BEIJING - CHINA made a rare appeal for cooperation between its normally secretive military and Washington on Tuesday but said US arms sales to Taiwan remain a 'serious harm to Sino-US relations.'

The statements came as China issued a major policy paper on national defense that said blocking formal Taiwanese independence remains the chief concern for one of the world's fastest-growing armed forces.

A Chinese military spokesman presenting the paper made an apparent reference to Taiwan as one of the 'obstacles' the Pentagon should remove for better relations with China.

'At present, when China-U.S. military-to-military relations are faced with difficulties, we call on the US Department of Defence to remove obstacles ... and create favourable conditions for the healthy growth of military relations,' said Senior Colonel Hu Changming, chief spokesman for the Ministry of National Defence.

The policy paper itself said US arms sales to Taiwan caused 'serious harm to Sino-US relations.' Though Col Hu did not specify those difficulties, China suspended some senior-level visits and other exchanges last fall in retaliation for the US's US$6.5 billion (S$9.8 billion) arms sale to Taiwan that included Patriot III missiles and Apache helicopters.

Defence sales to and relations with Taiwan have been an issue for every US president since Beijing and Washington established diplomatic ties 30 years ago. China considers the self-ruled island a part of its territory and threatens to attack it to prevent it gaining formal independence.

While arms sales remain an irritant, Taiwan should be less of a headache for President Barack Obama than it was for the Bush administration.

Prolonged tensions between Taiwan and China have given way to rapprochement in recent months following last year's election of Taiwanese President Ma Ying-jeou, who favours a less confrontational approach to China.

Col Hu noted there had been major improvements in cross-strait relations, saying 'the situation across the Taiwan Strait has taken a significant and positive turn.'

But later on Tuesday, Foreign Ministry spokesman Jiang Yu reiterated China's opposition to Taiwan arms sales, warning that Washington should 'cautiously and properly handle the Taiwan issue, (and) support the peaceful development of cross-strait relations with concrete actions.'

The new paper on national defence also focused on long-running separatist movements in Tibet and the far western, largely Muslim region of Xinjiang as threats to China's national security.

'On these matters, we will not compromise,' Col Hu said.

China faced violent incidents in both regions last year, with an uprising in Tibetan areas last March and a string of attacks in Xinjiang around the time of the Beijing Olympics last August.

The military policy paper did not give new spending figures for China's 2.3 million-strong armed forces for 2009. Last year, China announced a military budget of US$59 billion, up nearly 18 per cent over the previous year. It was the 18th year of double digit growth of military spending in the past 19 years.

China's spending, which puts it on par with Japan, Russia and Britain, is still dwarfed by US military expenditures, which are nearly 10 times as large.

The traditional security concerns that once dominated the US-China agenda - including Taiwan and human rights issues - are not the only challenges that Obama must contend with. The bilateral relationship has become a far more expansive one focused much more heavily on financial interdependence.

Bilateral trade has soared to US$400 billion, and China's US$1.9 trillion in foreign reserves makes it a potential lifeline in the midst of the global financial crisis.

The power balance between the two countries has also shifted with China now owning more than a half trillion dollars in US government bonds. -- AP