March 4 (Bloomberg) -- China said it will boost defense spending by 14.9 percent this year to raise salaries of the world’s largest standing army as it competes for regional influence with the U.S. and Japan.

China’s military spending will rise to 480.6 billion yuan ($70.3 billion), from a revised 418.2 billion yuan last year, Chinese legislature spokesman Li Zhaoxing said today at a press conference ahead of the body’s annual session tomorrow. The amount compares with $513.3 billion approved by the U.S. Congress for fiscal 2009 not including war spending.

The Communist Party’s move to strengthen naval and space capabilities has sparked criticism from the U.S., which contends that the Asian nation is underreporting its spending. U.S. Deputy Assistant Secretary of Defense for East Asia, David Sedney, suggested on Feb. 28 that China is acquiring more military capabilities than justified by its stated strategic goals.

The U.S. told China in military talks last week that it wants “clarity” on the connection between its developing military capacity and strategic objectives, Sedney said.

Defense spending in China has increased an average of 16.2 percent from 1999 to 2008, according to figures from the latest defense white paper published in January. The biggest increase was 20.4 percent in 2006.

“China’s defense spending is relatively low in the world,” Li said. “China’s limited military power will be used solely to safeguard its sovereignty and territorial integrity.”

U.S. Spending

U.S. defense spending, adjusted for inflation and not counting the cost of wars, has increased about 43 percent since fiscal 2000. U.S. President Barack Obama has requested an extra $75.5 billion for combat operations in Iraq and Afghanistan this year in addition to the $65.9 billion in emergency wartime spending already approved.

China’s actual military outlays are about 70 percent higher than they report publicly, said Tim Huxley, executive director in Asia for the London-based International Institute for Strategic Studies. They don’t include weapons purchases from overseas, research and development spending, or revenue generated by China’s own arms exports, according to Huxley.

The U.S. spends about 4 percent of gross domestic product on defense compared with about 1.4 percent in China, Li said. The CIA World Fact Book puts China’s spending at about 4.3 percent of GDP compared with 4.1 percent in the U.S.

Fighting Pirates

In December, China deployed three ships to the Gulf of Aden to help protect commercial shipping in the area from pirates. The nation is also seriously considering building an aircraft carrier, Senior Colonel Huang Xueping said in December.

The Asian country approved a new space-launch center in its southern island province of Hainan and will start construction soon, the official Xinhua News Agency reported on March 2, citing unidentified military sources. The center, approved at the end of last year, will launch rocket carriers as well as providing meteorological and telecommunications services, the report said.

In 2007 China destroyed a weather satellite with a missile launched from a mobile platform, technology that poses “a significant risk to both civilian commercial systems and military systems,” U.S. Air Force Chief of Staff General Michael Moseley said in April 2007.

Arms Race

Chinese President Hu Jintao promised his country wouldn’t spark an arms race with its neighbors or pose a military threat to “any country” during a visit to Japan last year.

Japan had called on China to justify its military spending ahead of Hu’s visit, with then Chief Cabinet Secretary Nobutaka Machimura saying he couldn’t “comprehend” why it has risen by more than 10 percent each year for the past 20 years.

To contact the reporter on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.net

Last Updated: March 4, 2009 00:37 EST