Australia, China sign historic deal

Australia has taken advantage of China's leadership change to seal a historic deal that lifts 40 years of diplomatic relations with the Asian giant to a new level, the Australian Associated Press reports.

Under the agreement signed by Prime Minister Julia Gillard and China's new Premier Li Keqiang, three types of annual "strategic dialogue" will be held between prime ministers, foreign ministers, and economic ministers.

"This is a great step forward," Gillard said at the start of the inaugural leaders' meeting in the Great Hall of the People on Tuesday.

Premier Li said at the meeting the agreement would "raise the Australia-China relationship to a new height". The only other countries with similar agreements with China are Russia, Britain and Germany.

Gillard told reporters later that the lack of a free trade agreement was a "gap" in the relationship, and talks on it would resume in May after Premier Li expressed a strong interest. The Australian leader was given an official welcome outside the Great Hall involving precision marching Chinese military and a cannon salute.

The economic talks will involve the treasurer and trade minister meeting with the chairman of China's powerful National Development and Reform Committee.

Gillard said she wanted the relationship to go beyond simply economic ties. "Our partnership is broad, it's deep, it's complex and it's a relationship we intend to keep focusing on into the future," she told reporters.

The two countries also signed a deal to form a joint expert group on carbon trading, which will meet regularly, and an exchange of senior Defense Department and People's Liberation Army officers to discuss regional security.

While no agreement was struck on defense ministers' meetings, there will be a new exchange of defense department officials.

A further agreement was signed on cooperation to tackle poverty and health issues, such as malaria and HIV/AIDS, in the Asia-Pacific region.

On Monday, the prime minister announced direct trading between the Australian dollar and Chinese renminbi, and a 2014 Australia Week in Shanghai featuring film and music stars and artists similar to the G'Day USA event. Gillard will head back to Australia on Wednesday morning.