Malcolm Turnbull heads into a G20 summit which is deeply divided over how to tackle North Korea's ambitions and threatening to fracture over global trade.
The prime minister arrived in the host city Hamburg on Thursday and headed straight to a bilateral meeting with host leader Angela Merkel before the summit starts on Friday.
North Korea has been widely condemned for testing a Hwasong-14 intercontinental ballistic missile which landed in Japanese waters.
US President Donald Trump, who outlined some of his foreign policy priorities during a visit to Poland before heading to his first G20 summit, has called on China to "end this nonsense once and for all".
His ambassador to the UN, Nikki Haley, warned at a UN Security Council meeting that America would use force "if we must" against North Korea.
Australia's Deputy Prime Minister Barnaby Joyce backed up the US remarks, telling Sky News: "No one should ever go too far in testing the resolve of the United States of America."
"If North Korea was to deliver a warhead into the United States of America then the ANZUS alliance would be called in."
Mr Turnbull says China is the key to stopping the "dangerous escalation" and he looked forward to discussing the issue with other G20 leaders.
China and Russia have urged cooler heads among G20 nations, with more trade sanctions only likely to increase poverty in North Korea and damage the global economy.
The US has sanctioned a Chinese bank for its alleged ties with North Korea, sold weapons to Taiwan and sent a navy destroyer close to disputed territories in the South China Sea.
Chinese President Xi Jinping will take to the summit a plan for "suspension for suspension", which would involve North Korea winding back tests while the US and South Korea suspend military exercises.
The Chinese believe this is the better option because it avoids more damaging trade sanctions and involves all parties.
Russian President Vladimir Putin, who will hold a much-anticipated first sit-down meeting with Mr Trump in Hamburg, argues military options should be ruled out and an "exclusively political and diplomatic" solution is needed.
Russia is already irate at the US over what it describes as a "sanctioning frenzy" over the Ukraine.
Mr Trump's speech in Poland will add fuel to the fire, criticising Russia's "destabilising behaviour" while appearing to encourage Polish defiance towards the European Union.
Business leaders will closely watch whether global security issues stall economic reform at the summit, and that proposed new bilateral trade deals don't see the world plunge into a new era of trade wars and protectionism.
Mr Turnbull also wants to discuss economic reform, countering terrorism and balancing energy reliability and cost with cutting emissions.
Security in Hamburg is being stepped up before the opening on Friday, with 21,000 police to deal with tens of thousands of protesters angry over globalisation, capitalism and a lack of action on climate change.
After the summit, Mr Turnbull will head to Paris and London for leader meetings.
