Australia shouldn't pick between US and China, says Chinese Premier Li Keqiang

Chinese Premier Li Keqiang and Australian Prime Minister Malcolm Turnbull at a welcoming ceremony outside the Parliament House in Canberra on March 23.
Chinese Premier Li Keqiang and Australian Prime Minister Malcolm Turnbull at a welcoming ceremony outside the Parliament House in Canberra on March 23. PHOTO: EPA

CANBERRA (BLOOMBERG) - Australia doesn't need to take sides between its biggest trading partner China and its main ally the US, Chinese Premier Li Keqiang told lawmakers and business leaders in Canberra.

"We respect your choices in your foreign policy," Mr Li said on Thursday (March 23) during his first speech in a five-day visit to Australia. "We don't want to see taking sides as happened during the Cold War."

Mr Li's comments come a week after Foreign Minister Julie Bishop said democracy was crucial for nations to reach their economic potential, and called on China to be a responsible global player. That earned her a rebuke from the Communist Party-run Global Times.

Australia, which has fought alongside the US in every major conflict since World War I, has been careful not to offend China, which was responsible for 31 per cent of its merchandise exports in the 12 months to July last year.

In the most senior visit by a Chinese official since President Xi Jinping in 2014, Mr Li said it was in China's interests to promote peace and stability in the Asia-Pacific region to boost its economic growth prospects.

Australia has urged China to follow the rule of law and observe international protocols as unease mounts over its militarisation of disputed rocks and reefs in the South China Sea.

"Even when China grows in the future, we will never seek dominance," Mr Li said. "We all are law-abiding people and we respect the rule of law."

The nations want to boost economic ties in the wake of a free-trade agreement that came into operation in December 2015. Mr Li said the best way to reduce China's trade deficit with Australia - which his government had calculated at US$50 billion (S$69.9 billion) last year - was to increase those ties, warning against the perils of global protectionism.

"We don't want to see that trade imbalance," Mr Li said, adding China will seek to lower tariffs with Australia.

"We believe that to resolve the trade imbalance we need to expand trade - that is the solution. We cannot close our doors."

In a speech welcoming Mr Li to Australia, Prime Minister Malcolm Turnbull said the "next stage" of Australia's economic relationship with China would be announced during Mr Li's visit.

"We intend to open up new opportunities in services and investment, and there is vast scope for us to work together on science and innovation, with a solid foundation on which to build," Mr Turnbull said, without providing details.

He is due to hold a press conference with Mr Li after further talks on Friday.