Beijing has used Malcolm Turnbull’s first visit to China as Prime Minister to warn Australia’s economic interests will be harmed unless it softens its position on the South China Sea.

The blunt message was published in the state sanctioned, English language  to coincide with Mr Turnbull’s arrival in Shanghai on Thursday and his keynote speech to open the biennial Australia in China Week.

A record delegation of more than 1000 Australian business people has travelled to China for the event which is seeking to capitalise on opportunities created by the coming into force last year of the China-Australia Free Trade Agreement.

Mr Turnbull used his speech to push back, telling China that her continued march towards prosperity required open markets and upholding the rule of law.

“Freedom, enterprise, open markets, embrace of the global community in all it’s diversity – those are the qualities that have delivered progress, rising living standards and growth,” he said.

The comments were a template for a stronger message he would be delivering to China’s leaders in private.

He stressed the mutual importance of allowing free-two-way internet trade after The Australian Financial Review reported this week that  barriers had been thrown up to e-commerce.

The China Daily, effectively a mouthpiece for Beijing, said Mr Turnbull needed to be “careful and considerate about Canberra’s stance on the South China Sea”.

It notes his visit, which included bilateral discussion with both Premier Li Keqiang and President Xi Jinping, “comes right after Turnbull called China’s military deployments in the South China Sea counterproductive” and four months after the FTA came into force.

Mr Turnbull raised Australia’s concerns over China’s inflammatory land grab in the region when he met both leaders on the sidelines of international summits late last year and he planned to raise it again. He was scheduled to meet Premier Li in Beijing on Thursday night and President Xi in Beijing on Friday.

The newspaper quoted Han Feng, deputy head of the national Institute of International Strategy of the Chinese Academy of Social Sciences as saying Australia should put its economic interests with China first.

“It will be a test of Australian leaders’ political wisdom,” he said.

Zhang Yuyan, from the academy’s Institute of World Economics and Politics, said the South China Sea issue will “more or less impact” the economic relationship between the two countries.

“It will cast a shadow on the promising cooperation if such a tendency keeps developing,’ he said.

Mr Turnbull has said both publicly and privately that China’s actions threaten her own march towards middle-class prosperity.

Mr Turnbull also used separate talks with communist party secretary Han Zheng to seek assurances that impediments to internet trade would be removed.

Officials said Mr Han accepted ecommerce was a growing and vital element of China’s expansion and gave a commitment to open and free e-commerce.

Mr Turnbull referred to this in his speech as well.

“We look forward, as I am sure do Chinese consumers, to the implementation of recent changes affecting e-commerce imports so that trade can continue to grow for mutual benefit.”

He quoted former leader Deng Xiaoping who said in 1984 that China had been strong and prosperous when it opened its doors to the world and had fallen into poverty and ignorance when the Emperors closed those doors.

He said China and Australia’s economies were similar insofar as they were transitioning away from resources towards services.

“This means a better deal, from wages to deposit rates for Chinese households – purchasing power to the people,’ he said.

“Out parallel economic transitions explain why it was so important that we delivered the China-Australia Free Trade Agreement.

“I’m here to help Australia exporters open do vrs which had been locked.”

The tensions over trade and security came as China’s foreign ministry summoned envoys from the Group of Seven (G7) advanced economies to complain about a statement their foreign ministers issued during a meeting in Japan regarding China’s behaviour.

China is isolated in its claim to most of the South China Sea and is actions of building artificial reefs and islands to further those claims is causing disputes with such nations Brunei, Malaysia, the Philippines, Taiwan and Vietnam while Australia and the United States see it as a threat to peace and stability.

Mr Turnbull has said both publicly and privately that China’s actions threaten her own march towards middle-class prosperity.