CANBERRA - China is absolutely pivotal to Australia's political, strategic and economic interests, Australian Defense Minister Stephen Smith said in a speech in Darwin on Thursday.

"We want to continue to build positive, cooperative and comprehensive relations with China and have always said that any country is entitled to modernize its military as its economy grows," he said at ceremony.

He said Australia is committed to enhancing a positive and constructive defense relationship with China, "as engagement in this area is of mutual benefit."

Smith said Australia had expanded its relationship with China to include co-operation in humanitarian assistance and disaster relief exercises, maritime engagement and peacekeeping.

He noted that Australian Prime Minister Julia Gillard and her Chinese counterpart Li Keqiang announced earlier that the premiers of the two countries will meet annually to provide high-level leadership and strategic guidance to bilateral relations.

"The relationship will be described as a Strategic Partnership to reflect the importance both countries place on the relationship, its expanding scope and depth and the shared interests of both sides in a stable and peaceful Asian region," he said.