The pace and scope of China’s military modernisation could create “misunderstanding and instability” in the Asia-Pacific region, Australia has warned in one of Canberra’s toughest public statements yet on Beijing’s growing strategic ambitions.

In a defence policy blueprint released Thursday by John Howard, prime minister, Canberra also highlights Australia’s strengthening military ties with Japan and warns that the strategic competition between the US and China needs to be carefully managed for the good of the Asia-Pacific region.