China wants Mr Li's visit to promote "pragmatic co-operation"
China has sent a top-level official to Australia, in what is being seen as a move to end a period of sour relations.
The visit of Chinese Vice Premier Li Keqiang is the first since China cancelled a visit from its vice foreign minister in August.
Sources of tension have included the arrest in China of an Australian mining executive and the visit to Australia of Uihgur activist leader Rebiya Kadeer.
But the Australian foreign minister has said "we're back to business as usual".
The wide expectation was that relations between Beijing and Canberra would prosper under Australia's Mandarin-speaking Prime Minister, Kevin Rudd, but the opposite has been the true, says the BBC's Nick Bryant in Sydney.
There has been a string of controversies and incidents during the course of the year which have soured Sino-Australian relations - from the arrest in Shanghai of the Australian mining executive from Rio Tinto, Stern Hu, to the high-profile visit of Rebiya Kadeer to Australia.
An attempt by the state-owned resources company, Chinalco, to buy into the Anglo-Australia mining giant, Rio Tinto, also ended in acrimony.
So the visit from the Chinese Vice Premier, Li Keqiang, is being seen as an important fence-mending exercise, says our correspondent.
Mr Rudd has come under pressure over relations with China
The Global Times, a Chinese state-controlled newspaper, said relations have "gone through some ups and downs this year... but the reality is that bilateral ties between the two countries have already started warming".
Good relations between the two countries are to the mutual benefit of both, with bilateral trade worth $68bn (£41.7bn).
China is Australia's largest trading partner and the country needs China's continued purchases of its resources such as coal, iron ore and liquid gas.
China needs access to these resources to continue its strong economic growth.
China's continued expansion through the global economic downturn has helped Australia become one of the few countries to avoid recession.
The Australian government openly admits that relations have been tense.
Foreign Minister Stephen Smith said on Monday that the two countries "have been going through some tense times".
"But we're confident that we're now effectively back to business as usual, and that's a good thing," Mr Smith said.