"BEIJING (AFP) - China announced Tuesday its defence spending would rise 17.6 percent this year but insisted the increase was moderate, after the United States expressed concerns about Beijing's expanding military power.

Military spending in 2008 will reach 417.8 billion yuan (57.2 billion dollars at the end-2007 exchange rate), a spokesman for China's parliament told reporters ahead of the legislature's annual session beginning Wednesday.

Jiang Enzhu said the rise, following a similar increase in 2007, was moderate, with the spending coming off a low base and helping to boost soldiers' pay packets as well as beef up the military's high-tech capabilities.

"In recent years the Chinese government has moderately increased its spending on national defence on the basis of sustained, steady and fast economic growth and rapid build-up of government revenues," Jiang said.

"These increases were of a compensatory nature to make up for the weak defence foundation."

Jiang said China's military spending was just 1.4 percent of its gross domestic product last year, compared with 4.6 percent in the United States and three percent in Britain.

On Monday, the Pentagon expressed concern about China's growing military might, saying a lack of transparency posed risks to regional and international stability.

A Pentagon report said China's military spending in 2007 was more than double Beijing's official budgeted figure of 45 billion dollars.

In an immediate reaction to the announcement in Beijing, Japan also warned that the international community was concerned about a lack of transparency in China's military.

Jiang indicated that 2007 spending was higher than originally budgeted, but not by the extent the United States claimed.

He said the 17.6-percent rise in 2008 was based on the actual spending of 2007. But based on the originally publicised budget, the increase was just over 19 percent.

The Pentagon also raised concerns over China's development of cruise and ballistic missiles capable of striking aircraft carriers and other warships at sea, and its testing of an anti-satellite weapon in January last year.

The report further pointed to numerous cyber intrusions into US and other computer networks around the world over the past year, apparently from within China.

"China's expanding and improving military capabilities are changing East Asian military balances; improvements in China's strategic capabilities have implications beyond the Asia-Pacific region," the Pentagon report said.

The US deputy assistant defence secretary for East Asian affairs, David Sedney, said US officials did not know what China's true aims were in the military sphere.

"I think the biggest thing for people to be concerned about, really, is the fact that we don't have that kind of strategic understanding of the Chinese intentions," Sedney said.

"And that leads to uncertainty."

Jiang identified four main areas where the increased funds would be directed in 2008.

Soldiers and officers would be given pay rises and the quality of their meals would be improved.

More money would also be spent on oil supplies, amid surging global fuel prices.

The third area was a more general "spending on public programmes and training to keep pace with the needs of the military."

"And fourth, to modestly increase spending on armaments to enhance the military's ability to conduct defensive operations under IT-based conditions," Jiang said.

China's parliament, the National People's Congress, will formally endorse the 2008 budget during its annual session, which will last until March 18."

Source:http://news.yahoo.com/s/afp/20080304...UxN3aZEbtvaA8F