President Xi Jinping said on Monday stable ties between China and Australia served each other's interests and both should expand their cooperation, sending a clear signal that Beijing was ready to move on from recent tensions.

China and Australia should promote the development of their strategic partnership as they build up mutual understanding and trust, Xi told Australian Prime Minister Anthony Albanese, the first Australian leader to visit Beijing since 2016, at the Great Hall of the People in the heart of the Chinese capital.

A strong relationship "will be beneficial into the future," Albanese told Xi in their second face-to-face talks in a year, a meeting that lasted more than an hour.

For decades, China and Australia built a relationship on trade, with Beijing becoming Canberra's biggest commercial partner with purchases of Australian food and natural resources.

But ties soured after Australia in 2017 accused China of meddling in its politics. The following year, Australia banned equipment from Chinese tech giant Huawei Technologies Co for its 5G network out of national security fears.

An Australian call in 2020 for an international inquiry into the origin of the COVID pandemic, which emerged in the Chinese city of Wuhan in late 2019, infuriated Beijing, which responded with blocks on various Australian imports.

As relations deteriorated, China warned its students against studying in Australia, citing racist incidents, threatening a multi-billion-dollar education market.

Earlier on Monday, Albanese stopped by Beijing's iconic Temple of Heaven and posed for a photograph at the circular Echo Wall where Australia's then prime minister, Gough Whitlam, stood in 1973, a year after the two countries established ties.

"In China we often say that when drinking water, we should not forget those who dug the well," Xi said. "The Chinese people will not forget Prime Minister Whitlam for digging the well for us."

'VERY POSITIVE'

Albanese took steps to stabilise relations after he became prime minister in May last year and met Xi on the sidelines of a G20 summit in Indonesia in November.

China soon began lowering trade barriers, allowing imports of coal in January and ending tariffs on barley in August. Last month, Beijing agreed to review dumping tariffs of 218% on Australian wine.

"I noted very much unimpeded trade was in the interest of both countries, was good for Chinese consumers as well as Australian exporters," Albanese told reporters after the meeting. "He certainly agreed that Australian wine is good."

China's January-September imports from Australia increased 8.1% from a year earlier to $116.9 billion, Chinese customs data show. In 2022, imports plunged 12.7% to $142.1 billion.

The meeting was "very positive", Albanese said, adding that he had invited Xi to visit Australia.

"Both of us certainly agreed that we shouldn't be defined by our differences, recognise that they are there, but also recognise the mutual benefit that we have."

Obstacles remain in their relationship.

Australian backing of a U.N. ruling rejecting China's territorial claims in the South China Sea has angered Beijing, which has told Canberra the issue is not its concern.

Australia says the South China Sea is an important passageway for its trade with Japan and South Korea.

Beijing's projection of power among Pacific island nations also alarmed Australia, while Canberra's security alliance with the United States and Britain in the Indo-Pacific - known as AUKUS - stoked Chinese worries about containment.

"AUKUS didn't come up explicitly. We discussed, though, regional stability," Albanese said, without giving specifics. "I spoke about guardrails and military-to-military cooperation between the United States and China. That's important."

Albanese also raised the case of Australian writer Yang Hengjun, who has been jailed in Beijing for four years on espionage charges.