Australia tries to placate China over navy expansion

CANBERRA (Reuters) - Australia sought to reassure China on Friday that plans to double its attack submarine fleet and buy warships capable of carrying ballistic missile shields in a $72 billion (48.7 billion pound) military upgrade were not aimed at Beijing.

The close U.S. ally will release a blueprint on Saturday covering military strategy for the next 20 years, including the purchase of 12 advanced new submarines that experts say could alarm China and accelerate an arms race in the Western Pacific.

"It follows very plainly that here in the Asia-Pacific region, there are in certain parts of the region the build up of armed forces," Prime Minister Kevin Rudd said on Friday.

"We simply need to take a calm, measured, responsible approach for the future to make sure that our army, navy and air force have the resources they need for the future."

Australia has already begun a $44 billion upgrade of the military, including new air warfare destroyers, cruise missiles, stealth fighters, aircraft carriers, tanks and helicopters.

But with the country teetering on the brink of recession, the centre-left government has been under pressure to rein-in spending amid market expectations that cumulative borrowings could top A$200 billion (98.4 billion pounds) in the May 12 budget.

At the same time, Southeast Asian powers are increasing the number of modern submarines in the region, with Indonesia planning to build 12 submarines by 2024 to patrol the far-flung archipelago.

Singapore, Thailand, Malaysia, Vietnam, South Korea, Bangladesh and Pakistan are also purchasing submarines, with Singapore to have six by 2016.

China and India are building new nuclear-powered boats, with Beijing planning to buy five equipped with JL-2 strategic nuclear missiles with a range of 8,000 km (5,000 miles).

Rudd, a Mandarin-speaking China expert, has been at pains to deny that Australia's strategy paper is aimed at countering a build-up in China's navy and wider military that will allow Beijing to flex its muscles much further from home.

CONCERN IN BEIJING

But Rory Medcalf, who heads the international security programme at the Lowy Institute think-tank, said that in foreseeing a major war-fighting capability, there was no doubt Beijing would be concerned about the new paper.

"Australia's ill-synchronised defence announcement will prolong a drumbeat of publicly-aired Australian worries about China. These noises, about sovereign wealth funds, resource investments, cyber-snooping and the defence minister's personal connections, are reverberating in Beijing," Medcalf wrote.

Australia has also signed a security pact with China-rival Japan, linking both countries into annual defence talks with the United States and which China has previously criticised as an attempt at strategic confinement.

Senior Chinese diplomats and scholars told The Age newspaper on Friday that they were confused at Rudd's apparent hawkish stance, given his aim to improve ties and trade with Beijing.

"China definitely will not accept Australia adopting the so-called China threat thesis," said Shi Yinhong, professor of international relations at Renmin University in Beijing.

The defence white paper was expected to see at least seven hunter-killer submarines on station at any time in Australia's north, close to key maritime straits running through the Indonesian archipelago.

It will also allow for construction of eight 7,000-tonne warships equipped with ballistic missile defence systems, as well as a new fleet of long-range maritime surveillance aircraft.

The purchase, already underway, of 100 F-35 stealth fighter aircraft from Lockheed Martin will be delayed by a year to 2014-15 because of financial turmoil, Australian media reports have said.

The country's small but capable military should be equipped to take the lead security role in Australia's neighbourhood, particularly the South Pacific, as well as having the ability to deploy military forces further afield, the report will say.

(Editing by Dean Yates)