UPDATE 3-Australian military to boost air power to focus on Indo-Pacific
* Australia commits to F-35 purchases, to buy Boeing Growlers
* New defence strategy accepts rise of China's military
* Australia says China-US need to build strategic relationship
By James Grubel
CANBERRA, May 3 (Reuters) - Australia announced a significant boost to its military air power on Friday, committing to buy up to new 100 Lockheed Martin Corp F-35 Joint Strike Fighters, as it shifts its focus back to the Indo-Pacific as China and India beef up forces.
After more than a decade of having forces first in Iraq, and then Afghanistan, Australia wants to focus on the military challenges closer to home, in line with U.S. President Barack Obama's 2011 "pivot" towards the Asia-Pacific.
In a new defence strategy, Australia reinforces that the United States remains its closest ally, but also struck a conciliatory tone towards top trading partner China, noting its rising defence capabilities are a natural outcome from its growing economy.
"The government does not approach China as an adversary. Rather, its policy is aimed at encouraging China's peaceful rise and ensuring that strategic competition in the region does not lead to conflict," the defence strategy said.
In Beijing, Chinese foreign ministry spokeswoman Hua Chunying noted Australia's assessment of China in the document "as a partner and not an opponent" and its view that the country's development was "beneficial to the region and world".
"We believe this embodies Australia's emphasis on developing China-Australia relations," she told a news briefing.
As part of Australia's military buildup, Defence Minister Stephen Smith said Canberra was committed to purchasing several squadrons of F-35s and would also buy 12 Boeing Co EA-18G electronic attack planes, modified versions of the 24 Super Hornets already equipping Australia's air force.
"This important decision will assure a first-class air combat capability for Australia through the transition period to the Joint Strike Fighter, which will proceed on its current schedule," Defence Minister Stephen Smith said.
Canberra's decision reinforces positive steps for the F-35, coming on the heels of a decision by Norway to buy six F-35s a year earlier than planned, and the Dutch parliament's decision not to reassess F-35 rivals to replace aging F-16s, despite cost overruns and development delays.
Australia's first two F-35s are due to be delivered in the United States in 2014-15. Australia will initially buy 14 F-35s, building up to three operational squadrons, of around 75 planes. The first squadron is due in service from around 2020.
The decision to stick with the F-35 will give Australia a mixed fleet of Super Hornets, Growlers and the new stealth fighters, matching the U.S. navy capability until at least 2030, Smith said.
The government also holds the option of buying a further 25 F-35s after 2030, to replace the Super Hornets when they are withdrawn from service, bringing the total of F-35s to 100.
The new defence strategy is the first reassessment of Australia's military priorities since 2009, and comes after the 2011 U.S. pivot to the Asia-Pacific. Part of that pivot included U.S. marine rotations through a de-facto U.S. base in northern Australia.
The U.S. troop deployments and Australia's 2009 military strategy both upset China, particularly when Australia bluntly told China it needed to do more to explain its military plans which it said had the potential to concern its neighbours.
China has sharply increased military spending over the past three decades and its navy is now second in size only to the U.S. fleet in terms of numbers, increasing concerns from neighbours, like Japan and South Korea, involved in a series of long-running territorial disputes.
Australia's new strategy stresses the need for both China and the U.S. to build their strategic relationship, and says Australia does not believe it will have to choose between its alliance with the U.S. and its strengthening ties with China.
"Certainly there has been a lot of diplomatic varnish put on the text of this white paper, and there is nothing in there that should offend China outright," said Rory Medcalf, an analyst from the strategic policy think tank the Lowy Institute. "This white paper will certainly be one of the last steps in rebuilding Australia-China relations."
The document also stresses the growing importance of the Indian Ocean region, with India's military growth and with two thirds of global oil shipments passing through the Indian Ocean.
The strategy said the United States was likely to remain the strongest maritime power in the Indian Ocean, although China was likely to increase its presence there in the coming decades, as 80 percent of China's oil imports go through the region.
With Prime Minister Julia Gillard's minority Labor government under pressure to find budget savings to respond to collapsing revenues, Australia's net defence budget has contracted to around 1.56 percent of GDP, or A$24.2 billion. As a percentage, spending is at the lowest level since 1938.
The new white paper makes no commitments on defence spending, but says the government remains committed to a target to increase defence funding to 2.0 percent of GDP when the economic circumstances allow.