Prime Minister Tony Abbott met with Chinese President Xi Jinping in Bali Indonesia for the Asia Pacific Economic Cooperation (APEC), Xinhua reports.
He expressed great confidence with Australia-China relations with FTA negotiations to be finalised before the end of 2014.
Mr Abbott also recognised the good agricultural relationship of New Zealand to China but said Australia can do a lot better than that.
"I am confident we can get a good agreement in 12 months. Let's face it, the Kiwis, our friend across Tasman, have had a serious FTA agreements including one with China, which have been very good for their economy, particularly for their agriculture exports. They managed to go from start to finish much more quickly than we have been able to manage over the last few years of the former government. And I think we can do a lot better than that," Mr Abbott said.
"China's growing strength is a benefit to the world, not a challenge," Mr Abbott added.
As for the FTA, Mr Abbott said that it all be finalised by mid-year of 2013 just in time for his visit to China.
"But our intention is to move as quickly as we can and I have to say I would be disappointed if we can't conclude a significant FTA with China within 12 months. That doesn't mean state-owned enterprises can't invest in Australia ... we want them to invest in Australia, it is just that they face FIRB scrutiny from the first dollar, rather than simply at the standard 240 million U.S. dollar threshold," Mr Abbott explained.
"We welcome foreign investment, including foreign investment from China," he added.
As for Mr Xi Jinping, the Chinese president said that the Australia-China relations add positive attitude, peace and development to the region.
"I firmly believe that as important nations in the Asia-Pacific region, China and Australia entering into closer cooperation not only serves common interests but will also add positive attitude to the region and also peace and development of the whole world," he stated.
"China is ready to work with Australia to continue to substantiate China-Australia's strategic partnership to ensure greater progress in the cooperation between our two countries, given there is acceptance in this way will bring greater and more benefits to the people of the two sides," Mr Xi Jinping added.
Mr Xi Jinping also reiterated that the two countries should come up with agreement involving "four bonds" in bilateral ties - bonds in mutual trust, economy and trade, people-to-people exchanges and security.
China and Australia should "respect each others' core interests and major concerns, objectively and rationally view each other's strategic intentions, achieve common progress amid inclusiveness and mutual learning," explained Mr Xi Jinping as quoted by Xinhua.
Economy and Trade
China and Australia should work together for successful bilateral free trade agreement (FTA) with additional partnership in the energy and recourses, infrastructure, information technology, energy conservation and environmental protection.
Both countries should strengthen partnership in education, culture and friendship among youths of China and Australia.
China and Australia should continue with military exchanges and navy visits.