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Reporter: Can I ask you a quick one about your brief stop in Thailand last night, and your chat to the Ambassador, and what your views are on the situation there?

Mr Smith: I have been speaking to the Ambassador regularly by telephone since the recent difficulties started back in April. I transited through Bangkok airport last night. I didn't leave the airport, but had a good conversation with him.

We have become increasingly concerned about the circumstances in Thailand. As you would be aware, we increased our travel advisory on the 23rd of April to “reconsider your need to travel”. For those Australians who are in Thailand — we urge them to avoid the site of demonstrations and the site of military cordons, and that particularly applies to Bangkok. And if they do get caught up in such matters, they should follow the advice of the security authorities.

We continue to urge all of the parties to resume negotiations and to resolve these matters peacefully and peaceably, in accordance with Thailand's parliamentary and democratic processes. But on the basis of the lengthy conversation I had with our Ambassador last night, we have an increasingly concerned view about what we worry may be a deterioration of circumstances in Thailand.

Reporter: Sir, you personally met with General Guo Boxiong last week during his official visit to Australia. So the two sides discussed cooperation between the two militaries. So I was wondering if Australia will regard China's safe power development as a threat to Australia's security? Is there any intention from Australia to seek cooperation with the United States and its allies to contain China?

Mr Smith: Well, there are a number of things in that. Firstly, we published a White Paper, a Defence White Paper, not last year but the year before, that does not refer to China as a threat to Australia. That's the first point.

Secondly, one of the aspects of the relationship which is underappreciated is we do engage in defence cooperation. The visit by the General for official bilateral Ministerial-level defence talks was very important, and we hope to see this continue.

Australia has an alliance relationship with the United States. We've had that alliance relationship for over 60 years, and we regard that relationship as part of the substantial bedrock of our security, strategic and defence arrangements. But our relationship with the United States is not about the containment of China.

Australia wants China to emerge into the world, both economically and as a nation generally.

And so we don't regard our relationship with the United States as impacting upon our relationship with China. We regard both relationships as win-win.

One is not at the cost of the other. Which is why, as I said in my remarks to the students, we very much encourage a productive bilateral relationship between the United States and China.

You can make the analysis that the most important bilateral relationship in the future will be the bilateral relationship between the United States and China, and we want that to be positive and constructive.

Reporter: I have one question [arising] from Prime Minister Rudd's speech I would like to bring up. In the Australian part of the speech Mr Rudd said we are constrained by our reality.

So as a democratic country, we will see the change of political power, or the government in power and the expectable public view as the uncertainty on the Australian part. But in the China part, as Prime Minister Rudd also mentioned, there is ongoing debate within China itself about its reform, and he used economic interaction as an example and there are more.

Like we have question marks on China, what China will do in politics, in international relationships. So the uncertainty in the both two sides, how will it impact on the China- Australia relationship and how can a longer-term mutual respect, mutual understanding be reached in the background of these uncertainties?

Mr Smith: Well, there are always uncertainties in the world, and that is why nations, and regional groupings and international institutions need to constantly adapt to changing circumstances. So there are always uncertainties, firstly.

Secondly, you've made a very good analysis there. I think one of the strengths of the Prime Minister's speech was the point that, as we get closer to each other, the more we know each other. And often the more you know each other, the more issues you come to appreciate you might have a different view about, and you need to manage that.

I was once at a meeting where the President of Indonesia, when Prime Minister Rudd and I were meeting with him and the Indonesian Foreign Minister and we were going through some potentially difficult issues in the relationship, the President of Indonesia said that Australia needed to understand that Indonesia had a perfect relationship with Iceland. They were so far away they never came into contact with each other. Because Australia and Indonesia are neighbours, often things will arise that you need to manage.

The same is true of Australia and China. Now how China develops or how China emerges in terms of social matters, in terms of political matters, is something that the world will watch, but in the end that is a matter for China. But whether China remains static in terms of its political circumstances, or whether it changes, the Australian analysis is that the strength of the relationship between Australia and China is such that both countries, if there is a will, can manage these changes, these developments. Presently, we have gone through, as I indicated, a difficult period. But that difficult period has, in very many respects, made us understand how to better manage these issues.

Reporter: You mentioned earlier that China has a greater role to play in the issue of North Korea. What steps do you think China can take?

Mr Smith: China is an important and key member of the six party talks. China can be an important influence on the DPRK, as reflected by President Kim's recent visit to China.

We continue to urge the DPRK to return to a conversation with its neighbours about its nuclear program. It is, in our view, effectively in breach of a number of security council resolutions and its ongoing conduct is a threat, in our view, to peace and security on the Korean Peninsula, but also in North Asia and, as a consequence, our region.

The attitude and conduct of the DPRK has been, in our view, a most unhelpful contribution to confidence building in our region for a considerable period of time. China is a key member of the six party talks, but the starting point is, historically or in the recent period — the starting point has to be the DPRK returning to those talks.

Reporter: To what extent do you think that joint military exercises between Australia and China in the future will increase mutual trust?

Mr Smith: I think it is an important aspect of the relationship. As you know, because of China's economic growth, we also see military growth, or military modernisation as it is termed.

Australia believes that military modernisation should be transparent, and the strategy behind it should be transparent. And so the conversations that one has at that Defence Ministerial level can only build confidence, can only add to the understanding of the strategic motivation or intent or design behind that military modernisation.

Reporter: In your speech you mentioned that the two countries have different views on some important issues. Do you think such differences will affect the relationship between the two countries? And what do you think about the direction of the two countries' relations?

Mr Smith: We have a very strong economic relationship, firstly. Secondly, we are working very closely in regional and international institutions. Regionally in APEC and the ASEANrelated institutions, the East Asia Summit and the ASEAN Regional Forum. And internationally, the WTO — the World Trade Organisation — and the United Nations itself. But most importantly in recent times — of course not to detract from the premier international institution, the United Nations — but in the face of the global financial crisis, working very closely on international financial regulatory matters in the G20. And also in the context of climate change, working closely in the lead up to Copenhagen and beyond. In our view, despite some recent difficulties, the relationship has never been better, and the prospects for the future, not just bilaterally, but engaging regionally and internationally, have also never been better.

Thank you.

[ENDS]

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