China has confirmed it has test launched a strategic missile from a submarine in the Pacific Ocean.

Chinese state media said the test was a missile topped with a dummy warhead in "designated waters" as part of a routine arrangement of annual military training.

Australia had been informed of the missile test ahead of time, Foreign Minister Penny Wong said.

She said China's plan to test-fire a missile in the Pacific underscores the need for nations in the region to work together to determine their own futures.

"Australia has been clear with China that we regard this as destabilising to the region," the foreign minister told reporters in Suva.

"This proposed test, is in the context of a rapid military build up by China, which is lacking in the transparency and reassurance as to intent that the region expects."

It follows the landmark Ocean of Peace alliance struck between Australia and Fiji on Monday, which includes mutual-defence obligations.

The treaty is also open to other Pacific nations joining, and comes amid a push by Solomon Islands Prime Minister Matthew Wale for a region-wide pact.

It is Fiji's first alliance and comes off the back of a number of security agreements sealed by Australia in a bid to keep China at a distance.

Pacific leaders had made it clear they wanted the region to be peaceful, Senator Wong said.

"We believe this test is inconsistent with that objective," she said.

"This underscores the imperative of countries of the region to work together to ensure that it is Pacific countries who determine our futures, because we want the Pacific to remain an ocean of peace."