Chinese Foreign Minister Wang Yi says previous Australian governments' treatment of China as an opponent and a threat is the cause of tension between the countries.
Mr Wang met Foreign Minister Penny Wong on the sidelines of the G20 Foreign Ministers' Meeting in Bali on Friday.
Senator Wong afterwards described the meeting as an important first step, but said stabilising the countries' relationship would take time and effort.
"We both recognised it is a first step for both our nations," she told reporters on Friday.
"We've got a path to walk and we'll see if it can lead to a better place between the two countries."
Mr Wang expressed hope that Australia could "seize the opportunity, take concrete actions and come to a correct understanding of China", according to a summary published by China's foreign ministry on Saturday.
"The root cause of the difficulties in Chinese and Australian relations in recent years lies in the insistence of previous Australian governments to treat China as an 'opponent' and even a 'threat'," Mr Wang said.
Mr Wang told Senator Wong that China was conducting "equal exchange and cooperation" with sovereign island nations based on their requests and needs, the Chinese foreign ministry said.
China has issued trade sanctions against many Australian products including wine, beef and coal.
It has also signed a security pact with the Solomon Islands and seeks similar deals with other Pacific nations.
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