Senator Marise Payne met with Secretary of State Mike Pompeo in Sydney on Sunday with the foreign minister later declaring the US-China relationship was the most important bilateral relationship in "coming years".

Both major powers were important to Australia and it wasn't in Canberra's interest for those relationships to become confrontational, the minister said during an afternoon forum at the State Library of NSW.

"But we do have to recognise that we are in an era of strategic competition and we must play our part in protecting our interests and advancing those values," Senator Payne said.

The foreign minister said Australia shared the concerns raised by the US over Chinese intellectual property theft and industrial subsidies.

"At the same time we have to also be clear that protectionism is not the answer," she said while sharing the stage with Mr Pompeo.

"US-China trade tensions should be resolved in a way that is consistent with the rules-based order and doesn't undermine the interests of other parties including Australia."

Where that order was incapable of dealing with new practices "we have to evolve it to repair and maintain that rules-based system", she said.

The secretary of state insisted Washington welcomed China's continued growth but said it had to be "right, fair, equitable and reciprocal".

Mr Pompeo said it was wrong to think of trade and economic issues as separate to national security.

"Make no mistake about it, China's capacity, the People's Liberation Army's capacity to do exactly what they are doing, is a direct result of the trade relationships that they developed," he said.

"They grew their country on the backs of a set of unfair trade rules."

The former CIA director said China's "economic tools" - including a willingness to steal technologies - underwrote Beijing's capacity to build its military.

Mr Pompeo was then asked by the moderator if Australia perhaps had more to lose given its heavy reliance on Chinese trade and the fact the US was unlikely to win any potential conflict.

"You can sell your soul for a pile of soybeans or you can protect your people," he replied.

"Our mission set is to actually do both."

Mr Pompeo during his address commended Canberra's decision to investigate what "Confucius institutes" were doing on Australian university campuses which, he said, would help shine a light on state-sponsored election interference.

He also praised Canberra's leadership when it came to protecting the country's 5G network.

Australian Trade Minister Simon Birmingham earlier on Sunday suggested the US may have breached international trade rules in its latest tariff hike on Chinese goods.

The ongoing trade war between the two global superpowers ratcheted up when President Donald Trump abruptly announced 10 per cent tariffs on the remaining $US300 billion worth of Chinese imports.

Australian Associated Press