China announced this week that its defense budget for 2008 will total about $58.79 billion—a 17.6% increase over last year. This will be the twentieth consecutive year China’s military budget sees double-digit growth.

Earlier this week, the United States Congress received its annual report from the Pentagon on the Chinese military. The report stated that the U.S. was unsure of China’s intentions and that the actual spending for last year was between $97 billion and $139 billion—about three times official estimates. However, due to lack of transparency, the U.S. cannot know for sure how much was spent or the specifics of how funds were used.

While announcing the release of the report, Deputy Assistant Secretary of Defense for East Asia David Sedney questioned China’s military intentions: “The real story is the continuing development, the continuing modernization, the continuing acquisition of capabilities and the corresponding and unfortunate lack of understanding, lack of transparency about the intentions of those and how they are going to be employed. What is China going to do with all that?”

The report goes on to say that in recent years Beijing has purchased many submarines and aircraft carriers for its expanding navy, as well as improved nuclear intercontinental ballistic missiles. Concerns were also expressed regarding China’s anti-satellite missile test and cyber-warfare tests against U.S. government computers.

A statement by the Chinese government called for the U.S. “to abandon the Cold War thinking.” Chinese official Jiang Enzh responded to the allegations by saying the increases are “defensive in nature,” also adding that China spent less on defense, as percentage of GDP, than the U.S. (whose defense budget for the next fiscal year will exceed $500 billion), the United Kingdom, France or Russia (BBC).

The focus of the international community’s concern is on the possibility of China deploying its most advanced weaponry on the coast facing Taiwan. Beijing has warned the island that any move toward further independence would be followed by military action by China. Currently, according to the Pentagon report, China is in position to launch air and missile campaigns, set up blockades and perform a sea invasion.

Yet the report affirms that the U.S. “welcomes the rise of a stable, peaceful, and prosperous China.”

“However,” the report continues, “much uncertainty surrounds China’s future course, in particular in the area of its expanding military power and how that power might be used.”