The Australian benchmark S&P/ASX 200 index slipped 4.3 points to 4,050.6 on latest available data from a shortened session of light trading, just off Thursday's record high of 4,055.0.
Susan Gosling, head of investment management at National Australia Bank fund manager MLC, said China's strong growth was a key driver of the market's rally in 2004.
"We are so complementary to China, and China has had such a stellar growth period. We export commodities and import their manufactures and the terms of trade have been very much in our favour," she said.
The outlook for China and the United States remain risk factors in 2005, with diverse views on the performance of Australian shares over the next year.
"We expect another positive year for the local share market, supported by solid global growth, continued expansion of the Australian economy and favourable valuations," Commonwealth Securities equities economist Craig James said.
Australia's largest steel maker, BlueScope, fell 1.6 percent on Friday to A$8.25, following slides in US steel companies on Wall Street overnight on concerns about a slow down in Chinese demand for steel.
The world's largest diversified miner BHP Billiton fell 0.9 percent to A$15.34 while Rio Tinto fell 2.1 percent to A$39.12. Zinc and lead miner Zinifex fell 1.7 percent to A$2.34.
Dairy company National Foods added 0.8 percent to A$6.30 on expectations that Fonterra would raise its bid to top a rival offer launched on Thursday by Southeast Asian food giant San Miguel Corp.
Construction group Rinker Group fell 0.4 percent to A$10.65 after it said it had sold a US pre-stress concrete manufacturing business for about $45 million, below book value.
In New Zealand, the benchmark NZSX-50 Index closed up 17.5 points at 3,064.4, pushing further into record territory on turnover of NZ$31 million ($22 million).
Telecom, which accounts for a quarter of the top 50 index, was up 0.8 percent at NZ$6.15. Third-ranked stock, wood products firm Carter Holt Harvey, rose a cent to NZ$2.07.
The New Zealand market will be closed early next week for the New Year holiday, reopening on January 5.