Trade flows in focus as Australia's Albanese meets China's Xi

China's Premier Li Qiang visits Australia

By Kirsty Needham

SYDNEY (Reuters) -Australia's Prime Minister Anthony Albanese met China's President Xi Jinping in Brazil on Monday, as Beijing seeks to promote Australia as a model for trading with China in a Trump era, even as Canberra draws closer defence ties with Washington.

The meeting with Xi, which took place on the sidelines of the G20 summit in Rio de Janeiro, comes a year after Albanese travelled to Beijing to end a years-long diplomatic dispute that saw billions of dollars worth of Australian exports to its largest trading partner blocked.

Albanese said there had been "encouraging progress in the stabilisation of our relationship".

"Trade is flowing more freely to the benefit of both countries and to people and businesses on both sides," he said, according to an official transcript of his opening remarks.

Australia and China would look for opportunities to cooperate in energy transition and climate change, he said.

Meanwhile, Xi told Albanese, their relationship had achieved a turnaround and the two countries were maintaining a positive momentum of development, according to China's official Xinhua News Agency.

Xi said he hoped Australia would provide a non-discriminatory business environment for Chinese companies, Xinhua reported.

The pledge by the incoming administration of President-elect Donald Trump to impose hefty tariffs on China appears in contrast to Australia's policy of stabilising ties and exporting iron ore, gas and agricultural produce to China's complementary economy, analysts said.

Albanese said on Sunday he would not get involved in bilateral relations between Beijing and Washington, when asked by reporters about Trump's pledge of China tariffs.

Albanese told reporters Australia had not changed its position on any of the differences it has with Beijing.

U.S. Ambassador to Australia Caroline Kennedy, said in a speech on Monday that Australia was "hand's down our most glorious friend".

She highlighted increased defence cooperation between Washington and Canberra, and plans to develop Australia's critical minerals sector to break China's "chokehold".

"Australian policy with Washington in the Trump era looks increasingly like it is going to be running on two tracks – with deepening and intensifying ties in security, with a more discordant and combative relationship on trade," said Lowy Institute senior fellow for East Asia, Richard McGregor.

In an editorial last week, the state-owned China Daily newspaper said Australia was a model for U.S. allies in a Trump era, because it had shaken off Washington's "anti-China spell" to balance trade with China.

(Reporting by Kirsty Needham in Sydney and Ethan Wang and Yukun Zhang in Beijing; Editing by Lincoln Feast and Alison Williams)