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Lieutenant General Zhang Qinsheng (C), deputy chief of staff of the People's Liberation Army (PLA) of China, attends the Keynote Address and Opening Dinner of the Shangri-La Dialogue security conference in Singapore June 1, 2007.[Reuters]

SINGAPORE - China and the United States plan to set up a defense hotline, one of Beijing's top generals said on Saturday, a move aimed at improving bilateral military relations.

Zhang Qinsheng, deputy chief of the general staff of the People's Liberation Army, made the remarks while speaking at the plenary session of the three-day security summit, also known as the Shangri-La Dialogue, after the name of the Singapore hotel at which the event has been held since its launch in 2002.

He said the issue of a hotline between the Chinese military and the US Defense Department would be settled when he visited the United States in September.

"We will finalize the establishment of the hotline," said Major General Zhang, speaking through an interpreter at an Asian security conference in Singapore.

"We are prepared that in September this year during the ninth Sino-US defense talks, we are going to settle the issue."

Zhang also told the Summit that China's defense budget is true and authentic.

As the level of Chinese military modernization gradually rises, some raise the question of "military transparency", and voice their suspicion over China's defense budget, so it is necessary to briefly clarify the matter, Zhang said.

"In China, defense budgeting must follow a set of highly strict legal procedures, and the published Chinese defense budget is true and authentic," he said.

He added that the increased proportion of the defense budget is mostly used to make up the retail price rise, improve welfare of the military personnel, and for better logistic support.

"Given the multiple security threats, geo-political environment, the size of the territory, and the per-capita expense, the Chinese defense expenditure is small by all judgments," he added.

Regarding "military transparency", Zhang noted that due to differences in history, culture, social system and ideology, countries naturally disagree on what "transparency" means and how to achieve it.

"The rise of a country's military power is a dynamic process full of changeable factors. It is difficult to be evaluated precisely," he said, adding that "Therefore, it takes time to achieve transparency."

He stressed that "China is gradually making progress in military transparency, in light of the principles of trust, responsibility, security and equality."

The annual Shangri-La Dialogue, organized by the London-based International Institute for Strategic Studies, opened on Friday. It gathered defense ministers and top officials from 26 countries and regions in the Asia-Pacific region and Europe to address major regional security issues and defense cooperation.