"They (China) continue to grow and prosper. They are modernizing their military," Pace said. "We in the United States are anxious for them to be as transparent as possible so we can understand what they intend to do, so we can understand the amount of money they are spending on modernizing."
Zhang Qinsheng, the Chinese army's deputy chief of the general staff, told an Asia-Pacific defense conference on Saturday that China's military budget for 2007 increased by 17.8 percent. Almost half of the US$44.9 billion (EUR33.4 billion) budget will be used to raise soldiers' salaries and pensions, he said.
He said some of the extra money will be used to buy new uniforms, and the rest to set up more military schools.
The Pentagon says China's actual defense spending could be much higher, because the official budget does not include expenditures on items such as foreign weapons and military research and development.
Pace said the U.S. needs time to study comments made by Indonesia's Defense Minister Juwono Sudarsono at the conference that China and Japan are set to play a major role in the maritime security of Southeast Asia.
Sudarsono said there was "a tremendous interest for us in Southeast Asia to link up and provide some degree of ... relationship between the armed forces of the Southeast Asian countries and Northeast Asia."
"It's a new concept," Pace said, adding that information-sharing was always beneficial.
"The sovereign countries in this region are best situated to determine for themselves how best to provide the security," he said. "The United States will continue to work bilaterally with our friends here and multilaterally to ensure that we participate in a way that is good for the U.S. and the region."