Labor says countries like Australia should ‘demonstrate that they are not prepared to be bullied by China’ by conducting a freedom-of-navigation exercise near disputed islands

The Turnbull government faces renewed calls to send an Australian military ship or plane close to disputed islands in the South China Sea amid growing tensions in the contested region.

The opposition’s defence spokesman, Stephen Conroy, said countries like Australia should “demonstrate that they are not prepared to be bullied by China” by conducting a freedom-of-navigation exercise within 12 nautical miles of islands claimed by Beijing.

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The call came as the prime minister, Malcolm Turnbull, and his New Zealand counterpart, John Key, met in Sydney on Friday to discuss a range of issues including regional security.

The leaders urged all countries that claimed territory in the South China Sea to “halt land reclamation, construction and militarisation, and to take steps to ease tensions”.

Turnbull said: “It is absolutely critical that we ensure that there is a lowering of tensions because our prosperity and the prosperity of every single person in our region depends on peace, and any actions, regardless of their motivation, which undermine that, which create tensions, are working against the best interests of everybody in this region.”

Tensions rose this week after Beijing appeared to install a surface-to-air missile system on Woody Island, which is part of the disputed Paracel Island chain.

A US navy destroyer sailed within 12 nautical miles of Triton Island, in the same island chain, in a freedom of navigation exercise late last month. China – which claims the island, as does Taiwan and Vietnam – branded that action as “highly dangerous and irresponsible” and accused the US of being the biggest cause of militarisation in the South China Sea.

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The Australian defence force conducts maritime surveillance patrols in the region, but Conroy said these did not go close to the disputed islands.

“The international rules-based system needs the people who are benefiting from it, needs the people who have the capability to stand up and demonstrate that they are not prepared to be bullied by China in this way,” Conroy told the ABC on Friday.

“The international treaties, the international laws of the sea allow us to sail well within the 12 miles of all of these disputed territories. If an arbitration or an agreement was reached that these islands were recognised, then those 12-mile limits would come into play and we would not be engaged in going through them. But at the moment, they are not recognised as anyone’s territory and we can sail legally, peacefully through these alleged 12-mile limits.”

Conroy said while it would be “foolhardy” for the government to announce a freedom-of-navigation exercise in advance of it happening, Australia “should be prepared to defend the international system”.

Comment has been sought from the defence minister, Marise Payne.

Addressing reporters after the bilateral meeting, Turnbull said he and Key were “absolutely of the same mind” on regional security issues.

The Australian prime minister said the Chinese president, Xi Jinping, has previously acknowledged the need to avoid falling into “the Thucydides Trap, which is ... essentially where a rising power creates anxiety among other powers such that conflict occurs”.

“President Xi is right in identifying avoiding that trap as a key goal,” Turnbull said.

“Our proposition, very simply, we take no sides on whose claims, Australia and New Zealand have no claims in the South China Sea, we can confidently assure you of that. But the fact is that there is a massive vested interest in reducing tensions and not doing things, any measures that would inflame tensions.”

Key said both countries had been pursuing deeper economic ties with China, which could increase their opportunities to make their case diplomatically.

“Australia and New Zealand now have free trade agreements with China, we are both part of the Asian [Infrastructure] Investment Bank – we have regular contact and dialogue,” Key said.

“I don’t think it’s lost on any of the parties that are, in a disputed position in the South China Sea that any blow-up of activities there would be very bad for security and both economic issues in the region, so we just have to continue to, I think, to make the case that the parties have to look to resolve that amicably and lawfully.”