"Building up military equipment is an urgent task of military combat preparations and is an important strategic task for the country's peace and stability," Jiang was quoted as saying by the People's Daily.

Jiang, chairman of the Central Military Commission, told a high level meeting that included President Hu Jintao that it was a priority to improve the overall combat capability of the military and its weapons.

According to the Pentagon, China is more than doubling its budgeted defense spending this year as part of an aggressive military modernization strategy.

China's official defense budget in 2004 is more than 25 billion dollars.

But when off-budget funding for foreign weapons system imports is included, total defense-related expenditures should soar to between 50 and 70 billion dollars, US deputy undersecretary of defence Richard Lawless said earlier this year.

This would rank China third in defense spending after the United States and Russia.

Jiang's comments came as China reportedly cancelled a military exercise on Dongshan Island near to Taiwan, withdrawing some 3,000 troops.

China has been escalating its rhetoric against Taiwan, which it considers part of its territory, warning last month that it may attack the island before 2008 if Taiwan pushes its pro-independence timetable too hard.

China has some 600 short-range ballistic missiles aimed at Taiwan and has cautioned Taipei against engaging in military build-up through purchases of advanced weapons from the United States.