"In recent years, China has gradually been boosting its military expenditures," he told reporters at a briefing in Beijing.

"Our nation has all along rationally set out national defence spending by coordinating national defence with economic development."

Just hours after the announcement, US Deputy Secretary of State John Negroponte, who was on a visit to Beijing, told reporters he would like to know more about what China plans to do with new military hardware.

"The way I phrase our concern is the concern about transparency and the desire to have a more extensive dialogue with China on what their military build-up involves, what the doctrine is that underlies it, and what their intentions are," he said.

Little more than a week ago, US Vice President Dick Cheney said China's military build-up clashed with its repeated claims to be a peaceful power.

Cheney cited a January ballistic missile test by China that destroyed one of its own satellites in space as evidence of the nation's increasing militarisation.

The new budget figures came a day after China voiced its opposition to US plans to sell 450 air and ground missiles to Beijing's arch rival, Taiwan.

A Taiwan government spokesman said Sunday the budget increase marked "China's rising threat" to the island, and that real expenditure could be higher.

Jiang, the Chinese spokesman, said the military expenditure would account for 7.5 percent of total government expenditure in 2007, compared with 7.4 percent in 2006.

"Overall, the proportion has been stable over the past few years," said Jiang, speaking ahead of Monday's opening of the annual session of the legislature, which is to approve the budget.

"The increases have been in order to make up for the weak basis of the nation's defence."

China's military expenditure in 2005 amounted to 1.35 percent of Chinese gross domestic product, compared with 4.03 percent for the United States, Jiang said.

"What I especially want to emphasise is that China persists in following the path of peace and development and in pursuing a defence policy that is defensive in nature," he said.

"China does not have the wherewithal nor the intention to engage in an arms race. China does not pose and will not pose a threat to any country."

China has increased its military spending by double digits nearly every year over the past 15 years, including 14.7 percent last year and 12.6 percent in 2005.

US officials have estimated China's annual defence spending at between 80 and 115 billion dollars, the highest in the world after the United States, and well above their stated budget announced in March 2006 of 35 billion dollars for that year.

Much of the funding is aimed at building a military force capable of reunifying Taiwan by force should the island territory claimed by China seek to realise formal independence, they said.

Jiang also reiterated that constitutional reform efforts by Taiwan President Chen Shui-bian were moving the democratic island dangerously towards formal independence, and warned against such moves.

"To resolutely contain the separatist activities of Taiwan independence forces and safeguard peace in the Taiwan Strait is the most important and urgent task facing compatriots on both sides of the strait," Jiang said.

China "will never tolerate an independent Taiwan and will never permit anyone under any form to split Taiwan from the mainland."

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