Canberra: China's ambassador to Australia Xiao Qian has told the Australian government to treat the issue of Taiwan with “caution” saying there is “no room for compromise” over Beijing’s territorial claim over the self-governed island.

Mr Xiao addressed the National Press Club on Wednesday as tensions intensify across the Taiwan Strait since US House Speaker Nancy Pelosi’s visit to Taipei.

China’s ambassador has warned Beijing is prepared to use “all necessary means” to prevent Taiwan from being independent, saying there can be “no compromise” on the “one China” policy.

Xiao Qian blamed the US for the recent escalation in tensions. China’s decision to launch ballistic missiles in live-fire exercises in response to Speaker Nancy Pelosi’s visit to Taiwan was “legitimate and justified”, he told the National Press Club in Canberra.

Xiao Qian said he was "surprised" that Australia had signed a statement with the United States and Japan that condemned China's firing of missiles into Japanese waters in response to U.S. House Speaker Nancy Pelosi's visit to Taiwan last week.

"We hope that the Australian side could take China-Australia relations with a serious attitude. Take the 'One China' principle seriously, handle the Taiwan question with caution," Xiao told the National Press Club.

Xiao said after a “good start” with the newly elected Albanese government, “there is an opportunity for a possible reset of relationship” between China and Australia.

He said China was ready to solve trade disputes through the World Trade Organization or “if the new government in this country is ready, to discuss it bilaterally”.

Since Labor’s election in May, the defence minister, Richard Marles, and the foreign minister, Penny Wong, have both met their Chinese counterparts, the beginning of a thaw in relations that soured over nine years of Coalition government.