Gates met with Hu in Beijing's Great Hall of the People after two days of talks -- characterised by both parties as "candid but friendly" -- that raised US concerns about China's rapid military build-up and Iran's nuclear programme.

"I restated our position that we're categorically opposed to any efforts by anyone to unilaterally change the status quo," Gates told reporters after his talks with Hu.

"I basically reiterated that the US government has been quite clear in its messages to Taiwan not to change the status quo," he said, citing Chinese fears of "de jure independence" for Taiwan.

Taiwan and China split in 1949 after a civil war, and while the island has since governed itself, Beijing considers it part of its own territory awaiting reunification.

Taiwan President Chen Shui-bian is pushing for a referendum next year on launching a fresh bid for United Nations membership using the name Taiwan, rather than the official "Republic of China".

This has touched a raw nerve with China, which considers the move a provocative step towards independence.

The US defence secretary made no apparent headway Monday on an appeal for Chinese support for sanctions against Iran over its nuclear programme, and in the meeting with Hu Tuesday, the issue did not even come up.

"There are clearly areas of agreement and disagreement," Gates said in introductory remarks as he sat down with Hu.

"Talking about both is good for the relationship, and I think as a result of our conversation we have opportunities to expand the military-to-military relationship."

Hu said, via an interpreter, that the talks in Beijing would "be conducive to deepening trust between us and further development of state-to-state relations."

China has joined Russia, also a veto-wielding permanent member of the UN Security Council, in opposing a further round of UN economic sanctions to step up the pressure against Tehran, which has defied international demands that it halt its uranium enrichment programme.

Washington charges that Iran is seeking to develop atomic weapons, but Tehran insists its nuclear programme is for peaceful purposes only.

Gates said he had argued earlier in the visit that "an Iran that is a destabilising force in the region is not in anyone's interest, including in China's."

"If one is interested in long-term energy security then a stable Persian Gulf-Middle East area is a very high priority," he said.

China continues to back dialogue over sanctions, Foreign Ministry spokesman Liu Jianchao told a press briefing after the meeting.

"China believes that what we should emphasise and pay attention to is promoting dialogue and cooperation between relevant parties... and hope that positive results can be generated," he said.

After his talks Monday with Chinese Defence Minister Cao Gangchuan, Gates emphasised the need for greater clarity from Beijing about a rapid military build-up that US officials believe is altering the region's balance of power.

"I hope what will come out of it is an ongoing dialogue," Gates told reporters Tuesday.

He added it was important the two nations "enter into a longer-term dialogue about perceptions of threats, about a world that faces the threat of nuclear proliferation and perhaps finding some confidence-building measures along the way."

The underlying US aim in seeking such a dialogue is to avoid a misunderstanding between the two nuclear powers, a senior US defence official said.

Liu, the foreign ministry spokesman, said China was willing to work with the US to "strengthen dialogue, expand consensus, and properly handle sensitive issues in the bilateral relationship."

China has said its annual military budget rose 17.8 percent this year to 45 billion dollars. But the Pentagon believes China's military spending is as high as 125 billion dollars a year.

Gates was to leave China on Tuesday for South Korea and then stop in Japan later in the week.

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