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China second-largest defence spender in 2008

China's efforts to modernise its armed forces has seen it become the second biggest military spender behind the United States, according to the Stockholm International Peace Research Institute in its annual report on world arms transfers.

While the global arms spending rose 4% last year, China's grew by 10% to an estimated $84.9 billion. The USA led the rankings by a wide margin at $607 billion, which amounted to a third of the global total of $1.46 trillion.

"They are the second biggest military spender now, that does not mean they are the second strongest military power because a lot of other countries have been at this game for a lot longer than China," says Sam Perlo-Freeman, a researcher at the institute. "While they are certainly seeking to increase their regional and global influence ... there is very little evidence of any hostile intent in terms of the region."

Other analysts believe that Beijing understates its military spending and channels a lot of the money to other ministries and departments that classify it differently. They then use this for various research and development programmes that have a military focus.

The People's Liberation Army Air Force [PLAAF], which has been inducting the Chengdu Aircraft J-10 and Chengdu J/F-17 fighters, is a major beneficiary of the spending. Chengdu has also reportedly developed a J-10B, an upgraded version of the multi-role fighter with enhanced capabilities.

Companies like Chengdu and Shenyang Aircraft are believed to be working on competing fifth generation fighter and unmanned combat aerial vehicle programmes. Others plans include new attack helicopters, airborne early warning and control [AEW&C] systems, and high-altitude long-endurance UAVs.

China's neighbours like Japan and South Korea have been increasingly wary of Beijing's plans to modernise its air force. Japan has renewed its efforts to procure the Lockheed Martin F-22 Raptor from the USA to modernise its air force, while Australia said earlier this year that China could become a maritime threat.

"Obviously, all countries in the region will be looking at what China's doing and what their growing military power and modernisation means. To some countries that will be a stronger factor than others," Perlo-Freeman told Reuters news agency in an interview.

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