"The challenge for US and China is complex, but I am optimistic about the future," he said at a press briefing in the Northeast city of Shenyang.

Fallon arrived in China last Tuesday for talks with senior Chinese military officials. During the visit, he also visited military academies and facilities in Xi'an, Hangzhou and Shenyang.

This is Fallon's second visit to China since he assumed his post in February 2005. He paid his first visit to China in September that year.

"I can think of no other issue that looks as big as the relationship between US and China. China's large population, culture and economy make it a top priority. This is why I took the opportunity to come back again," said Fallon.

During the past week, Fallon has had full contact with persons from military, academic and diplomatic backgrounds.

"I come to China again to continue the work we began last year," said Fallon.

Fallon met Chinese Defence Minister Cao Gangchuan last Wednesday in Beijing and both agreed to step up military exchanges at all levels, Xinhua News Agency reported.

Since taking his position last year, Fallon has repeatedly called for a full restoration of contacts between the US and Chinese militaries.

"I have pushed for renewed military contacts because I think it is important to understand one another better," Fallon said.

Sino-US military ties were broken off in 2001 when a Chinese fighter aircraft was rammed by a US reconnaissance plane over the South China Sea.

Fallon said he hoped for more exchange of mid-level officers as well as high-level discussions.

But he rejected the idea of a hotline between Chinese and US defence ministries.

"I would prefer to use a traditional telephone," he said jokingly.

(Source: China Daily)