SYDNEY - AUSTRALIA needs deeper links with Asia to take advantage of the growth of the region into 'the global powerhouse' this century, Prime Minister Kevin Rudd said on Saturday.

'The 21st century will be the Asia-Pacific century, so we need to make sure that in decades ahead we are fully engaged with the region,' said Mr Rudd.

'It will be the global powerhouse and there are great opportunities if we engage properly and engage now,' he told an OzAsia symposium in the southern city of Adelaide.

'Engaging with, cooperating with, active collaboration with the rich economies and societies of greater Asia is critical to Australia's economic future.'

Mr Rudd, a Chinese-speaking former diplomat who has made increased links with Asia a centrepiece of his foreign policy since taking office last year, said he wanted Australia to be 'the most Asian literate nation in the western world'.

International student exchanges and learning foreign languages were a key part of this drive, he said.

'I would argue if you speak the language, you understand the culture. It's about having the door open to begin with.'

Mr Rudd said the financial turbulence on world markets illustrated the need for concerted international action by economic regulators to deal with the global crisis for the long term.

'Make sure that this Asia-Pacific century is truly a Pacific century, a peaceful century. The habits of cooperation are so much easier if the region speaks to one another,' he said.

The speech came just 10 days after Mr Rudd flagged an increase in defence spending as he warned the country's military must start preparing for an arms build-up in Asia and the Pacific.

Australia was 'in a region where there is an explosion in defence expenditure', he warned then.

'There has been an arms race under way - well, an arms build-up, let me put it in those terms - in the Asia-Pacific region for the better part of the last decade,' he told reporters in the northern city of Townsville.

'Therefore Australia must be prepared through its diplomacy, its foreign policy and its defence policy.'

'We are looking at a time in the Asia-Pacific region and world history where, for the first time in several hundred years, we are going to have powers other than Anglo-Saxon powers who will be the dominant players in the world,' he said. -- AFP