BEIJING - CHINA needs to increase defence spending to keep pace with economic growth and overcome historic shortfalls, the military's newspaper said.

China's official defence budget for 2007 was US$45 billion (S$63 billion), a rise of 17.8 per cent on the previous budget that continued a string of double-digit military spending rises for a decade.

The People's Liberation Army (PLA) official budget for 2008 is likely to be unveiled shortly before the national Parliament meets for its annual session in early March.

China focuses many of its navy ships, missiles and military aircraft on Taiwan, the self-ruled island Beijing claims as its own and says must accept eventual reunification.

The Pentagon has estimated China's true military budget could be more than double the public number.

But in an unusually blunt piece of public lobbying, China's Liberation Army Daily on Tuesday warned of grave consequences if increases in defence spending did not continue, arguing that the rises were making up for slimmed budgets for much of the 1980s and 1990s, when economic priorities squeezed spending.

'When economic conditions improve, this (defence spending) shortfall must be compensated. Otherwise there will be dire consequences,' the paper said.

'Now the time has come when we must increase defence spending to make up for historic arrears.'

The paper estimated that defence spending must keep rising until 2030 to make up for past tight budgets and to properly reflect China's growing economic strength.

'To make up for the arrears, naturally there must be compensatory increases in military spending that are higher than the rate of economic growth,' the paper said.

'Our country's current rises in military spending are merely bringing that spending into step with economic growth ... but we are far from completing this compensation and closing the shortfall.'

The report did not specify what levels of spending would satisfy PLA needs.

Faced with international calls for greater military candour, China has often said its intentions are peaceful and pointed to the much higher budget of the Pentagon.

The Bush administration asked for US$484.1 billion for the Defence Department in the fiscal year from October 2007. That figure does not cover military operations in Iraq and Afghanistan.