AN internal army report has given a more threatening assessment of China's military expansion than was publicly stated in the defence white paper, warning bluntly that it could "destabilise" the region.
The report, obtained by The Weekend Australian, also makes more hawkish comments about India's military ambitions than Defence has admitted.
A draft copy of an army report, Army's Future Land Operating Concept, due to be finalised in September, warns about China and India's military ambitions.
"China and India's growing military ambitions, matched by growing military spending, have the potential to destabilise the region with their military expansion," the report states.
The defence white paper released last Saturday warned only that China's military modernisation might "give its neighbours cause for concern if not carefully explained".
The different wording in the documents suggests the white paper was toned down for public release to avoid causing offence in Beijing and New Delhi.
The army document is more pessimistic than the white paper about future regional stability, warning of a "real potential" for war between major powers.
"China, and potentially India ... have the potential to challenge US (strategic) dominance within their regions," the report states. "Of particular concern is an increased likelihood for dispute escalation as a result of changes to the perceived balance of power with the real potential for a return to major combat operations involving states."