China plans to boost military spending by at least 8 percent in 2018—its biggest increase in several years. Over the next year, the People’s Liberation Army will officially get $175 billion for payroll, training, research, and development, and the acquisition of new ships, planes, spacecraft, and other weapons.

The state-run China Daily newspaper defended the budget boost, noting that “China’s defense budget is neither the largest in size—it accounts for just one-fourth of the military spending of the United States—nor does it have the fastest growth rate.” By any measure, Beijing’s military budget is comfortably the second-biggest in the world after that of the United States.

But experts say Beijing’s actual military spending is potentially tens of billions of dollars greater than the spending it publicly acknowledges. All that money has paid for one of the most ambitious arms buildups in recent memory, including the acquisition of huge new warships, radar-evading stealth fighters, and an array of satellites.

Combined, the new weaponry could help the PLA match U.S. forces at sea, in the air, and in space. “There are a lot of questions on the minds of countries in the region and extending beyond the region of what exactly does this mean,” Adm. Scott Swift, commander of the U.S. Navy’s Pacific Fleet, told reporters.

Nowhere is China’s military spending spree more apparent than in the western Pacific Ocean, where the Chinese navy, coast guard, and naval militia each possess more ships than any rival does. The People’s Liberation Army Navy alone operates more than 300 warships—slightly more than the U.S. Navy operates.

Big fleets allow China to dominate disputed waters rich in minerals and fish. “Routine patrols and exercises ensure Chinese forces are in and around all the features, not just the ones they occupy,” Adm. Harry Harris, commander of U.S. Pacific Command, told Congress (PDF). “China routinely challenges the presence of non-Chinese forces, including other claimant nations and especially the U.S., often overstating its authority and insisting foreign forces either stay away or obtain Chinese permission to operate.”

True, Chinese warships on average are smaller and less sophisticated than American warships are. But that’s changing fast. Beijing commissioned its first aircraft carrier—a refurbished Soviet vessel—in 2011. The second Chinese flattop launched in 2017. A third with advanced features is under construction and several more are planned. By 2020, the Chinese fleet could have three operational carriers—more than any other country except the United States with its 10 flattops, just five of which are in the Pacific.

Beijing is also building one of the most powerful surface warships in the world. The Type 055 cruiser is nearly 600 feet long and packs 122 cells for launching missiles. The U.S. Navy’s 22 Ticonderoga-class cruisers—about half of which are in the Pacific—are roughly the same size and have an equal number of missile cells. The first Type 055 launched in 2017. As many as seven more are under construction.

The Type 055s could carry a powerful new weapon. In February, photos circulated depicting what appears to be a prototype of an electromagnetic railgun on the deck of a Chinese warship. Railguns use magnetism rather than gunpowder to propel shells, and can shoot farther and faster than conventional guns. The U.S. Navy is working on railguns, too, but has yet to install one on a ship.

China’s air force also benefits from generous funding. The first prototype of China’s J-20 stealth fighter appeared in 2011. Seven years later, in February 2018, the People’s Liberation Army Air Force declared the twin-engine jet to be combat-ready with at least one regiment. It’s unclear how many J-20s are in service, but a Chinese fighter regiment typically includes at least 20 planes.

The U.S. Air Force’s own F-22 stealth fighter has been operational since 2005. The Air Force and U.S. Marines declared the newer F-35 stealth fighter operational in 2016 and 2015, respectively.

Combined, there are about 400 F-22s and F-35s in U.S. military service in 2018. Around 60 F-22s and a dozen F-35s are permanently based in the Pacific region. The Air Force, Marines, and Navy plan to send more F-35s to the Pacific. China, likewise, is building J-20s at a high rate and is also developing a second, possibly cheaper stealth fighter, the J-31.

U.S. officials expect the Chinese air force to catch up to America’s own air arms. “The PLAAF continues to modernize and is closing the gap rapidly with Western air forces across a broad spectrum of capabilities,” the Pentagon warned in the most recent edition of its annual report on the Chinese military (PDF). “This development is gradually eroding the significant technical advantage held by the United States.”

When it comes to space, Beijing actually briefly surpassed Washington in one key measure. In 2011, China launched 19 rockets into space. The United States launched just 18. America regained the lead for a few years. Then in 2016, China matched the United States’ 22 launches. In 2017, America again won, launching 29 rockets to China’s 18. Two of the Chinese launches that year failed.

This could be the year that the Chinese military and space agency, propelled by ever-higher budgets, pulls way ahead in rocket launches. China’s space agency announced it would attempt 35 launches in 2018.

What kinds of spacecraft the Chinese send into orbit is at least as important as how many it launches. It’s apparent China is pursuing an offensive strategy in space that could jeopardize the United States’ hundreds of satellites, which the U.S. military—and indeed the entire American economy—rely on for surveillance and communication.

Beijing’s “counterspace” weapons include anti-satellite rockets and maneuverable spacecraft that can sneak up on and tamper with other spacecraft. “Despite its public stance against the militarization of space... China also continues to develop a variety of counterspace capabilities designed to degrade and deny the use of space-based assets by adversaries during a crisis or conflict,” the Pentagon warned in its annual report.

“Whether liked or not, given the uncertainties in the global situation it is a trend of the times for military spending to be on the rise,” China Daily opined. “However, there is no need to fret at China’s defense budget hikes because China is committed to a path of peaceful development and it is not seeking to be aggressive in putting its interests first but rather be a builder of a community of shared future for all humankind.”

The U.S. government isn’t buying it. China, along with Russia, aims to “challenge American power, influence and interests, attempting to erode American security and prosperity,” the White House stated in its recent National Security Strategy (PDF). “They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence.”