Prime Minister Malcolm Turnbull has urged China to avoid conflict in the South China Sea as it continues its "peaceful" rise.
Australia made no judgment on competing territorial claims but urged all parties to refrain from unilateral actions that were a threat to the "peace and good order" of the region.
"We would hope that China's actions would be carefully calculated to make conflict less likely not more," Mr Turnbull told the Centre for Strategic and International Studies in Washington on Monday afternoon (US time).
"The legitimacy of claims to reefs and shoals should be a secondary consideration when that objective is focused on."
Mr Turnbull believes Chinese President Xi Jinping is genuinely committed to avoiding the "inevitability of the rising power coming into conflict with the incumbent".
But if that was his objective, Beijing should calibrate its actions against that test and in the case of the South China Sea use the international legal system to resolve the issue.
Mr Turnbull said China saw its own rise as a return to the natural order of things.
It was the largest economy in the world until the mid-19th century and would no doubt become so again unless instability and conflict developed, "simply because of its size".
As a great economy, China would seek to have the military capability to go with it, the prime minister said.
Mr Turnbull also urged the US to ratify the UN Convention on the Law of the Sea.
Although the US already observed the treaty, non-ratification diminished American leadership where it was most needed.
He also urged the US congress to support a 12-country free trade deal, saying Australia was making the most of the opportunities in the region through free-trade agreements with the largest economies.
"We have championed the Trans-Pacific Partnership and we urge your Congress to do so too," he said.
Mr Turnbull said free trade was good for security as well as jobs.
Governments spent a lot of money on military capability as a deterrent to make it costly for others to wage war, he said.
But tighter economic engagement between countries makes the cost of conflict enormous.
"If you think about the political imperative in China of the government continuing to deliver rising living standards and continuing to deliver economic growth, well, the cost of instability, the cost of conflict, the cost of uncertainty that that entails is very, very high."
