BEIJING (Reuters) - China will boost military spending by 11.2 percent this year, the government said on Sunday, unveiling Beijing's first defense budget since President Barack Obama launched a policy "pivot" to reinforce U.S. influence across the Asia-Pacific.
The increase announced by parliament spokesman Li Zhaoxing will bring official outlays on the People's Liberation Army (PLA) to 670.3 billion yuan ($110 billion) for 2012, after a 12.7 percent increase last year and a near-unbroken string of double-digit rises across two decades.
Beijing's public budget is widely thought by foreign experts to undercount its real spending on military modernization, which has unnerved Asian neighbors and drawn repeated calls from Washington for China to share more about its intentions.
Li said the world has nothing to fear, and the money spent on the PLA paled in comparison with the Pentagon's outlays.
"You can see that we have 1.3 billion people with a large land areas and a long coastline, but our outlays on defense are quite low compared to other major countries," Li told a news conference before the annual full session of the National People's Congress, the Communist Party-controlled legislature that will approve the budget.
"China's limited military power is for the sake of preserving national sovereignty, security, and territorial integrity," said Li, a former foreign minister. "Fundamentally, it constitutes no threat to other countries."
Asian neighbors, however, have been nervous about Beijing's expanding military, and this latest double-digit rise could reinforce disquiet in Japan, India, Southeast Asia and self-ruled Taiwan, which China considers part of its territory.
Obama has sought to reassure Asian allies that the United States will stay a key player in the area, and the Pentagon has said it will "rebalance toward the Asia-Pacific region".
"Eleven percent, for a Chinese defense budget, is what I would characterize as a reasonably sizeable increase," said C. Uday Bhaskar, a former director of India's Institute for Defence Studies and Analyses in New Delhi.
"It also, I would say, goes beyond the normal pegging we do for inflation, and it would be noted with great interest and concern by China's principal interlocutors," he said.
Obama's proposed budget for the fiscal year of 2013 calls for a Pentagon base budget of $525.4 billion, about $5.1 billion less than approved for 2012.
Beijing has sought to balance long-standing wariness about U.S. intentions with steady relations with Washington, especially as both governments focus on domestic politics this year, when Obama faces a re-election fight and China's ruling Communist Party undergoes a leadership handover.
But the U.S. "pivot" has fanned unease in China, with some PLA officers calling it an effort to fence in their country and frustrate Beijing's territorial claims.
China has advertised its long-term military ambitions with shows of new hardware, including its first test flight of a stealth fighter jet in early 2011 and its launch of a fledgling aircraft carrier in August - both trials of technologies that remain years from deployment.
Beijing is also building new submarines, surface ships and anti-ship ballistic missiles as part of its naval modernization.
China's military build-up is likely to continue "unabated," irrespective of recent U.S. moves in Asia, the U.S. military commander for the Asia-Pacific region, Admiral Robert Willard, said on Tuesday.
Japan and China have locked horns over islands each claims in the East China Sea. Vietnam, the Philippines and other nations have challenged Beijing over claims to swathes of the South China Sea that could be rich in oil and gas.
A spokesman for Philippines' Department of National Defence, Peter Paul Galvez, said the latest increase in PLA spending was not cause for alarm. Others were more anxious.
"China shares its land border with 14 countries; it used to make sense that a country in such a position maintains strong conventional forces," said Kazuya Sakamoto, a professor at Osaka University in Japan who researches international security.
"But in this nuclear age, it does not really make sense that China, a nuclear-armed country, continues to build up its military at such a pace."
SYMBOLIC VALUE, PRACTICAL LIMITATIONS
The Pentagon estimated China's real total military outlays in 2010 were over $160 billion, which would easily make it the world's second-biggest defense spender after the United States.
"The purpose of our armed forces isn't just to win wars, but keep us out of war," said Claude Chafin, a spokesman for U.S. House of Representatives Armed Services Committee Chairman Howard McKeon. "We risk our ability to deter when we decrease our military advantage over potential adversaries."
But China's military modernization should be kept in perspective, said Michael Beckley, a research fellow at Harvard University's Belfer Center, who has studied the strength of China and the United States.
"There's no doubt China's new hardware has important symbolic value and, at least in the case of the ASBM, important coercive value - the U.S. navy has to think twice now before getting too close to China's shores," Beckley said in emailed comments, referring to China's anti-ship ballistic missile.
"But the PLA's progress needs to be viewed in the context of China's low level of economic development," he added.
"China's economic weaknesses constrain its ability to produce cohesive military systems that link weapons and soldiers to sensors, satellites and command centers."
($1 = 6.2982 Chinese yuan)