By Michael Martina and Ben Blanchard
BEIJING (Reuters) - China's 2019 defense spending will rise 7.5 percent from 2018, according to a budget report issued at the opening of the country's annual meeting of parliament on Tuesday, a slower rate than last year but still outpacing the economic growth target.
The defense spending figure, set at 1.19 trillion yuan ($177.49 billion), is closely watched worldwide for clues to China's strategic intentions as it develops new military capabilities, including stealth fighters, aircraft carriers and anti-satellite missiles.
The 2019 defense spending increase comes as China's economic growth target for the year was set at 6.0 to 6.5 percent.
Last year, defense spending was set to increase 8.1 percent, in 2017 was set at just 7 percent, and in 2016 it grew 7.6 percent. The five years before that had seen double-digit increases.
China would "speed up efforts to make innovations in defense-related science and technology" and maintain "absolute (Communist) Party leadership over the armed forces", Premier Li Keqiang told parliament.
China's military build-up has unnerved its neighbors, particularly because of its increasing assertiveness in territorial disputes in the East and South China Seas and over Taiwan, a self-ruled territory Beijing claims as its own.
A government spokesman on Monday said China would keep up a "reasonable and appropriate" increase in defense spending to satisfy its national security and military reforms.
On its website, the official People's Liberation Army Daily said in a report on the defense budget that the armed forces would "focus on supporting national defense and military reform and comprehensively promoting national defense and military modernization".
Beijing does not provide a breakdown of its defense budget, leading neighbors and other military powers to complain that its lack of transparency has added to regional tensions.
"China has increased defense spending at a high rate for some time and Japan would like to see a high level of transparency in regard to its defense policy and militarization," the Japanese government's spokesman Chief Cabinet Secretary Yoshihide Suga said on Tuesday.
"We will continue to monitor the situation closely and at the same time will look to engage further with China in security dialogue in order to seek clarification."
'SUBSTANTIAL INCREASE'
China's defense spending ranks as the world's second largest, lagging behind the United States. By comparison, U.S. President Donald Trump has backed plans to request $750 billion from Congress for U.S. defense spending in 2019.
But diplomats and military experts say China's defense numbers probably underestimate true military spending for the People's Liberation Army, the world's largest armed forces, which are in the midst of an impressive modernization program overseen by President Xi Jinping.
Sam Roggeveen, visiting fellow at the Strategic and Defense Studies Center at Australian National University, said the budget figure marked a "substantial increase" in the size of China's military.
"China has long maintained its military is for the defense of its borders but that definition has broadened over the years," Roggeveen said. "The West will be very interested to see what the funds are used for, particularly if it used on assets that can project force over great distances."
China's military has been particularly focused on democratic Taiwan recently and is nervous President Tsai Ing-wen wants to move the island towards a formal declaration of independence, a red line for China, which views Taiwan as its territory.
Li said China will "resolutely oppose and deter any separatist schemes or activities seeking Taiwan independence, and resolutely protect China's sovereignty and territorial integrity".
Tsai, who has repeatedly warned of the threat from Beijing, says she wants to maintain the status quo with China but will defend the island's security and democracy.
"China repeatedly claims that they won't give up annexing Taiwan by force, so we are always being very cautious," Taiwan Premier Su Tseng-chang told parliament on Tuesday when asked by a lawmaker about the Chinese military threat.
"We are not afraid of a fight and we will not challenge (China), but we are ready to fight at all times."