China arms spend 'above official data'

LONDON - China's military spending may be about 1.7 times higher than officially stated and will continue to rise sharply, the International Institute for Strategic Studies said.

The assessment came a day after the Pentagon said China's military buildup had altered power balances in the Asia-Pacific.

The institute said there was a growing risk that military competition between the US and China would play an increasing role in relations between the two countries.

In its research, the London-based think tank focused on 2003.

It estimated Chinese military-related expenditure for that year at US$39.6 billion - based on market exchange rates - compared to the US$23 billion officially stated.

The institute also produced an estimate based on purchasing power parity which put the true figure at US$75.5 billion ($120.89 billion).

Director-general John Chipman urged some caution with that estimate but said the trend in Chinese military spending was clear.

"Expenditure is on a sharp upward trend and will remain so in view of popular and elite support for accelerated defence modernisation."

China's military spending has risen by double-digit percentages for the last few years. Its defence spending was 2.7 per cent of GDP in 2003, while the US figure was 3.7 per cent, the institute said.

- REUTERS