* China, Malaysia boost ties hours after Obama cancels Asiatrip
* Xi, Najib boost military cooperation
* China-Malaysia trade seen tripling to $160 bln by 2017
By Yantoultra Ngui
KUALA LUMPUR, Oct 4 (Reuters) - China and Malaysia agreed onFriday to elevate bilateral ties to a "comprehensive strategicpartnership", aiming to boost military cooperation and nearlytriple two-way trade to $160 billion by 2017.
Chinese President Xi Jinping and Malaysian Prime MinisterNajib Razak spoke soon after U.S. President Barack Obamacancelled a week-long tour of four Asian nations, includingMalaysia, due to the U.S. government shutdown.
Najib said he agreed with Xi, who is visiting Malaysia aheadthe Asia-Pacific Economic Cooperation summit in Indonesia thatObama was to have attended, to encourage more joint militaryexercises and visits between the nations.
China is already Malaysia's largest trading partner, withtwo-way trade last year totalling 181 billion ringgit ($57billion). Trade between the two countries, which rose at anaverage annual of 15.7 percent between 2002 and 2012, isexpected to hit $70 billion by the end of this year.
"We have agreed to strengthen our partnership with navaldefence, joint military exercises to combat terrorism andpromote security," Xi told a news conference in the Malaysianadministrative capital Putrajaya.
"This will create a sound environment for peace and theprosperity of both countries," he said.
The two leaders declined to answer questions from reporters.
China has been steadily increasing its influence in theregion in recent years, although not always harmoniously and hasclashed with several countries over territorial disputes.
Faced with China's growing influence across the region,Obama announced in 2011 a pivot towards Asia as the UnitedStates brought wars in Iraq and Afghanistan to an end.
Malaysia is one of several Asian nations that has competingterritorial claims with China over the resource-rich South ChinaSea, but it has kept a lower profile in the dispute than thePhilippines and Vietnam and downplays regional concerns overBeijing's rising military clout.
In addition to soaring trade, Malaysia has seen an increasedflow of Chinese investments in recent years in sectors such aslogistics and property.
China's Guangxi Beibu Gulf International Port Group Ltd said last month it was buying a 40 percent stake inKuantan Port Consortium Sdn Bhd for 334.4 million ringgit ($94million), a move that would pave the way for 3 billion ringgitworth of extension works at the biggest port on the east coastof peninsula Malaysia.
Late last year, Chinese property developer Country GardenHoldings Co Ltd said it was buying 11 hectares ofprime waterfront land in a big industrial zone in southernMalaysia for almost 1 billion ringgit ($328.97 million).
Xi said in Indonesia on Thursday China hoped that trade withthe 10-member Association of Southeast Asian Nations would reach$1 trillion by 2020.
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