Given a rare invitation to address the Vietnamese parliament, Hu said Asian nations should stick together and that they had nothing to fear from China's increasing political and economic muscle.

"China's development is peaceful, broad-based and cooperative," he said.

"China's development poses an obstacle to no one and undermines no one. On the contrary, it benefits peace, stability and global prosperity."

But he made it clear that China had designs on redressing the global balance with the only remaining superpower, a regular concern of the Chinese communist leadership.

"China will actively promote the process of multi-polarisation, globalisation and the establishment of a fair political and economic world order," he said.

"The major changes in China are linked to the fact that we have found a way of developing that is in line with the Chinese situation."

The Chinese leader arrived in Hanoi Monday for his first trip to the communist country since becoming president, after an official visit to Beijing by his Vietnamese counterpart Tran Duc Luong in July.

Beijing, which has seen 9.4 percent economic growth over the first nine months of the year, has stepped up its efforts over recent years to increase its influence and trade ties in the region.

China and the 10 members of the Association of South East Asian Nations (ASEAN) decided in November last year to create a free-trade zone comprised of two billion people -- the largest in the world by population, by 2020.

The two have struck an accord aimed at reducing tariffs to between zero and five percent on certain types of goods.

It will apply to the six most advanced ASEAN economies -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- by 2010, and to Laos, Vietnam, Cambodia and Myanmar by 2015.

China's immense sway, however, worries certain countries in Southeast Asia, and Beijing often states its good intentions.

"Asia is our shared home. China's development is tied to Asia," Hu said.

"With Asian countries, we foresee reaching an understanding in the political sphere, mutually profitable cooperation in the economic sphere and trust and cooperation in security matters."

A Western diplomat, who asked not to be named, said, "the Chinese need to reassure other nations and indeed reassure themselves."

"Small countries fear losing control over their domestic markets while rich ones such as Singapore are afraid of being sidelined," the diplomat said.

Hu also underlined the very close links between Vietnam's and China's communist parties.

Experts say Hanoi can undertake few reforms without the tacit support of Beijing, even more so as Vietnam prepares for the 10th Congress of its communist party next year.

They also point out that Hu's visit comes after Vietnamese Prime Minister Phan Van Khai in June became the first Vietnamese head of government to visit Washington since the end of the war between the two countries in 1975.

"The Vietnamese comrades present here are interested in China's development, and we also are very closely watching Vietnam's development," Hu said.

"Leaders of both sides agree it is in the basic interests of China and Vietnam and their people to promote friendly mutual trust, cooperation for mutual benefits and common development between the two countries and the CPC and the CPV."

Hu was expected to leave Hanoi Wednesday morning after a trip to the central city of Danang was cancelled due to bad weather.

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