"China's military budget adheres to strict legal procedures, and is true and authentic." said Lieutenant General Zhang Qinsheng, also Deputy Chief of the General Staff of the Chinese People's Liberation Army, at the annual Shangri-La Dialogue, formally known as Asia Security Conference, in Singapore on June 2.

Organized by London-based International Institute of Security Studies, or IISS, and named after Singaporean Shangri-La Hotel where the three-day meeting was held, it was seen as an important mechanism for addressing major security issues in the Asia-Pacific region. As the most senior Chinese representative to appear at this forum, Zhang's openness on China's defense budget and state military policy was widely applauded by participating nations.

Zhang reiterated China's sincerity to build mutual security, trust and cooperation with other nations in the region. While on the other hand, he assured the gathered defense ministers that China's strategic intent was purely "defensive" in nature, spelling out the country's peaceful development strategy.

Zhang offered a breakdown of the 2007 budget: $20 billion used to raise salaries and pensions for service people, $8 billion for new uniforms, $7 billion for maintenance of military academies, and $15 billion for strengthening the armed forces. The money spent on weapons and arms therefore accounts for less than half of the total $40 billion.

"China's defense budget is small given the size of its population and territory," Zhang added, reassuring his audience that China has no intention of joining the arms race, because a longstanding stability will be beneficial to constant prosperity of China and the region at large.

At the meeting, Zhang also revealed that he would finalize the hotline plan between Chinese and U.S. defense ministries during his Washington tour in September. Amid growing suspicions over China's military buildup, which are evident in Pentagon's newly released annual report on this topic in which China was seen as a military threat, this direct conversation tool between the two sides is expected to help disperse suspicions and improve mutual trust.