China under-reported defense by 20 percent: Pentagon

China underestimated its growing defense budget by nearly 20 percent with its spending likely nearing $145 billion last year, the Pentagon said Thursday.

In an annual report required by Congress, the Pentagon said that China’s defense 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 defense 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 neighboring countries over maritime disputes.

In its previous annual report on China, the Pentagon said that Beijing’s military spending was anywhere between $135-215 billion.

The $145 billion estimate “reflects an improvement in our understanding of how China develops its defense budget,” the official said.

“But I would say there’s a lot that we still don’t know about China’s defense 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 percent in its defense budget to an official 808.23 billion yuan ($132 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 neighbors.

In 2013, Russia’s defense budget was $69.5 billion, Japan’s was $56.9 billion, with India at $39.2 billion and South Korea at $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 $495.5 billion defense budget in 2013 along with another $82 billion allocated for the Afghanistan war.

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