WASHINGTON (AFP) - China underestimated its growing defence budget by nearly 20 per cent with its spending likely nearing US$145 billion (S$182.18 billion) last year, the Pentagon said on Thursday.
In an annual report required by Congress, the Pentagon said that China's defence budget for 2013 was higher than the officially announced $119.5 billion.
"We think that if you start factoring in other considerations, other funding streams that go into the military, other investments that are not included in the defence budget, that it could be up to $145 billion," a Pentagon official said of the report.
The United States and its allies, especially Japan, have repeatedly voiced concern about the Chinese military's lack of transparency amid growing tensions between Beijing and neighbouring countries over maritime disputes.
In its previous annual report on China, the Pentagon said that Beijing's military spending was anywhere between US$135-215 billion.
The US$145 billion estimate "reflects an improvement in our understanding of how China develops its defence budget," the official said.
"But I would say there's a lot that we still don't know about China's defence spending and that's an area where we encourage China to be more transparent," he said.
In March, China announced a new hike of 12.2 per cent in its defence budget to an official 808.23 billion yuan (S$162.34 billion) for 2014.
China dismissed foreign criticism, with the state-run China Daily saying, "World peace needs a militarily stronger China."
China's military budget - either the official figure or Pentagon estimate - is significantly higher than the amount spent by its neighbours.
In 2013, Russia's defence budget was US$69.5 billion, Japan's was US$56.9 billion, with India at US$39.2 billion and South Korea at US$31 billion.
But China's budget is much lower than that of the United States, by far the world's largest military power, which has a US$495.5 billion defence budget in 2013 along with another US$82 billion allocated for the Afghanistan war.