Australia says China military rise risks instability

CANBERRA (Reuters) - China's rapid military expansion risked causing greater instability in the region, Australia said in a new defense strategy paper launched by Prime Minister John Howard on Thursday.

"The pace and scope of its military modernization, particularly the development of new and disruptive capabilities such as the anti-satellite missile, could create misunderstandings and instability in the region," the defense department paper said of China's rapid military expansion.

Australia, a close U.S. ally, has been dovish so far about China's military and economic development, with Beijing having this year overtaken Japan as the country's top trade partner.

But with Washington eyeing Canberra's warming relationship with Beijing with some concern, the new doctrine brought Howard's government into closer step with Japan and the United States -- both partners with Australia in security pacts.

"Australia has no closer nor more valuable partner in the region than Japan," said the paper. Its release coincided with the arrival in Sydney of a U.S. naval battle group spearheaded by the aircraft carrier Kitty Hawk.

"Japan's more active security posture within the U.S. alliance and multinational coalitions is in keeping with its economic and diplomatic weight," it said.

Chinese Foreign Ministry spokesman Qin Gang reacted quickly to the Australian statements. He told a regular news briefing in Beijing: "The Chinese government has repeatedly stated that China will be unwavering in taking the peaceful course of development."

POLICY SHIFT

Asked about Canberra's apparent policy shift, Qin quoted from earlier comments made by Howard and Australian Foreign Minister Alexander Downer which welcomed China's development and saw no need to be overly worried about its defense spending.

"Whether it's Prime Minister Howard's or Minister Downer's comments, they are the most fitting response to your question."

Qin said relations with Canberra were developing well and Beijing was willing to seek a further improvement in ties.

Howard, who once caused a diplomatic furor with threats to carry out pre-emptive strikes against militant bases in Asia, said Australia's military must rebuild for operations far from home, including anti-terrorism and humanitarian missions.

The government has committed to a A$51 billion ($43 billion) military modernization including two new amphibious assault carriers, missile destroyers, tanks and advanced strike aircraft.

"It must also be capable of conducting substantial operations in our immediate region, whether alone or as the leader of a coalition, and of making meaningful military contributions as a member of coalitions further abroad," Howard told a security conference in Canberra, where he launched the report.

Howard signed a new security pact with Japanese Prime Minister Shinzo Abe in March, and this paper elevates both Japan and India in importance as Australian strategic partners.

Howard, who has embarked on a series of pre-election policy speeches dubbed "Australia Rising", also committed to keep Australian soldiers in Iraq as part of the U.S.-led coalition.

OIL WORRIES

The paper for the first time cited security of the world's oil supply as one of the major reasons to stay on in Iraq.

"Obviously the Middle East itself, not only Iraq, but the entire region is an important supplier of energy, oil in particular, to the rest of the world," Defense Minister Brendan Nelson said in comments backed by Howard.

China has lodged diplomatic protests with Australia, the United States, Japan and India over new security talks between the four which Beijing sees as de facto encirclement.

Nelson said Australia very much supported China's emergence and he would travel to China soon to explain the new document.

"I don't think anything should be read into the defense update as far as China is concerned," he told reporters.

But Hugh White, a leading defense expert at the Australian National University, said the emphasis on so-called trilateral defense ties with Washington and Tokyo was the biggest shift.

"It now appears that he's moving to a policy under pressure from Washington and Tokyo to be less welcoming of China's growing power. I think that China will be very uncomfortable with it," White told Australian radio.

($1 = A$1.17)