Expect more Chinese trade tensions, Treasurer Josh Frydenberg warns

Treasurer Josh Frydenberg has warned Australian companies to expect further trade tensions with China and to continue building new export markets.

In a speech today, Mr Frydenberg warned businesses they must prepare for new penalties from Beijing after Australian exports - including wine, coal and barley - were hit by trade sanctions over the past 18 months.

But the treasurer says Australian industry has proven it can replace many of the lost sales by finding new markets outside China.

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"Australia will always choose partnerships ahead of conflict, wherever we can," Mr Frydenberg told the Australian National University's Crawford Leadership Forum.

"However, heightened strategic competition is the new reality we face, now and likely into the future."

Mr Frydenberg praised China for freeing its population from poverty, but warned against its "assertive" tactics of using economic muscle to put political pressure on other nations.

"It threatens economic consequences for perceived misdeeds," he said.

Mr Frydenberg said that unlike during the Cold War, when Soviet Russia was largely isolated from other nations, China's combination of economic power and global connection "poses new and significant challenges for many countries".

"Australia is no exception," he said.

"Indeed, Australia is facing this pressure more sharply than most other countries."

But Mr Frydenberg says that Australian businesses are weathering the trade sanctions applied by China.

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He pointed to trade data showing that a $5.4 billion decline in exports to China has been offset by $4.4 billion in new exports to other markets in the three months to June.

"Many of the firms and industries targeted by China's trade restrictions have also been successful in redirecting goods to other export destinations. This is particularly the case for larger bulk commodities that trade on global markets," Mr Frydenberg said.

And he says the trade sanctions against Australian products are also hurting the Chinese economy.

"They rob Chinese consumers of premium Australian wine, seafood and other goods. And they rob Chinese industry of high-quality and high-value inputs, such as Australian coal.

"We would both be better off if markets were allowed to operate freely."

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Despite all the work to secure lucrative Chinese markets, Australian businesses should continue to find new trade destinations, Mr Frydenberg said.

"They should always be looking to diversify their markets, and not overly rely on one country," he said.

"Essentially, adopting a 'China-plus' strategy."