Prime Minister Scott Morrison wants to see China act and be treated like a grown-up on the world stage.
But he says although the rules of engagement on trade need to change to recognise a developed China, there's no need to "catastrophise" the situation.
However, the whole world - the United States included - has to pull together to make sure trading rules work for everyone.
Mr Morrison has told the Chicago Council on Global Affairs - after three days of being feted by US President Donald Trump - that China's growth and participation in the world is vital to Australia.
"China's economic growth is welcomed by Australia and we recognise the economic maturity that it has now realised as a newly developed economy," he said.
"This was the point of the world's economic engagement with China."
But now it has matured, China must take up the responsibilities that go with being a world power, including addressing environmental challenges and staying transparent in their partnerships and aid for developing countries, he said.
Equally, global institutions had to adjust their settings to recognise China's new status.
Rules that were written a generation ago were no longer appropriate, with some not comprehensive enough and others just plain old.
"There's no need to catastrophise it," Mr Morrison said.
"There's just a need to understand it and work together to adjust the institutions and the rules to accommodate it.
"We're totally up to it."
The prime minister reminded the audience that US strategic engagement in an international community that built the global trading system was what underwrote China's economic expansion
The US has come under fire from some quarters for stymieing efforts to modernise the WTO rules.
Mr Morrison's visit is playing out against a backdrop of trade tensions between China and the US and strategic pressures to temper the Asian giant's rising influence in the Indo-Pacific.
He has urged Mr Trump publicly and privately to look for a speedy end to the trade tensions.
While he has travelled extensively in the 13 months since taking on the leadership, Mr Morrison has not been invited to visit China.
Opposition Leader Anthony Albanese said he wasn't sure that Chicago was the best place from which to send a message to Beijing.
"That is a message perhaps, if it is going to be advanced, that would be better sent from Australia so there was no confusion that the prime minister was advancing Australia's national interests," he told ABC radio.
He also wasn't sure he bought the idea that China was a fully developed country now.
"There are pockets of China, of course, around the coast and around the cities that are very prosperous ... (but) it is still an emerging economy. It is growing substantially."
Australian Associated Press