China has a strategy to help Pacific Island nations with policing, not defence, and its growing presence in the region should not alarm Australia, China's ambassador to Australia said on Wednesday.

Ambassador Xiao Qian also told reporters that Nauru's decision this week to form diplomatic relations with China at the expense of Taiwan was "their own choice" and would not impact Australia's ties with Nauru, a tiny nation of 12,500 that uses the Australian currency.

Pacific neighbours Solomon Islands and Kiribati switched diplomatic recognition from Taiwan to Beijing in 2019, with Solomon Islands later striking security and policing pacts with China that sparked alarm in Canberra and Washington.

Australia, concerned by the strategic location of the Pacific Islands as a battleground in World War Two, has said security should be provided by countries within the region that share democratic values, and not China.

Xiao told reporters that Pacific Islands countries want to have political ties with China, sell products to the Chinese market, and receive investment and help from China in infrastructure, telecommunications and maintaining social order.

Security "is part of the relationship between China and Pacific Island countries, to help them to social stability," he said.

"It is not a strategy for military security, its a strategy to help policing their nation for social stability and basic order," Xiao said, adding that there was "no need for any so-called anxiety on the part of Australia".

Australia's ties with China have stabilised after a visit by Prime Minister Anthony Albanese to Beijing in November, the first in seven years by an Australian leader, and China wanted to further improve the relationship, Xiao said.

Defence was an area "we need to work harder on," he said, also saying that China had lodged a diplomatic protest with Australia over its congratulations to Taiwan, which China claims as its own, over the election of a new president.

Albanese said on Wednesday that Australia respected Taiwan's democratic processes in its election, and also respected the decision by Nauru to change diplomatic ties.

He declined to comment on whether Australia would seek a new security agreement with Nauru, but said security deals recently struck by his government with Pacific nations Papua New Guinea and Tuvalu were "very significant".

Ties between Australia and its largest trading partner China improved last year after China lifted some trade blocks imposed in 2020 on a raft of Australian exports. (Reporting by Kirsty Needham; Editing by Christopher Cushing, Miral Fahmy and Michael Perry)