FRANK GAFFNEY, PRESIDENT, CENTRE FOR SECURITY POLICY: Well, I think there are a number of concerns. One of them is, I believe, we are not entirely on the same page in what we call the "war on terror". I believe that China has, for many years, been involved with both groups and states that have sponsored terrorism. While the administration here, I think, would like to put the best face on this, that there's greater cooperation today than in the past. I think that remains a concern. China is, of course, also in its own right, pursuing programs, nuclear programs, missile programs, even most recently a space program, that combined with rather predatory trade practices and a growing appetite for the world's limited supply of energy, that I think almost certainly will give rise to greater tensions between the two countries in the future. And then finally there's the problem of North Korea. There wouldn't be a problem in North Korea, I believe, but for the Chinese Government propping up the odious regime of Kim Jong-Il and enabling, through Pakistan, as well as in its own right, North Korea's nuclear weapons programs. All of these are sources of not just irritation between the two countries, but I think possibly of future conflict between us if they can't be managed in a more satisfactory way than we've seen to date.

MARK DAVIS: Dr Yan that was a fairly blunt assessment. Was it a fair assessment of China's role, particularly in the Asia Pacific region?

DR.YAN XUETONG, INSTITUTE OF INTERNATIONAL AFFAIRS,TSINGHAU UNI:I think actually I agree with Mr Gaffney that there's a lot of problems between China and especially in the future of the security issues that we are not agree with each other and especially when US have not make decision why they can live along with non-nuclear North Korea so that countries in this region and South Korea, Japan, Russia and all eastern countries, you worry about US and North Korea war against Australia in this region and especially after US withdraw from the ABM Treaty and try to deploy the missile defences, possibly neutralise other nuclear deterrents and make the balance in this region unbalanced. So I think the China and the US really need to work together and looking for our common ground and common interests to cooperate with each other.

MARK DAVIS: Frank Gaffney, is there ground for mutual cooperation between China and the US at the moment, or you don't see it in such rosy terms?

FRANK GAFFNEY: Well, my concern is that I'm afraid the problem is less the near term than it is the medium to longer term. I think as long as communist China remains on a trajectory that I believe it is on, of increasing its influence in East Asia and projecting it more broadly in the Pacific, I think the reality is the current direction of the Chinese Government is problematic and will become more so in the future and our hope is, of course, that we'll see changes taking place in China that provide greater freedom for its people and less of a potential menace to the rest of us in the future.

MARK DAVIS: But is this issue really a military concern for America, or is it an economic resentment at the great success that China's been having in recent years, and why shouldn't China pursue political influence on the back of that economic success?

FRANK GAFFNEY: Well, I don't think it's resentment. I think there are, of course, economic considerations. Where possible you like to see the pie expanded rather than having the pie simply divided to your detriment. But let me just give you as an example of an area of concern. China has made much, of course, in the past few days about its space program. Congratulations to the Chinese on joining the small number of countries that have put a man into space. My concern is this is only part of a larger program that clearly has military implications, including anti-satellite activities that the Chinese have been pursuing for some time in unmanned space programs, as well as, of course, improving ballistic missile technologies that are manifestly offensive in nature and threatening. So these are things that quite apart from the economic realm, give rise to concerns about China's future course and I think we have to be clear about them if we're to have a relationship that is rooted in the truth rather than in wishful thinking or worse, popular misconception.

MARK DAVIS: Dr Yan, you've written that the US is attempting to prevent China from growing strong so the US can continue to dominate the world. Are we witnessing that today as America seeks to bolster its security relationships in this region, in Asia Pacific?

DR.YAN XUETONG: Well, I think what I heard is representative of some people in Washington and they really fear about China growing stronger. But from my understanding and if China and the US work together and they're looking for the common ground with their common interests and then we can maintain the peace of this region and then we can contribute a lot for the peace of the world. But if these two countries work on the containment policy, trying to contain others, try to maintain their dominance and then I think there will be make this situation in this region very difficult.

MARK DAVIS: Let's look at the most, in our final minutes, let's look at the most likely flashpoint which is Taiwan. Dr Yan, last year Richard Armitage, the Deputy Secretary of State said that if there was a conflict over Taiwan, Australia would be expected to do its part. What would China's response be to Australia if it followed its main security partner into such a conflict?

DR.YAN XUETONG: Well, I think I should say for China, the most serious security issue or the threat coming from the succession movement in Taiwan which backed by Americans and military support and this is really dangerous and if they go to the form independence or the independence and possibly drag China and the US into major clashes. That's why I strongly argue that China and US need cooperation. I don't mean that we need cooperation to work together against a given party. I mean that we need to cooperate with each other to try to prevent the metro clashes of war between China and the US rather than to fight a war against the other country.

MARK DAVIS: I'll try and keep away from arguing the entire Taiwan issue, but it does have great implications for Australia. Frank Gaffney, if there is a conflict between the US and China over Taiwan, should Australia be drawn into it? What's in it for Australia? In fact there's - we have quite good relations, economically, with China. Should we follow you into that conflict if it occurs?

FRANK GAFFNEY: Well, obviously none of us want a conflict to occur and it's instructive, just as I was saying a moment ago, that China regards as a terrible threat to its security, free people living in Taiwan. Our view is that nothing is more likely to prevent conflict than for the United States to be very clear that we will defend and support the people of Taiwan in their own defence and I think that will avoid a conflict. It will avoid Australia being drawn into it, it will avoid us being drawn into a conflict because it makes clear to the Chinese that the costs of exercising hegemony and suppressing the very extraordinary experiment in freedom for the Chinese people taking place on Taiwan, in the first place, and that of course is much to be preferred than any conflict that would be highly devastating to all parties.

MARK DAVIS: Alright gentlemen, thanks very much to both of you for joining us.