China arms spend prompts South Korea arms race warning

By Rob Taylor

CANBERRA (Reuters) - South Korea's President Lee Myung-bak warned on Thursday of the danger of a North Asia arms race after China announced another double-digit rise in annual military spending.

Lee, speaking during a visit to Australia, said a near-15 percent lift in China's military spending this year, announced on Wednesday, could influence the defensive strategies of other countries like Japan and South Korea.

"In Northeast Asia it is not desirable to have countries engaged in a race for military buildup, or increasing their military spending," Lee told reporters at the Australian parliament through a translator.

"The Northeast Asia region in particular is a very, very dynamic and volatile region, with North and South Korea (issues) still remaining, and also we have the issue of China building military spending," he said.

China said on Wednesday the official military budget for 2009 would rise 62.5 billion yuan ($9.13 billion) on last year to 480.7 billion yuan ($70.24 billion), citing the need to improve equipment and to protect social stability.

The increase was lower than in 2008, when the budget for the People's Liberation Army rose 17.6 percent on 2007. China has now had nearly two decades of almost unbroken double-digit rises in declared defense spending.

But China's parliamentary spokesman Li Zhaoxing said the latest increase should not be seen by other countries as threatening.

RUDD QUESTIONS TRANSPARENCY

Many foreign analysts believe China's real military outlays are much more than the official budget.

In a veiled swipe at Beijing, Australia Prime Minister Kevin Rudd said there was a need for more transparency on the reasons for increased military spending in the Asia-Pacific.

Both Australia and South Korea said they would enhance their security ties, but officials said an agreement reached by Lee and Rudd fell short of a security pact Australia already has with Japan, and which has been criticized by containment-wary China.

"In a future-oriented relationship, security issues must be discussed," Rudd said. Both countries also said they would start formal negotiations on a free trade pact.

Lee said recent threats by North Korea to attack the South, while preparing its longest-range Taepodong-2 missile for a launch, were probably a negotiating tactic aimed at strengthening its hand should stalled nuclear disablement talks involving the two Koreas, China, Japan, Russia and the United States resume.

"One of the things they are very good at is negotiating with others. There are many things happening at the moment which would give the North Koreans, to try to seek a more ... positive position on the negotiating table," he said.

Rudd said Pyongyang needed to be very mindful of U.N. Security Council resolutions when making threats.