Kalynda Davis, 22, was arrested along with New Zealand-born Peter Gardner, 25, and charged with smuggling a commercial quantity of the drug "ice" from the southern Chinese city of Guangzhou to Australia.
A Chinese custom official said the drugs were found in the pair's checked in luggage.
"When they tried to leave the country, we found the ice inside their checked-in luggage," the spokesperson told the ABC.
He said the case has now been handed over to the Anti-Smuggling Bureau within customs.
NSW police said Ms Davis was reported missing on November 5. After her arrest in China, the matter was referred to DFAT.
Under China's drug laws, people found guilty of possessing more than 50 grams of meth or heroin face the death penalty.
The Department of Foreign Affairs is assisting nine Australians who have been detained on serious drug offences.
The travel advisory for Australians travelling to China has since been upgraded after a series of similar cases.
Ms Davis is reported to be the daughter of former senior police constable Larry Davis, according to the Saturday Telegraph.
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