China hailed mended ties with Australia on Monday, saying relations were "on the right track" as the trading partners moved on from a bitter economic dispute despite a duel for influence in the Pacific.

Chinese Premier Li Qiang arrived to a grand ceremonial welcome at Parliament House in Canberra, before talks with Australian Prime Minister Anthony Albanese.

The highest-ranking Chinese official to visit since 2017, Li said his trip to Australia demonstrated "that this relationship is on the right track of steady improvement and development". 

Li offered an olive branch, granting Australian citizens limited visa-free access to China, a gesture limited to a relatively small number of nations in Beijing's good books.

Australia, meanwhile, said the two countries had agreed to improve "military-to-military" communication, lowering the temperature after recent brushes in international waters.  

Despite the goodwill on show, both sides acknowledged lingering "differences" -- a nod to diplomatic jostling in the Pacific and China's ongoing detention of a dissident writer.

"We won't always agree, and the points in which we disagree won't simply disappear if we leave them in silence," Albanese said.

Police beefed up security in a bid to head off trouble as Li arrived, standing in the middle of chanting human rights protesters and banner-waving pro-China groups.

A brass band played as Li inspected a military honour guard on the forecourt of Parliament House, the 19-gun artillery salute only briefly drowning out the noisy crowds gathered on the manicured lawns.

One of the most pressing issues in Australia's eyes is the plight of jailed dissident writer Yang Hengjun.

A dual Chinese-Australian citizen, Yang was handed a suspended death sentence in February after a Beijing court found him guilty on espionage charges seen by many as politically motivated.

Yang's supporters penned a public letter on the eve of Li's arrival in Canberra, urging Albanese to push for his immediate release to Australia.

"We in Australia oppose capital punishment and I reiterated our position there," Albanese said after meeting with Li. 

Military friction

Albanese also said Canberra and Beijing had agreed to improve "military-to-military communication" to avoid future incidents at sea. 

Last month, Australia accused China of "unsafe and unprofessional" conduct after one of its warplanes allegedly fired flares in the path of a naval helicopter over the Yellow Sea.

And late last year, Australia said a Chinese destroyer blasted navy divers with dangerous sonar pulses. 

Elsewhere in the Pacific, Canberra has become increasingly vocal in its criticisms of China's efforts to build influence with island nations, another issue that Albanese said he had raised with Li. 

"I did raise the issue of ensuring that foreign interference wasn't acceptable," he added.

Chinese officials were accused of employing heavy-handed tactics in a bid to ensure Li's rare trip to Canberra ran smoothly. 

Australian journalist Cheng Lei -- a former high-profile prisoner who spent three years detained in China -- said Chinese diplomats tried to "block" her from being seen in the same room as Li. 

"They went to great lengths to block me from the cameras and to flank me," she told Sky News Australia. 

"And I'm guessing that's to prevent me from saying something or doing something that they think would be a bad look."

Pandas and wine

While regional security is likely to remain a sore point between Canberra and Beijing, relations are far warmer when it comes to trade.

"Mutual respect, seeking common ground while shelving differences and mutually beneficial cooperation" are key to the relationship, Li said at the outset of his Australian tour.

In the depths of a bitter dispute in 2020, China slapped trade barriers worth billions of dollars on Australian coal, timber, wine, barley, beef and rock lobster. 

Most of these trade bars have since been dismantled. 

"I think this is really an important signifier that China and Australia's relationship has moved away from its historical low," said University of Sydney academic Minglu Chen. 

"It's moving towards a more positive direction." 

Li is nearing the end of a six-day tour of New Zealand and Australia.

He spent Sunday in the state of South Australia, viewing the pandas at Adelaide Zoo and lunching at a historic vineyard on the outskirts of the city that had been hit by China's sanctions.

Li announced China would loan new "adorable" giant pandas to replace popular pair Wang Wang and Fu Ni at Adelaide Zoo.

The longstanding Adelaide pandas, which have failed to produce offspring since their arrival in 2009, will return to China by the end of the year.

"I guess they must have missed their home a lot," the Chinese premier said.