Give China credit on yuan liberalization: Australian Treasurer

China has come a long way in a short period of time in relation to liberalizing its currency and opening up its economy, said Australian Treasurer Joe Hockey, responding to U.S. Treasury Secretary Jacob Lew's call for Beijing to get back on the path of demonstrating that they're committed to pursuing a market-determined exchange rate.

"I understand where Jack is coming from, (but) I do note the Chinese government has come a very long way in a short period of time in relation to the RMB and in opening up the economy. We all want it to move quicker but when you reflect what's happened over the past decade there has been a lot of movement," Hockey told CNBC on Thursday.

Read MoreChina yuan band widening a sign of caution, not reform

"And quite frankly we should be doing what we can to encourage China to continue on the path to full deregulation of its currency," he said.

Australia Treasurer Joe Hockey
Mark Graham | Bloomberg | Getty Images
Australia Treasurer Joe Hockey

On Wednesday, Lew told CNBC that while he welcomed China's recent decision to double the yuan's daily trading range, policymakers needed to do more to demonstrate their commitment to moving towards a market-based exchange rate.

"If they want the RMB to be a world currency someday, if they want it to be a reserve currency someday, they need to demonstrate that," he said.

Hockey and Reserve Bank governor Glenn Stevens will chair the meeting of G-20 finance ministers and central bank governors in Washington later on Thursday.

He confirmed that Russia would be at the table and that geopolitical challenges surrounding Ukraine would be discussed. However, he said this would not dominate the discussions.

Weighing in on the debate over whether the European Central Bank (ECB) should use unconventional measures, such as quantitative easing, to spark economic growth, Hockey said, "I'm not going to give [ECB chief] Mario Draghi advice over the media."

"Europe has come back from the edge. I'm more bullish about Europe over the medium term than some others simply because it has enormous capacity and we're seeing the U.S. – which has been through a pretty tough winter – have a more ambitious outlook in the near future," he continued.

Read MorePutin's Ukraine adventure may hurt Russian economy

The ECB kept interest rates steady at a record low of 0.25 percent last week despite the fact that inflation in the euro zone hit its lowest level in more than four years in March. However, Draghi said he was committed to doing anything he could to stop low inflation from dragging on too long.

Australia's ambitious free trade agenda

Next on Australia's free trade agenda is locking in a deal with China, said Hockey.

Prime Minister Tony Abbott is currently in China to spur free trade talks with the world's second-largest economy, days after concluding talks with Japan on a similar deal.

Earlier this week, Japan and Australia reached an agreement on a long-awaited free-trade deal, in a rare opening of Japan's protected markets. Japan has agreed to lower duties on Australian beef and raise the duty-free quota on cheese - Australia's biggest dairy export to Japan. In turn, Australia will end its tariffs on Japanese-made vehicles, household appliances and electronics.

The pact between the two countries comes as officials are trying to push for an ambitious U.S.-led 12-nation free trade plan, the Trans-Pacific Partnership (TPP).

Read MoreJapan, Australia ready trade pact on cars, beef

When asked whether the deal undercuts the efficacy of the TPP deal, he said, "No, we've done what we had the responsibility to do. We finalized agreements we had been negotiating for years."

"We want to get on with opening up markets for Australia and we are strongly supportive of TPP negotiations but you have to have the capacity to walk and chew gum at the same time. That means if we can nail down new agreements that open access for Australia's economy, we'll get on with it," he added.