Vowing to step up modernisation of its military, China today announced a 7.5 per cent hike in defence spending in 2010 boosting its military budget to USD 77.9 billion, almost double that of India.

But the hike was the smallest increase in defence expenditure in more than two decades and could be a fallout of financial constraints.

The increase will be used to enhance China’s military capabilities and ability “to meet various threats” Xinhua quoted Li Zhaoxing spokesman for China’s Parliament, the National Peoples Congress as saying.

“China is committed to peaceful development and military posture that is defensive in nature” Li said after the budget was placed before the Parliament.