China has under-reported its defense budget in 2014 by around 20%, based on a yearly report posted by the defense department of the US.

According to the US report cited by BBC News, China posted a 2014 budget of $120 billion, but the Pentagon said the actual amount reached almost $145 billion.

Like Us on Facebook

The US said China should be more transparent on its military expansion plans, especially now that it is involved in bitter territorial disputes with some of its neighbors over some islands in the South China Sea.

China, on the other hand, has often called the US a "hypocrite" since the latter's budget is way bigger compared to Beijing's. In 2013, the US military spending had reached around $600 billion.

The US yearly report on China's military budget shows a rough estimate of the amount spent by China. Last year, the posted figure fell between $135 billion and $215 billion. This year, officials said they now have a better grasp of China's operating methods.

According to the Pentagon, Beijing was using its cash mostly to upgrade its stock of drones, jets, missiles, cyber weapons, and warships. The US said Beijing has its focus on a possible confrontation in the Taiwan Strait but it is also trying to give more attention to the disputed territories in the South and East China Seas.

China claims ownership of some islands and rocky outcrops in waters that are also claimed by some of its neighboring countries including Vietnam, Japan, and the Philippines.

The US explained that China's lack of transparency has stirred the concern of other countries in the region. The report also said China's behavior and increasing focus on its "military modernization programme" will most likely worsen the tension in the region.

Beijing has not yet issued an official response to this reported issue.