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Rice puts China on regional security agenda -

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(generated from captions) to Australia, On the first day of her 3-day visit heckled by protestors the US Secretary of State has been angry over the Iraq war. Condoleezza Rice is here to discuss regional and global security and spent the day in Sydney where she held bilateral talks with the Foreign Affairs Minister Alexander Downer. The rise of China as a global power was high on the agenda - Dr Rice criticising the country's military build-up saying it's time for Beijing to be more transparent. Narda Gilmore reports. This evening, Condoleeza Rice took in the view from Kirribilli House before dinner with the Prime Minister. This is an almost perfect Kirribilli night. A far cry from the violent protests that greeted the US Secretary of State at one of her functions in Sydney today. Anti-war protestors clashed with police - five were arrested. Inside, as she spoke of progress in Iraq, Dr Rice was heckled by students. Iraqi blood is on your hands and you cannot wash that blood away! I'm very glad to see that democracy is well and alive here at the university. Earlier on Sydney Harbour,

it was a much warmer welcome

from American sailors on board the USS 'Port Royal'. Dr Rice, I cannot express how excited my crew is to have you on board today. CHEERING

The world's most powerful woman joined the crew for lunch. Steamed cabbage sounds great.

Along with Australia's Foreign Minister Alexander Downer, the US warship is bound for the Middle East, where it'll support operations in Iraq. I just want you to know, I don't care what people think politically, everybody is really proud of what you're doing. Despite ongoing violence in Iraq, Condoleezza Rice is predicting the country will transform into a more stable and secure nation over the next couple of years. I believe that they've been remarkable in what they've achieved, thus far, and I really do believe that we're going to look one day at a stable and secure Iraq. The ongoing war was just one of the issues on the agenda during an hour of bilateral talks with Alexander Downer. Another was China and Washington's ongoing concern over the rising power's military build-up. I heard there is going to, that there is going to be a 14% increase in the Chinese defence budget -

that's a lot and China should undertake to be transparent about what that means. She's also questioned Beijing's commitment to open trade -

but says Washington's policy hasn't changed. To the degree that we have concerns, we're going to raise them. It's a sensitive issue - Alexander Downer describing Australia's relationship with China as "good" and "constructive". I think we feel comfortable with where the United States is at, in terms of its relationship with China. Our relationship has its own dynamics. America's nuclear pact with India is another potentially sensitive issue, but according to Dr Rice, Washington will not be putting any pressure on the Australian Government to supply uranium to India. I think the issue of whether on not one decides to participate in fuel supply is a quite seperable issue and it's one for the Australians to determine, but not one that is at issue with the United States by any means. Tomorrow, the Secretary of State will hold talks with the Prime Minister before heading to Melbourne to watch some Commonwealth Games events. It'll be back to foreign policy matters on Saturday, when she attends security talks with the Australian and Japanese foreign ministers. Narda Gilmore, Lateline.