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China to unveil military budget after U.S. Asia "pivot"

By Chris Buckley

BEIJING (Reuters) - China is likely to unveil its military spending for 2012 on the weekend, flagging the direction that Beijing will take after President Barack Obama launched a new "pivot" to reinforce U.S. influence across Asia.

Beijing has not set a time to announce the yearly budget for the People's Liberation Army (PLA), but it has made a habit of releasing the number at a news conference preceding the annual parliament session, which this year opens on Monday.

Though the official Chinese budget is widely thought to undercount real military spending, neighbors and the Obama administration are likely to read the 2012 figure as one signpost of how Beijing is responding to the U.S. focus on the Asia-Pacific and to maritime territorial disputes.

"The official numbers don't tell us a lot other than the fact that China's defense budget is increasing year on year," said Rory Medcalf of the Lowy Institute for International Policy in Sydney, who specializes in Asian security.

"If you're looking at a conflict on China's periphery or within hundreds of kilometers of the Chinese coastline, then already the local balance is -- I wouldn't say in China's favor -- but so China is able to put U.S. forces at risk in ways it couldn't in the past," he added.

"If you look at a bigger picture than that -- at the aggregate force capability or the global stage -- then of course the U.S. is a long way ahead."

China has sought to balance its wariness of U.S. moves with a desire for steady relations with Washington, especially as both sides grapple with domestic politics this year, when Obama faces a re-election fight and China's ruling Communist Party undergoes a leadership handover.

Chinese Vice President Xi Jinping, who is almost sure to succeed Hu Jintao as president, stressed his desire to keep tension in check when he visited the United States in February.

Beijing's growing military capabilities are, however, overlapping with the United States' long-entrenched presence across Asia, creating risks of miscalculation and worse.

ENERGY-RICH SEAS

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".

China has repeatedly warned the United States over its arms sales to Taiwan, the self-ruled island that Beijing calls an illegitimate breakaway from mainland sovereignty.

More recently, China's naval reach has extended further, as have tensions over territorial claims.

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.

China's military build-up is likely to continue "unabated", irrespective of the recent U.S. moves in Asia, the U.S. military commander for the Asia-Pacific region, Admiral Robert Willard, said on Tuesday.

China's party-run parliament, the National People's Congress, more or less automatically approves the PLA budget which throughout the 1990s and the past decade recorded a near-unbroken run of double-digit increases.

Last year, China said it would increase defense spending to 601.1 billion yuan ($95.6 billion), a 12.7 percent rise on the previous year, resuming double-digit growth after a dip to 7.5 percent growth in 2010.

But 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.

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.

China has advertised its long-term 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.

($1=6.29 yuan)

(Editing by Nick Macfie)

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