A hotline linking the Chinese and US defense ministries may be set up as part of agreements to increase military exchanges between the two countries, state media reported. It would be an important step in improving military ties that are still on the slow rebound following the collision between a Chinese fighter plane and a US spy aircraft in 2001. Washington has been encouraging Beijing to set up the system as a practical means of resolving further crises and China appeared ready to comply after a meeting Wednesday between Defense Minister Cao Gangchuan and Admiral William Fallon, commander of US Pacific forces. The US remains concerned about China's military spending and the possibility of conflict between Beijing and Taipei, although US Defense Secretary Donald Rumsfeld's visit to Beijing last year suggested an improvement in relations. A hotline between the Chinese and US presidents was set up in 1998.