TOKYO (AP) _ Defense Secretary William Cohen and his Japanese counterpart agreed today to continue cooperating on ways to monitor North Korea's military threat, a Japanese military spokesman said.

Cohen and Hosei Norota, secretary general of Japan's Defense Agency, discussed a bilateral plan to build an antimissile defense system, said the Defense Agency spokesman, who spoke on condition of anonymity.

Cohen and Norota also exchanged views on plans to update U.S.-Japan security guidelines and the issue of reducing the U.S. military presence on the southern Japanese island of Okinawa.

Talks between the United States and Japan on developing an antimissile defense system have raised concern among many of Japan's Asian neighbors.

In Washington on Tuesday, a top Chinese diplomat hinted that China might build more powerful missiles.

The United States and Japan agreed to work together on researching a theater missile defense system after Stalinist North Korea fired a missile over Japan in August.

Earlier today, Cohen met with Chief Cabinet Spokesman Hiromu Nonaka to discuss security ties.

During a visit on Tuesday to Yokota Air Base outside Tokyo, Cohen warned North Korea that it must allow inspections of a suspected nuclear weapons site or risk losing financial aid for a nuclear power project.

Cohen said the North's continued refusal to allow inspection of the underground site will make it hard to persuade taxpayers in the United States, Japan and South Korea to help finance nuclear reactors in North Korea.

The United States, Japan and South Korea agreed in 1994 to build two light-water nuclear reactors in North Korea after the reclusive communist state said it would freeze and eventually dismantle its nuclear weapons program.

Cohen dismissed North Korea's demand for $300 million in exchange for the right to inspect the site, which is north of Pyongyang, North Korea's capital.