Fortescue Metals (FMG) chairman Andrew "Twiggy" Forrest told an Austcham business dinner in Shanghai he wants China to pay more for the resource which would result in better prices for companies and a massive tax windfall for governments.

Mr Forrest also indicated his company FMG could join BHP, Rio Tinto and Brazil's Vale to cooperate in slowing supply to force a price rise.

The theoretical pact would help Mr Forrest's company which is struggling due to low prices.

Mr Forrest added China would not mind paying more if it meant FMG and even smaller companies survived instead of the big three miners gaining complete control of the market.

"I'm absolutely happy to cap my production right now," Mr Forrest said.

"All of us should cap our production now and we'll find the iron ore price will go straight back up to $70, $80, $90.

"The tax revenues which that will generate will build more schools, more hospitals, more roads, more of everything which Australia needs, universities ... by a quantum than this foolhardy attitude of deepening your expansions into a falling price."

Many observers think FMG could struggle to survive in the future if iron ore prices stay as low as they are or drop even further.

Big companies should 'act like grown ups'

He took a swipe at Rio Tinto and BHP for essentially ripping off taxpayers and their shareholders in a drive to wipe out the competition.

"And when you're just driving for market share at any cost and you're smashing the revenues of your host nation and you're smashing the revenues of your shareholders in the end you smash your own personal credibility.

"Why don't those companies who derive their fortunes from our nation act like grown ups and just agree to cap their production?"

The event was held by AustCham to give Mr Forrest an award for promoting China-Australia relations.

Mr Forrest also said Australia should build closer relationships with China and that this meant having a more independent regional foreign policy.

For example he said Australia should ignore the United States and sign up to China's regional infrastructure bank.