The minister, who was delivering a lecture here, said at the same time that there was a need to engage with Beijing as it would be in no one's interest to see the Chinese economy falter.
"Rising nationalism is leading to a narrow definition of national interest and a more transactional approach in negotiations. These factors reduce the prospects of multilateral cooperation in collective interest," said Bishop, who is on a two-day visit here.
"We continue to oppose the construction of artificial reefs and militarisation of those structures in the South China Sea," Bishop said.
India has commercial interests in the South China Sea and has been pressing for resolving the dispute as per the United Nations Convention on the Law of the Sea, besides advocating freedom of navigation in the resource-rich area.
Bishop said the right to freedom of navigation must be ensured as it its crucial for trade.
The Australian Foreign Minister also "applauded" India for successfully and peacefully resolving a long running maritime dispute with Bangladesh in 2014 under the provisions of the UNCLOS.
Bishop emphasised on the need to "close the gaps" for an early conclusion of the negotiations for a free trade agreement between India and Australia.
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