Acting Prime Minister Richard Marles has stressed improved ties with China were still possible, despite growing tensions in the region due to Taiwan
Mr Marles has called for a de-escalation of the situation in the Taiwan Strait, following China carrying out several military drills.
The drills, which included the launch of ballistic missiles, were in response to US Speaker Nancy Pelosi visiting Taiwan earlier this month.
China said it had finished the military drills, and Mr Marles said Australia was looking to stabilise its relationship with China.
"There are going to be challenges in the relationship with China and we were saying that before the election," Mr Marles told Sky News on Sunday.
"What we have sought to do is really change the tone in the way in which we are engaging with the world, but that includes the way in which we engage with China. We're not going about things with chest beating," he said.
Mr Marles said the global community has called for calm in regards to the Taiwan Strait following the rise in diplomatic tensions.
"What we obviously want to see is a return to normal peaceful behaviour around the Taiwan Strait," he said
"The world would breathe a sigh of relief if we could get to that moment. And obviously, from Australia's point of view, we've been calling for a de-escalation."
The acting prime minister said the broader region would be critical to Australia's national interest.
It comes after China's ambassador to Australia Xiao Qian addressed the National Press Club earlier this week.
In the speech, Mr Xiao said China would still pursue a reunification with Taiwan.
"But we cannot, we can never rule out the option to use other means, so when necessary, when compelled, we are ready to use all necessary means," he said.
"As to what does it mean, 'all necessary means'? You can use your imagination."
Mr Marles said Australia's stance on the One China policy remained the same.
"We're not wanting to see any changes to that. But it is really important that we get back to that normal, peaceful set of behaviours," he said.
Meanwhile, Energy Minister Chris Bowen has called on the US and China to restart talks on climate change.
He said it was critical both countries come to the table to reduce emissions.
"Those talks have been suspended in all the tensions between China and the United States," Mr Bowen told the ABC's Insiders program.
"We want the world's two biggest emitters talking with each other. I do hope those talks resume and that suspension is lifted because that is a blow, and it would be better if those talks resumed."
