* Growing China rubs against U.S. in Pacific
* Mistrust hinders development of ties between militaries
* Taiwan arms sales remain sore spot
By Paul Eckert, Asia Correspondent
WASHINGTON, Nov 5 The eye-popping economic growth that has made China an attractive business partner has also funded an even faster expansion in its military spending that has raised eyebrows among U.S. policymakers.
China's military spending, even after two decades of double-digit growth, is only about one-sixth of U.S. outlays and American officials say they accept the huge country's legitimate need to update antiquated defenses.
But the Pentagon worries that it knows little about China's strategic intentions and sees the People's Liberation Army building capabilities that exceed Beijing's routine assertion that its military modernization is purely defensive in nature.
"When we see a military growing at that rate, we're interested in transparency and understanding the uses of that military," Rear Admiral Kevin Donegan, commander of the USS George Washington Carrier Strike Group, said in Hong Kong.
President Barack Obama, who is to visit China later this month, inherited stable, multifaceted relations with Beijing from George W. Bush.
But military ties have lagged behind. China resumed military talks in June after freezing them, not for the first time, in 2008 to protest a $6.5 billion U.S. arms sale to Taiwan, which China claims as its territory and the United States is committed to defend.
"What I hope we can get through is this on-again, off-again aspect of our military-to-military relationship," Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, told a conference on Wednesday.
INCIDENTS AT SEA
Just as Bush early in his tenure faced a showdown with Beijing over a mid-air collision between a U.S. spy plane and a Chinese fighter plane, Obama was in office less than two months when Chinese vessels confronted a U.S. surveillance ship in Asian waters in a reminder of potential dangers ahead.
"As the Chinese assume a greater military footprint in the Asia-Pacific region, they don't really have a great deal of understanding about how to operate alongside us," said Tai Ming Cheung, an expert on Chinese military technology at the University of California San Diego.
China rejects the U.S. assertion of its right to send surveillance ships 12 miles (22 km) from the Chinese coast, insisting on a boundary of 200 miles (371 km).
China has shown new interest in military ties following talks in Beijing in June and an October U.S. tour by General Xu Caihou, vice chairman of China's Central Military Commission.
"What you've seen over the last nine months is really a significant deepening of the interaction," a senior U.S. official told Reuters.
But historic mistrust and potentially explosive issues such as the status of Taiwan mean "the mil-mil side will continue to be the poor cousin in the relationship," Cheung said.
CHINA SEES ENCIRCLEMENT, SUFFOCATION
General Kevin Chilton, head of the Pentagon's Strategic Command, which coordinates U.S. military operations in space, on Tuesday called for "an open dialogue between our nations" to better understand the intent of China's space programs.
U.S. calls for transparency have prompted China to publish military white papers, but China's military views openness as a luxury only the stronger United States can afford, experts say.
"We think transparency's really important, but it's a challenge for militaries, and especially for their military, to accept the basic premise," said the U.S. official.
Analysts Zhao Pi and Li Xiaodong of the China Academy of Military Science indicated there was great mistrust of the United States, which has military bases in South Korea and Japan and has begun to develop military ties with India.
"In the face of the U.S.'s overbearing strategy of encirclement and suffocation, China must show even greater flexibility at the same time as upholding its own position and principles," they wrote in a study.
A big test of military ties will come if Taiwan, whose China-friendly president, Ma Ying-jeou, has improved relations with Beijing, restates a long-standing request to buy U.S.-made F-16 fighter planes to update an aging fleet.
Mullen said the Beijing-Taipei relationship "seems to be moving in the right direction" toward reduced tensions. But he added, "We have obligations to support Taiwan as well, which we have done and I believe we will continue to do."
On broader military ties with China, the admiral said, "I hope we have enough of a relationship with them that we can avoid any serious conflicts in the future." (Additional reporting by Phil Stewart and Adam Entous in Washington, Ralph Jennings in Taipei, James Pomfret in Hong Kong and Ben Blanchard in Beijing; Editing by Mohammad Zargham)