Australia and Japan have agreed to share more sensitive intelligence and deepen military cooperation, signing a security pact aimed at countering China's military rise.

Prime ministers Fumio Kishida and Anthony Albanese inked the accord on Saturday in the Western Australian city of Perth, revamping a 15-year-old agreement drafted when terrorism and weapons proliferation were the overriding concerns.

"This landmark declaration sends a strong signal to the region of our strategic alignment", said Albanese, hailing the "Joint Declaration on Security Cooperation".

Kishida told a news conference in Perth that the deal "will be a compass that shows the direction of bilateral security and defence cooperation for the next 10 years."

Under the accord, the two countries agreed military forces would train together in Northern Australia, and would "expand and strengthen cooperation across defence, intelligence sharing", Australian officials said.

Without citing China or North Korea by name, Kishida said the agreement was a response to an "increasingly harsh strategic environment".

In recent years North Korea has repeatedly lobbed missiles over and around Japan, while China has built the world's largest navy, revamped the globe's biggest standing army, and amassed a nuclear and ballistic arsenal right on Japan's doorstep.

READ MORE: Why Australia and Japan signed a defence deal 

Intelligence sharing

Neither Australia nor Japan has the armies of overseas intelligence operatives and foreign informants needed to play in the major leagues of global espionage.

Japan does not have a foreign spy agency equivalent to America's CIA, Britain's MI6, Russia's FSB or Australia's much smaller agency ASIO.

But according to expert Bryce Wakefield, Australia and Japan do have formidable signals and geospatial capabilities — electronic eavesdropping and high-tech satellites that provide invaluable intelligence on adversaries.

Wakefield, director of the Australian Institute of International Affairs, said the agreement could also have broader significance, providing a template for Japan to accelerate intelligence ties with countries like Britain.

READ MORE:US, Australia, Japan, New Zealand and UK form Partners in the Blue Pacific