Gillard woos China amid background of tension

Austalian Prime Minister Julia Gillard walks beside Chinese Premier Wen Jiabao. Photo / AFP

Prime Minister Julia Gillard has defined Australia's delicate strategic position in the western Pacific, maintaining its defence alliance with the United States while rejecting any move to contain China.

Gillard has also emphasised the benefits of China's ballooning economic strength as a force for good both for the region and Australia's own economic future.

Her affirmation of Beijing's emerging role as a major regional and global power came during a three-day visit during which China's leaders reciprocated with a lavish welcome, similar sentiments, and a series of new agreements.

"We have always seen Australia as an important partner in win-win co-operation," Premier Wen Jiabao said.

But Gillard's visit was also made against a background of tension between China and the US, concern within Australia's defence establishment at the expansion of Chinese military capabilities, and strong public doubts about the future of the relationship.

As Gillard and a delegation including senior mining and business executives arrived in Beijing from South Korea, a Lowy Institute poll found that Australia's enthusiasm for the economic benefits flowing from China was heavily tempered by fear.

The poll found that although three-quarters of Australians see China's growth as good for the nation, almost half believe Beijing will become a military threat within 20 years, most likely because of tensions with the US.

And if war erupted on the Korean Peninsula, most said Australia should join the US and other allies in the conflict - even if China intervened to support North Korea.

The poll also confirmed concern at investment in Australia by state-owned Chinese enterprises, and at human rights abuses.

Canberra has been boosting its relations with Beijing, with a two-way flow of senior ministers that in the past four years has included President Hu Jintao and China's most senior military officer, General Guo Boxiong, part of a move to promote bilateral defence ties.

Australia's economy has also become far more dependent on China, whose vast demand for resources buffeted the nation against the worst of the global financial crisis.

Beijing is Australia's largest trading partner, with two-way trade topping A$100 billion ($127.6 billion) last year and China now the nation's largest source of imports.

"Of course our economic relationship is a vital one for Australia's national interest and it's growing in leaps and bounds," Gillard told reporters in Beijing.

She said China now bought one-quarter of all Australian exports, Beijing had become Australia's largest services export market, energy and minerals trade continued to grow - a 20-year, A$90 billion ($114.8 million) LNG contract was signed last week - and 167,000 Chinese students were studying in Australia.

Research by the Australia-China Business Council said Australia's trade with China equated to more than A$10,000 ($12,765) for every Australian household last year.

And despite widespread concern, Gillard said Australia was open for Chinese investment.

"My argument today is that we can be positive about our relationship and that we should be ambitious for its future," she told a business dinner.

Gillard also addressed China's growing military power, earlier identified as a potential threat to Australia, and the balance Canberra is seeking between its economic ties with Beijing and its close alliance with Washington.

"Our policy is not to contain, our policy is to engage," she said after meeting Wen.

"To positively engage with China, and a prosperous China that's fully engaged in our region, ... is good for the region. It is good for Australia, it is good for China."

She said this would not affect Australia's long-term friendship and alliance with the US.

"The engagement of the US in the Asia Pacific is a good thing too. That has been a long-term policy of successive Australian Governments and it is certainly is my policy.

"This is not an either-or choice, we have our long-standing friendship and alliance with the US ... and we can continue to build our constructive, co-operative arrangements with China."

Gillard, who had earlier been pictured dramatically standing face-to-face with a North Korean border behind a glass partition in the demilitarised zone, also urged Beijing to bring its influence to bear on the North.

"North Korea's strengthening nuclear programme and developing long-range missile systems are a threat to regional stability and security." she said.

"So are the unprovoked recent attacks on the Republic of Korea.

"As the host of the six-party talks to address the problems of North Korea's nuclear programme, China is an essential part of the solution we need."