Smith will hold an inaugural defense ministers' dialogue with his Chinese counterpart Liang Guanglie, where the two are expected to discuss China's concerns about U.S. marines being stationed in northern Australia.

The United States has accused "Chinese actors" of being the world's biggest perpetrators of economic espionage and U.S. security experts warn of a rising number of Internet-based attacks originating from China on U.S. corporate and government computers. China rejects the charges.

Concerns over cyber security was heightened last month with the discovery of the Flame virus, described as one of the most sophisticated pieces of malicious software discovered to date.

Security experts said the Flame virus was infecting computers in Iran and the Middle East and may have been deployed at least five years ago to engage in state-sponsored cyber espionage.

Before entering China, both Smith and his staff left their laptops and phones in Hong Kong to avoid potential interception, the Sydney Morning Herald newspaper reported on Wednesday.

The anti-espionage precautions, rare for Australian ministerial visits to other countries, were arranged by Australia's defense department following allegations that laptops and mobile phones were compromised during previous ministerial visits to China, the newspaper said.

A spokeswoman from Smith's office declined to comment on the report or specific arrangements for the visit.

Earlier this year, Australia blocked Huawei Technologies, a Chinese telecommunication company, from bidding on the national broadband network citing security concerns.

China is Australia's number one trading partner and the biggest customer for Australian exports. Bilateral trade is worth around A$105 billion a year with exports to China worth A$65 billion in 2010-11.

(Reporting By Maggie Lu Yueyang; Editing by Michael Perry)

• A Permanent Economic Emergency