AUSTRALIA'S top diplomats consider our neighbourhood deeply troubled. They describe China's leadership as ''nervous, paranoid and uncertain'' but "running rings'' around Japan. Thailand is unstable, the Philippines a "basket case" and East Timor a "burden".

The candid judgments of some of Australia's most senior and experienced diplomats are contained in the United States' record of the secret Australia- US political-military talks held between senior officials of both countries in Canberra in October 2008.

Foreign Affairs Department deputy secretary David Richie warned that Australia faced a ''troubled neighbourhood … including an increase in illegal immigration from Indonesia … continuing political instability in Thailand; the 'basket case' of the Philippines; the continuing 'burden' of providing security and development assistance to East Timor; problems of bad governance in many of the Pacific Island states''.

The US record of the secret discussions, chaired by Mr Richie and US assistant secretary of state Mark Kimmitt, has been provided exclusively to The Age by WikiLeaks.

During the exchange, the department's first assistant secretary for north Asia, Graham Fletcher, gave a broad political overview of China.