OTTAWA Canada and Australia, expressing alarm at China's claims over the disputed waters of the South China Sea, on Thursday said they would increase their military and defence industry cooperation.

Canadian Defence Minister Bill Blair said security in the Indo-Pacific region was being challenged "in a number of significant and difficult ways" and accused Beijing of trying to reshape the international system to advance its own interests.

Blair, speaking after Vancouver talks with Australian counterpart Richard Marles, said the two nations needed to work more closely together to maintain order in the Indo-Pacific.

"We have agreed to pursue closer collaboration by enhancing the interoperability of our armed forces and by deepening our operational cooperation," he told reporters.

The two said they were concerned about what they called Beijing's excessive maritime claims in the South China Sea, as well as Chinese military activity around Taiwan.

The Philippines' armed forces and their counterparts from Canada, United States, and Australia held joint maritime exercises in the South China Sea this week.

"Our cooperation is based on seeking to deter. We are absolutely about working with each other, so that we can avoid conflict," said Marles, referring to his talks with Blair.

Marles flew to Vancouver from Washington after Wednesday talks in which Australia agreed to begin co-manufacturing guided weapons with the United States next year.

  - Reuters