Hillary Clinton is visiting Perth for the annual Australia-US talks on foreign policy and defence.
China, she says, should be encouraged to rise peacefully, as a responsible stakeholder in the region.
Mrs Clinton made the comments at the opening of a new thinktank -- the Perth U-S-Asia Centre -- at the University of Western Australia.
Presenter: David Weber
Speaker: Hillary Clinton, US Secretary of State
The Secretary of State said that Perth was sitting on a very strategic part of the planet.
Hillary Clinton described it as Australia's gateway to the trade and energy routes that connected the Indian Ocean to the Pacific.
"These waters are at the heart of the global economy. And a key focus of America's expanding engagement in the region, what we sometimes call our pivot to Asia. We never actually left Asia. We've always been here and been a presence here, we consider ourselves a Pacific power but in the 21st Century, it's important that we make absolutely clear that we are here to stay."
Mrs Clinton said The United States had adopted a strategic priority of encouraging India to play a greater role in Asian affairs.
The U-S supported India's 'look east' policy.
"It's exciting to see the developments as the world's largest democracy and a dynamic emerging economy begins to contribute more broadly to the region. It's also important to see the burgeoning relationship between Australia and India. And we support the 'look west' policy here in Australia and certainly applaud the Australian government's strategic white paper on Asian policy."
Hillary Clinton said the Obama administration would welcome joint exercises between Australian and Indian naval vessels.
The Secretary of State said Australia and The U-S had strong cultural and commercial links in a rapidly changing region.
"We look for ways to support the peaceful rise of China. To support China becoming a responsible,stakeholder in the international community. And hope to see gradual but consistent opening up. of a Chinese society and political system that will more closely give the Chinese people the opportunities that we in The United States and Australia are lucky to take for granted."
Mrs Clinton said democracies shared important values-- freedom, and respect for human rights and personal dignity.
She asserted that Australia and The United States needed to continue working together.
"To see how we can contribute to the kind of region and world we would like to see for both of us to give our young people the opportunities that they so richly deserve. So I thank you for your steadfast commitment to the U-S Australia partnership, it is a partnership that is of itself of importance to each of us but it's also a partnership that must remain at the core of the kind of engagement we have in the Asia-Pacific, Indo-Pacific regions for now and for the future."