China and Australia embarked on a new journey for their relations Monday as the two countries upgraded their diplomatic ties to a comprehensive strategic partnership and practically concluded their negotiations on a free trade agreement (FTA).

Growing ties

"It is a natural result for the two sides to jointly decide to elevate the bilateral ties," visiting Chinese President Xi Jinping told Australian Prime Minister Tony Abbott during their talks in Canberra Monday.

Both as important countries in the Asia-Pacific region, China and Australia have enjoyed economic complementarity, friendly people-to-people relations, frequent contacts and extensive cooperation, Xi said, noting that such features in the bilateral relations as being "comprehensive and strategic" have been increasingly outstanding.

"The two sides should proceed from the new historic point to expand exchanges, strengthen dialogues, respect each other, forge ahead and deepen cooperation, thus bringing more benefits to people in both countries and contributing more to the peace and prosperity in the region and the whole world at large," Xi said.

Abbott said that President Xi's visit bears historic significance and the establishment of a comprehensive strategic partnership between Australia and China marks a higher level of their bilateral relations.

He said that Australia admires the achievements China has made in reform and opening-up and is willing to enhance cooperation with China on the basis of mutual respect, friendship and mutual benefits.

FTA talks

The practical conclusion of bilateral FTA talks "is a big event worth celebrating in our trade and economic relations," Xi told Abbott.

"The two sides have taken a pragmatic attitude to address the concerns of each other, and the FTA demonstrates a balance of interests and is a high-quality, high-level deal," he said.

On energy resources, Xi said, the two sides should go beyond the simple model of goods trade to advance the cooperation in upstream and downstream integration and build a long-term strategic cooperative partnership.

The two countries should continue to strengthen cooperation in infrastructure construction, agriculture and animal husbandry, and financial services, the president said.

China will set up a clearing bank in Sydney to handle RMB business and grant a 50-billion-yuan ($8.2 billion) quota of investment to Australian financial institutions under the RMB Qualified Foreign Institutional Investors (RQFII) program, Xi said.

China has also agreed to increase the inter-bank bond market quota to 10 billion yuan ($1.6 billion) for the Reserve Bank of Australia to invest in China, he said.

Launched in 2011, the RQFII program allows foreign investors to invest in Chinese onshore stock and bond markets with offshore RMB.

China stands ready to actively participate in Australia's development project in its northern regions at the invitation of the Australian side, Xi said.

He also expressed hopes that Australia can continue to offer a fair environment for Chinese companies.

For his part, Abbott said the completion of the FTA negotiations is very exciting and displays the extensiveness and strong momentum of bilateral cooperation.

The Australian side hopes to constantly promote bilateral trade and investment, and welcomes Chinese businesses to invest in the country and participate in the exploitation of energy resources and the infrastructure construction such as high-speed railways and ports, he said.

People-to-people exchanges

The Chinese president said that both sides should actively increase people-to-people exchanges, facilitate and promote mutual visits between the two peoples.

China supports the Australian government's New Colombo Plan that will be carried out in China in 2015 with a view to enhancing student exchanges between the two countries, and China also supports the establishment of a mechanism on exchanges and cooperation between leading officials of Chinese provinces and Australian states, Xi said.

China highly values its cooperation with Australia in justice and law enforcement and in chasing fugitives and illegal assets, so as to jointly crack down on corruption.

The president said that China welcomes Australia to integrate itself into Asia, and is willing to strengthen communication and coordination with Australia within such multi-lateral mechanisms as the UN, the Group of Twenty (G20), the East Asia Summit (EAS) and the Pacific Islands Forum (PIF), enhance cooperation in global economic governance and counter-terrorism, and jointly push forward the Free Trade Area of the Asia-Pacific (FTAAP) process.

For his part, Abbott said that Australia will take measures to simplify the visa procedures for Chinese citizens and encourage the people-to-people, cultural and educational exchanges.

He said that Australia is willing to strengthen cooperation with China in defense affairs and justice and law enforcement.

The prime minister extended gratitude to President Xi for his attendance at the G20 Summit in Brisbane and his important contributions to the success of the meeting.

Australia is willing to enhance communication and coordination with China on Asia-Pacific affairs and on major international and regional issues, and actively study the participation in the Asian Infrastructure Investment Bank (AIIB).

The Chinese president expressed gratitude to the Australian side for its efforts to search the missing Malaysia Airlines Flight MH370, and said that China stands ready to work with Australia and other countries concerned to continue the search.

The flight, carrying 239 people,including 154 Chinese and six Australians, vanished early on March 8 en route from Kuala Lumpur to Beijing. Despite a multinational search and rescue effort, no confirmed flight debris or crash site has been found.

Abbott pledged that Australia will do its utmost to keep on searching the plane together with China and other related countries, and it will not stop its efforts until the flight was found.

After their talks, the two leaders witnessed the signing of a series of wide-ranging cooperation deals, covering trade, investment, energy, mining, agriculture, animal husbandry, infrastructure construction, finance, education, new energy, ocean, polar region, climate change and tourism, among others.

The two leaders also held a joint press conference, in which President Xi described the talks with Abbott as "productive."

"We decide to elevate the China-Australia ties to comprehensive strategic partnership from strategic partnership, which charts the course for our future relations," Xi told reporters.

Xi said the free trade deal "will provide broader markets, more conveniences and better system guarantee for bilateral cooperation."

"The extraordinary course of the 42-year relations between China and Australia shows that so long as the two sides consistently respect each other, understand each other and trust each other, take into account each other' s core interests and major concerns, and make solid steps, we can go more steadily and even further in our relations," he added.

Abbott told reporters that it is a historic day for Australia today, as the establishment of the Australia-China comprehensive strategic partnership and the completion of the FTA talks will generate greater opportunities and benefits for both countries.

China's reform and opening-up policies have lifted hundreds of millions of people out of poverty, which is the greatest progress in human history, Abbott said.

A rich, strong and prosperous China means a lot to the world and Australia is willing to be a reliable cooperative partner of China, he added.

Australia is the first leg of Xi's ongoing three-nation tour, which will also take him to New Zealand and Fiji.