Australia's former longest-serving treasurer says the country's problems with the Asian giant are not really economic issues but political complaints overs Huawei, the South China Sea, foreign interference laws and alleged cyber attacks.

"My own view is that China is putting pressure on Australia and wants to see whether Australia will buckle," Mr Costello told the Australian Financial Review Business Summit in Sydney.

"As time goes by and it comes apparent that Australia won't change its position to these sorts of issues ... hopefully we will go back to business as normal."

He said no self-respecting medium-sized power such as Australia was going to backtrack on those sorts of issues.

But he said China did not trade with Australia out of the goodness of its heart.

"China trades with us because it gets advantage. It will continue to trade with us while it gets advantage, for example cheap, reliable high-grade iron ore," said Mr Costello, who is chair of the Nine Network and the Future Fund.

"The day it can find cheap, reliable high-grade iron ore somewhere else is the day they won't trade with us."

He said to keep trading relations open, you had to make sure you have the best products.

"Countries trade out of self-interest. It is the same with China, as it is with Australia."

Australian Associated Press