East Timor has not discussed military cooperation with China in its upgrade of diplomatic ties, President Jose Ramos-Horta said, adding Australia and Indonesia can "sleep at peace" because the island nation won't be a security concern to its neighbours.

China's increasing assertiveness in efforts to form security ties with developing countries in close proximity to Australia have raised alarm bells in Canberra, and a recent shakeup of Australia's defense has refocused on protecting its northern approaches.

A Comprehensive Strategic Framework signed by East Timor during a meeting between Prime Minister Xanana Gusmao and Chinese President Xi Jinping in China last week covered development cooperation in agriculture and infrastructure, the Nobel laureate said in a telephone interview.