CANBERRA, Aug 24 (Reuter) - Australia's conservative government has criticised China's increasingly assertive foreign policy and territorial claims, warning Beijing could endanger much-needed foreign investment.

Australian Defence Minister Ian McLachlan, in an interview published on Saturday in the national daily The Australian, said China had become "a bit jumpy" since the end of the Cold war.

McLachlan said Beijing's strident stance over territorial claims in the South China Sea and Taiwan raised concerns about the regional strategic outlook.

"There is no doubt that China has felt much more assertive, has been much more assertive, since the end of the Cold War," The Australian quoted McLachlan as saying. "And the best example, of course, is Taiwan".

"So it is a bit disappointing that the Chinese ... are making lots of noises that they hadn't really made hitherto."

McLachlan said China's growing assertiveness risked scaring off foreign investment.

"I would have thought that ... the danger for them is that investment will start to drop off if people start to worry about it," he said.

"You know, all these little claims, the boundaries claims, the Taiwan thing, can't encourage people to invest in China."

McLachlan said China had taken a tough line with Australia over several issues.

"You know, we have had some aggression from (Canberra-based) Chinese diplomats," he said.

His comments came as Australian Foreign Minister Alexander Downer was in Beijing, trying to smoothe relations after recent disagreements.

Downer, who is on a four-day visit, on Friday announced an agreement with China to expand the two countries' security dialogue.

"What I would like to see happen is us holding, on an annual basis, senior officials talks about regional security issues," Downer said.

McLachlan told The Australian his criticisms would not sway Australia from its plan to boost defence links with China.

Asked if Canberra would continue with the plan, McLachlan said: "Yes, absolutely. I talk to (armed forces chief) John Baker about this a lot."

Relations between Canberra and Beijing have chilled recently over a range of diplomatic and security issues, including a plan to sell Australian uranium to Taiwan.

China has also protested against the axing of an Australian soft loan aid scheme, plans for an Australian minister to visit Taiwan, a new security pact between Canberra and Washington and the planned visit to Australia next month by exiled Tibetan spiritual leader the Dalai Lama.

Downer is due to meet the Nobel Peace Prize winner in Melbourne and Liberal-National Prime Minister John Howard is considering a meeting, arousing Beijing's ire.

REUTER