"A successful FTA upgrade would bring obvious commercial benefits to a number of New Zealand businesses," he said.
The upgrade could also demonstrate a shared commitment to free trade and a rejection of protectionism, Parker said.
Talks to upgrade the China FTA began under the previous National government.
The agreement has seen two-way trade triple to $22 billion since it came into force in 2008.
The upgrade aims to modernise the FTA and make improvements that further free up trade for goods and services to help exporters reach $30b in two-way trade by 2020 — the target set by leaders in 2014.
In other issues that came up during his China visit, Peters said peace and security in the Asia-Pacific, including North Korea, were discussed.
"We talked at length about recent developments in North Korea and resolved to stay in close touch as we continue to encourage all parties to find a path to peace and stability on the Korean peninsula, including through the North complying with all relevant UN Security Council Resolutions," he said.
Peters said there was also a "useful exchange" on climate change and there would be further high-level exchanges on the issue.