evidence. If there is solid evidence the application can be approved. If there is no solid evidence there is hardly consensus," Chinese Foreign Ministry Spokesperson Geng Shuang told a media briefing in Beijing.
China has put a technical hold on the recent US move to list Azhar as a terrorist in the 1267 committee of the UN Security Council. The issue, along with the issue of nuclear supplier group or NSG, has led to differences between the two countries.
Reacting to reports of "friction points" in the bilateral relationship, Mr Geng said "differences are only natural".
"Through all kinds of conversation and exchanges, including (the) upcoming Strategic Dialogue, (the) two sides can step up communication to narrow differences and reach new consensus on achieving cooperation," he was quoted by news agency PTI.
The proposal to ban Azhar, the mastermind of last year's Pathankot attack, had been moved by the US, the UK and France. All three nations are permanent members of the UN Security Council.
The Chinese official's comments ahead of a new round of strategic dialogue between Foreign Secretary S Jaishankar and China's Executive Vice Foreign Minister Zhang Yesui in Beijing on February 22.
Mr Geng said that New Delhi and Beijing will have an in-depth exchange of views on the international situation and other regional and global issues of mutual interest in the strategic dialogue which is an important communication mechanism between India and China.
(with inputs from PTI)