Rumsfeld questioned China's expenditure and government
The US defence secretary has accused China of spending more on its military capabilities than it acknowledges.
Donald Rumsfeld said Beijing was expanding its missile build-up and developing advanced systems of military technology, in a speech in Singapore.
He questioned the need for "growing investment" because he said no nation was threatening China.
The comments highlight US concern over China's increasing military, economic and diplomatic power, observers say.
Call for openness
Mr Rumsfeld's warning came at an annual international security conference of Asian defence ministers and military experts.
He said the Pentagon's annual study of China's military power concludes that its defence budget is now the third largest in the world.
The defence secretary also questioned China's government.
Beijing would have to expand political freedoms to maintain economic growth and influence, he said.
"Ultimately, China likely will need to embrace some form of open, representative government if it is to fully achieve the benefits to which its people aspire," he added.
The US is urging the European Union to maintain its ban on selling weapons to China.
Washington has argued that ending the embargo would upset the balance of power in the region.