US says secrecy raises potential for 'miscalculation' but experts say China cannot reach desired level of transparency

China's military cannot meet Washington's expectations of transparency, scholars in Beijing warned today, after a report from the US defence department said the secrecy of the People's Liberation Army was increasing the potential for "misunderstanding and miscalculation".

The annual Pentagon report was published amid frictions between the countries over US arms sales to Taiwan, US naval drills with South Korea and China's growing confidence in the South China Seas. It argues that despite modest improvements in the PLA's openness, "the limited transparency in China's military and security affairs enhances uncertainty and increases the potential for misunderstanding and miscalculation."

The PLA has issued reports on its work and attempted to improve links with other militaries in recent years, engaging in more joint exercises and taking part in peacekeeping missions. But Shi Yinhong, an expert on Sino-US relations at Renmin University, said: "Although China has steadily increased its military transparency over the past few years, it's currently impossible for China to reach the level that the US demands."

This year China announced that the military budget would rise by 7.5% to 532.11bn yuan (£51.7bn), after two decades of double-digit annual increases. Experts suggested the slowdown reflected Chinese concerns about the way it was perceived, as well as financial constraints. China argues that spending remains well below US levels and that US capabilities remain far superior.

The Pentagon believes that China's actual military spending is roughly double the stated level. Its report says China has the most active land-based ballistic and cruise missile programme in the world and that it is developing an anti-ship ballistic missile with a range of more than 1,500km, capable of attacking aircraft carriers in the western Pacific.

It adds that analysts believe China will not have a domestically produced aircraft carrier and associated ships for another five years, although foreign assistance could speed that process up. It also predicts: "It is unlikely ... that China will be able to project and sustain large forces in high-intensity combat operations far from China until well into the following decade."

Beijing suspended military-to-military ties between the countries in January, in retaliation for US arms sales to Taiwan. The report notes that while Beijing has improved economic and cultural ties with Taiwan, it has continued the build-up of missiles opposite the island and expanded its military advantage.

Last month Beiing reacted angrily when the US secretary of state waded into the territorial dispute over the South China Sea between China and several regional powers including Vietnam and the Philippines. Hillary Clinton said resolving the row was a diplomatic priority and was in the national interest of the US.

Other countries complain that China is taking a tougher line on the dispute. It recently began describing rights over the strategic waterway – which is also potentially rich in natural resources – as a "core interest".

China has also complained about US plans to hold joint drills with South Korea in the Yellow Sea, between China and the Korean peninsula. "The United States appears to want to declare to the world: 'The Asia-Pacific and the oceans remain under the United States'," said a commentary in the Communist party's official People's Daily newspaper.

Zhu Feng, of Peking University's School of International Studies, said the combination of issues had led to an "unprecedented surge" in tensions but that the prospect of conflict remained low.

Drew Thompson, a China expert at the Nixon Centre in Washington, warned: "The US military and the Chinese military don't have a common understanding, a rules of the road, for navigation. That's a major cause for concern."