As many as 34,000 defence force troops from Australia and the US are preparing for military manoeuvres off the coast of Queensland later this week.

And nobody will be paying closer attention to Operation Talisman Sabre than the Chinese, who have positioned a state-of-the art military surveillance ship in international waters close to the action.

The Defence Force says it is keeping a close eye on a Chinese warship heading into Australian waters allegedly to spy on scheduled war games later this month.

The Auxiliary General Intelligence vessel is expected to closely monitor the United States and Australian exercises during the Talisman Sabre war games off the Queensland coast.

Decked out with advanced communications systems designed to listen in on enemy militaries, the ship was reportedly north of Papua New Guinea on Saturday night.

"It is international waters, they have the right to sail there."

Last month the ABC revealed Japanese warships would also be taking part in Talisman Sabre for the first time, and defence sources believe the Chinese are particularly interested in how its Maritime Self-Defence Force operates with the ADF and the United States.

"This year's Talisman Sabre involves the Japanese Amphibious Rapid Deployment Brigade, which was created last year primarily as a response option for potential Chinese incursion in the Senkaku Islands", a military official told the ABC, speaking on the condition of anonymity.

"Their capability and interoperability with Australia and the United States will be of interest to Beijing."

The Defence Force later confirmed that Australian Navy pilots had been targeted by laser attacks in the disputed waters, with Chinese maritime militia vessels believed responsible.

Exercise Talisman Sabre, which is held every two years, will be formally opened in Brisbane on Sunday by the ADF's Chief of Joint Operations Lieutenant General Greg Bilton and United States Army Pacific's Commanding General 25th Infantry Division Major General Ron Clark.

Vira Maritime