BEIJINGBEIJING (Reuters) - China and the United States formally agreed on Friday a long-planned hotline to improve communication between their two militaries.

Leaders of both countries agreed to establish a direct telephone link for quick communication in times of crisis during the APEC summit last September, and the issue was further discussed during a visit to China two months later by Defense Secretary Robert Gates.

"The agreement will allow us to move forward on installing the actual equipment in the next few weeks," the Department of Defense said in a statement.


"We anticipate the DTL (defense telephone link) will become operational this month," it said.

The agreement was signed in Shanghai, following talks between David Sedney, Deputy Assistant Secretary of Defense for East Asia, and Chinese defense ministry official Qian Lihua.

The two countries also agreed a second accord on sharing archives with an aim to finding the remains of U.S. military personnel missing in the 1950-53 Korean War.

Military relations between China and the United States hit a low in 2001 when they broke off contact following a collision between a Chinese fighter jet and a U.S. spy plane.

Ties have improved markedly since then and the two have hosted joint military exercises in the past year, but mistrust and miscommunications still dog relations.

In November last year, China blocked a long-planned Thanksgiving visit to Hong Kong by a U.S. aircraft carrier group, the USS Kitty Hawk. Beijing later changed its mind and said the ships could dock, but by then the group was heading back to its home port in Japan.


China has refused to be drawn on its reasons for initially barring the Kitty Hawk from Hong Kong, though there has been speculation that Beijing's move was related to its irritation over U.S. plans to help Taiwan upgrade its missile system.

At the Shanghai meeting that wrapped up on Friday, China requested the U.S. "stop selling Taiwan advanced weapons (and) stop all formal official and military exchanges with Taiwan", Xinhua news agency reported.

Washington should "adopt any necessary measures to prevent Chen Shui-bian from taking reckless risks and creating 'Taiwan independence' incidents", the report said.

China views self-governing Taiwan as part of its own territory and has been particularly incensed by moves of its leader, Chen Shui-bian, to assert the island's independence.

Washington also complains that Beijing is not sufficiently transparent about its military ambitions, particularly the reasons for double-digit growth in its military budget.

That budget was set at $45 billion for 2007, a 17.8 percent rise on the previous year.


China is expected to release its defense budget for the current year next week, ahead of the opening of its annual session of parliament on Wednesday.

(Editing by Alex Richardson)