A new agreement to allow the direct trading of the Australian and Chinese currencies is a "foundation stone" for future jobs and investment, Prime Minister Julia Gillard says.
Ms Gillard told a business breakfast in Shanghai the Australian dollar would for the first time be directly convertible into Chinese yuan, cutting the cost of doing business for many companies.
Currently there is a two-step process involving conversion into US dollars.
"It's an important foundation stone for future opportunities," Ms Gillard said.
The prime minister will discuss China's interest in expanding its range of financial products when she meets with Premier Li Keqiang in Beijing on Tuesday.
"Australian companies have the expertise and the desire to make a significant contribution to the further development of China's financial services sector," Ms Gillard said.
Westpac chief Gail Kelly, who was at the breakfast, appeared delighted when she heard the news.