Delivering his first government work report as Premier at the Great Hall of the People in Beijing, Li Keqiang indicated a free trade deal with Australia could be finalised soon.
The decision comes as Prime Minister Tony Abbott prepares to visit China next month, with a free trade deal expected to be a key focus.
China is Australia's biggest trading partner and a free trade agreement between the two countries would boost Australia's beef and diary industries as well as open up trade in education, telecommunications and financial services.
Trade Minister Andrew Robb says Chinese Premier Keqiang's comments are a " very encouraging signal".
"It could mean many billions of dollars of increased sales, exports. It could mean a closer investment relationship," Minister Robb told the ABC.
He said the benefits of a free trade deal with China would outweigh the disadvantages.
"There will be some pressure and structural adjustment in some cases but it is a very healthy thing for Australia. And it is critical if we are to get sustainable jobs in Australia."
He said while the free movement of labour was not on the table for discussion, the Australian government will be working to protect Australia's tourist market, with Chinese travellers constituting the biggest source of tourists.
About 76,000 Chinese workers came to Australia as tourists in the last year, a 17 per cent increase.
"These sorts of areas are areas we need to develop and it also includes what happens with aviation and these other sorts of areas," he said.
Since the Coalition assumed office as the federal government in September, it has moved swiftly to finalise long-running talks on free-trade deals with Australia’s major trading partners China, Japan and South Korea.
A free trade agreement was secured with South Korea in December and the government hopes to sign a deal with Japan in July, when Japanese Prime Minister Shinzo Abe visits Canberra.
