For Australia to reach its goal of having a 40 million population by 2050, it recognises the vital role that skilled migrants will play to fill in the gap that natural births could hardly meet.

That means Australian must continue to operate a sizeable immigration program that would focus on attracting skilled workers who would become permanent residents and eventually Aussie citizens, Prime Minister Julia Gillard said on Thursday.

In the last 12 months to September 2012, about 228,000 people were added to Australia's population from overseas migrants which was a 33 per cent increase compared to the 176,000 average prior to 2010.

Instead of placing annual targets on increase of visas granted to skilled migrant workers, Ms Gillard said part of a well-managed migration programme is to adjust it according to Australia's needs, including making year-by-year changes.

She also criticised the fear campaigns made by Australian politicians. Ms Gillard made the remarks at her address before the Foreign Correspondents' Association event in Sydney on the eve of the second trip to China.

The prime minister particularly pinpointed the former Howard coalition government that lost to Labor in 2007 whom she blamed for squandering the nation's resources by spending government income on quick fixes instead of investing it into the future.

"There should be no false nostalgia for the days that preceded the global financial crisis - the days when our household savings ratio hit zero, when easy credit and rapidly rising terms of trade created a sugar hit that could never be sustained," Nine News quoted Ms Gillard.

"Even then, with rivers of gold flowing into federal coffers, a priceless opportunity was squandered," she added.

Ms Gillard will be in China for five days to meet President Xi Jinping and Premier Li Keqiang to discuss deepening defence and security ties and opening new markets for Australian industries.