Mr Li is on a five-day visit to Australia focused on strengthening economic ties with Australia, and the maritime dispute was among the issues discussed.
He says China has cautioned Australia not to take sides on regional conflicts.
Chinese premeir Li Keqiang's visit to Canberra was billed as talks on economic ties, but it was always going to involve the South China Sea issue as well.
Emerging from talks with Prime Minister Malcolm Turnbull and asked about militarisation in the South China Sea, Mr Li said China is only interested in maintaining freedom of movement.
Mr Turnbull says he discussed regional security issues with Mr Li and the importance of maintaining the international rules-based order.
For his part, Mr Li says China is committed to peace in the region.
He and Mr Turnbull say they discussed the threat posed by North Korea and the need for North Korea to curtail its nuclear program.
The two leaders announced a new trade deal to allow greater access into China for Australian chilled-meat exports.
The deal will expand access from 11 exporters to all eligible Australian exporters.
Mr Turnbull says China shares a mutual interest in free and open trade.
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