Speaking to Australia's Sky News network in Washington ahead of a visit to Australia an annual meeting of Pacific Rim leaders, Bush said he believed China's biggest issue was keeping it's economy growing.
"My view of China is that they're internally focused to the extent that they want economic growth and vitality, they're externally focused in order to get the raw materials they need. But if they ever turn hostile, I would be concerned about the military," Bush said.
He said that his administration spends "a lot of time on China" and that Washington had good relations with both China and Japan, two traditional rivals in Asia.
He said it was important for the United States to be an "active presence in Asia to make sure that old tensions don't flare up."
Bush also urged countries considering pulling out troops to base their decisions on restoring the country's security, saying the U.S. needs "all our coalition partners" in Iraq.
"I understand that everybody has got their own internal politics. My only point is that whether it be Afghanistan or Iraq, we've got more work to do. We, the free world, have got more work to do."
Australia has about 1,600 troops in and around Iraq, 550 of them in combat roles. The timing and circumstances of the troops' withdrawal is a political issue in Australia, as it heads toward national elections due by early next year.
Labor opposition leader Kevin Rudd, who opinion polls suggest is headed for victory in the elections, has pledged to set a timetable for withdrawing Australian combat troops from Iraq. Prime Minister John Howard has refused to set a timetable.
Bush said in the interview he would meet Rudd during his visit to Australia next week and that he would be glad to explain to Rudd why he believed victory in Iraq was important.
"What I ask if he were to win (the election) is that he consider the conditions on the ground before making decisions," Bush said. "What matters is success, and I believe we can be successful."
"My attitude is, coalition partners ought to be making decisions based upon conditions on the ground, because failure in Iraq would lead to, in my view, turmoil, chaos in the Middle East and other attacks on the United States and other nations," Bush said.
Bush said he did not want to take sides in Australia's upcoming elections, and said U.S.-Australia relations were strong regardless of who were the leaders of each country.
He said he looked forward to meeting Rudd in Sydney and offered high praise to Howard, who has been a staunch ally of Bush in Washington's war on terror.
Howard "no doubt about it, is a close personal friend of mine," Bush said. "He is a man of steel because he is a person who stands on conviction and principle."
