China's "worrying" military actions in the Taiwan Strait amount to a "very coercive gesture", the Albanese government says.
Beijing has ramped up military action following the inauguration of Taiwan's new president, Lai Ching-te.
Drills have included mock air and sea strikes around Taiwanese islands.
Cabinet Minister Bill Shorten labelled China's manoeuvring "deeply concerning and worrying".
"We all need peace and stability in the Taiwan Strait," he said.
"Common sense should prevail but there's no doubt that sending a fleet out in this way is a very coercive gesture."
Mr Shorten said Australia backed the rule of law and freedom of navigation.
"We've made it very clear that we will work with China where it's in our national interest to," he said.
"But we've also made very clear our support for freedom of navigation and a stable South China Sea."
Beijing had consistently engaged in dangerous actions toward Australia, Taiwan, the Philippines and Japan, Taipei's representative Douglas Hsu said.
"This is something all the like-minded countries need to pay more attention (to)," he told ABC Radio on Friday.
A Chinese jet fighter also had a close run-in with an Australian navy helicopter earlier this month, launching flares ahead of the chopper that forced it to take evasive action in a widely condemned move.
Mr Hsu said Taipei anticipated military drills following the presidential inauguration and expected China would take this kind of coercive measure against Taiwan.
"We noticed that there are 31 Chinese navy ships and 49 aircraft involved so far and so just like a previous drill PRC had in this region, we will continue to watch the situation closely," he said.
"Honestly, most of the Taiwanese people are used to this kind of coercive actions from PRC so, so far, people are staying calm."
Beijing has warned against other nations increasing ties with Taiwan, which is a part of China under the One-China principle that Australia and the United States adhere to.
Opposition foreign affairs spokesman Simon Birmingham raised concerns about the drills.
"This is deliberately dangerous action by China - it is action that risks miscalculation and risks escalation and those risks should never be underestimated," he told Sky News.
"China should not be undertaking this type of dangerous and destabilising activity in the first place.
"We would urge them to show respect for the democratic outcomes in Taiwan."
Australia is also working to boost its trading and economic relationship with Taiwan, with Mr Hsu spruiking co-operation in the energy and critical minerals sectors.
"We will continue to show our interest in engaging with Australia on the trade front," he said.
Australian MPs who visited Taiwan for the inauguration also used the trip to talk about the trading relationship with Vice President Bi-khim Hsiao.
The bipartisan delegation included Labor's Raff Ciccone and Luke Gosling and the Liberals' Claire Chandler, David Fawcett and Scott Buchholz.
Co-operation on renewable energy and education, so more students could study in Australia, were raised, Senator Ciccone said.
"The focus is very much on trade and investment," he told AAP.
