THE US has just signed a huge new defence contract as it looks to tackle Chinese military action in the Pacific with fears of all-out-war increasing.

It has sealed a $2.2 billion deal with Boeing for at least 17 state-of-the-art anti-submarine planes, named P-8A Poseidon.

And video revealed the Navy has already been training its Thai allies in using the planes, which have the worlds most advanced intelligence, surveillance and reconnaissance capabilities.

The training exercise named Cobra Gold 2017 took place over the western Pacific Ocean last month and was the largest security cooperation exercise in the region.

The South China Sea remains one of the world's most tense areas as it provides the main route for Chinese nuclear submarines.

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We will intercept any intruding aircraft and follow every military vessel in areas under our responsibility

For these submarines missiles to pose a first or second strike threat to the continental US, they must transit the South China Sea and enter the Western Pacific, Malcolm Cook, senior fellow at the Iseas-Yusof Ishak Institute in Singapore, explained in a report last year.

Fears were heightened last month when China conducted its own military training exercise in the area that involved bombers, fighter jets and early-warning aircraft.

It resulted in Japan scrambling its own aircrafts in response.

But Chinese state media claimed the exercise did not target any specific countries or goals and was conducted in accordance with relevant international laws and conventions.

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It is the latest in a line of aggression after Chinas first aircraft carrier, the Liaoning, cruised into the Western Pacific for the first time in December.

And officials in China have confirmed that the up-tempo pace of exercises will continue.

We will intercept any intruding aircraft and follow every military vessel in areas under our responsibility, Wang Weiming, deputy chief of staff of the Chinese Peoples Liberation Army, told the official Xinhua News Agency.

With relations between the US and China fragile, holding a joint live-fire military display with the Thai army could be seen as making things worse especially when Trump's chief advisor Steve Bannon believes America and China will be at war 'within a few years.'

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Thai and US military tanks participate in a live fire military display

With President Trump continuing to be outspoken on international matter, the massive US deal with Boeing includes options for 32 additional aircraft, as well as money for long-lead parts for future orders.

The Navy will receive 11 aircraft, while Australia will expand its P-8A fleet with four more. The UKs first two P-8A jets are part of the agreement, with first delivery set for 2019.

It comes as a Pentagon report revealed US would LOSE WW3 to China as it was not ready to take on highly capable opponents.

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WW3 fears grow as US signs $2.2 BILLION plane deal to tackle China nuclear subs - Daily Star