China's Foreign Minister has warned that both sides would lose in a conflict between his country and the United States over the South China Sea.

In a press conference in Canberra with his Australian counterpart Julie Bishop, Wang Yi said China would continue to focus on diplomatic efforts to resolve territorial disputes in the region.

He was asked about the likelihood of a war, given the aggressive rhetoric directed towards China by US President Donald Trump and some of his key advisers.

"For any sober-minded politician, they clearly recognise that there cannot be conflict between China and the United States because both will lose — and both sides cannot afford that," he said.

Mr Wang said the US-China relationship had defied "all sorts of difficulties" over decades, and he pointed to recent statements by the US Defence Secretary James Mattis that it was important to give priority to diplomatic efforts.

"What we assess is the official policy statement, made by the administration after inauguration, not campaign rhetoric, not some remarks made years ago," Mr Wang said.

China has been accused of militarising the region by building airstrips and artificially expanding islands, but it maintains it has a sovereign right over the contested areas.

Ms Bishop said Australia's position on the dispute had not changed.

"Australia doesn't take sides on competing territorial claims, we have a strong interest in unimpeded trade and regional peace, freedom of navigation and freedom of overflight, and respect for international law," she said.

But she revealed she had discussed the region with the newly confirmed US Secretary of State Rex Tillerson on Tuesday morning.

"We discussed the importance of maintaining adherence to the international rules based order, under which many nations, including China and other countries in our region, have been able to grow and prosper," she said.

Foreign Minister Wang also held talks with Prime Minister Malcolm Turnbull, signalling the importance the Government is placing on its relationship with China, in what both countries recognise are uncertain times.

China has reservations about TPP

In their formal talks, the Foreign Ministers vowed to deepen strategic and economic ties, and to build on the Free Trade Agreement already in place between the two nations.

Ms Bishop invited her Chinese counterpart to consider the "opportunities" the Trans Pacific Partnership (TPP) may present to China, now that the US has formally withdrawn from the deal.

Julie Bishop invited Wang Yi to consider the "opportunities" the TPP may present to China. ( AAP: Mick Tsikas )

"I can only speak on Australia's behalf, the other 11 countries have indicated a willingness to continue to pursue the principles behind the TPP," Ms Bishop said.

The agreement in its current form cannot go ahead without the United States, and Mr Wang's response was cautious.

He indicated that while the Chinese Government wants a free trade region across the Asia Pacific, it has reservations about the principles which underpin the TPP.

"It should not have all the standards set by one or several parties and ask other countries to accept such standard, it should be open and inclusive and not pursue small groups," he said.

The Chinese Government is working with the Association of South East Asian Nations on another regional trade deal, known as the Regional Comprehensive Economic Partnership (RCEP).

"We stand ready to work with Australia to advance the RCEP initiative," Mr Wang said.