BEIJING, March 31 (AFP) - Australian Prime Minister John Howard said here Monday that his country wanted to overcome differences to form a "truly effective partnership" with China into the next century.

"We recognize that there will be differences, but if we focus on the common goals that we have we complement each other we will have a truly effective partnership in the next 25 years and beyond," he said.

His comments came during a lunch given by the Australian business community in the Chinese capital, the official Xinhua news agency said.

Howard earlier met his Chinese counterpart Li Peng for talks aimed at boosting economic ties and easing a relationship strained since he came to power a year ago.

After a welcoming ceremony at the Great Hall of the People, the two leaders began meetings during which Howard formally invited Li to come to Australia which he last visited in 1988 -- "an offer which Li accepted with appreciation," Xinhua said.

Li said the economies of both China and Australia were highly complementary, adding that he hoped that Howard's visit would further deepen the existing friendship between China and Australia.

Howard stressed that China was a very important partner for Australia and that China's booming economy offered extremely favorable cooperative opportunities for his country. Howard expressed his country's firm support for China's entry into the World Trade Organization.

Li raised the thorny issue of Tibet and Taiwan, saying he hoped Australia would act in accordance with "the norms for international relations on the issue of Tibet," and would respect the "one China" policy on Taiwan, Xinhua said.

Howard relpied that Australia would observe "relevant norms governing international relations" as far as Tibet was concerned and that it had observed a "one China" policy since 1972.

Howard was widely expected to address cracks created over the last year by Australia's closer military links with the United States, welcoming a visit by Tibet's spiritual leader the Dalai Lama and sending a minister to Taiwan all of which were denounced in the Chinese state press.

Howard began two busy days of meetings in the morning, visiting a nearby joint-venture factory of Australian confectioner Cadbury's.

He also held a short pre-lunch meeting with Song Jian, the minister-level head of the State Science and Technology Commission.

He is at the head of a large and high-profile business delegation, and business dominated Monday's schedule, the Australian embassy said without providing details.

A key economic goal to be addressed during the visit is the opening up China's market to Australian wool the top concession sought by Australia in negotiations surrounding China's accession to the World Trade Organisation.

The prime minister is to meet Chinese President Jiang Zemin on Tuesday afternoon, winding up his five-day China visit the following morning.