Speaking at an international security conference in Singapore, Rumsfeld said China had every right to decide how to invest its resources, but the rest of the world also needed to understand Beijing's intentions.

"The only issue on transparency is that China would benefit by demystifying the reasons why they are investing in what they are investing in, in my view," Rumsfeld said.

A Pentagon report last month said China was spending two to three times more on its military than the 35 billion dollars a year it has acknowledged.

The report concluded that while Taiwan appears to be the near-term focus of China's military spending, the buildup poses a potential threat to the United States over the longer term.

Rumsfeld did not go as far as saying that China was a potential threat or future military rival to the US in a question and answer session with defense and security officials attending the so-called Shangri-la Dialogue in Singapore.

He said he thought China's primary objective was a peaceful reunification of Taiwan with the mainland.

But, he argued that as China's stake in the global economy grows it will face pressure to explain its behavior to the outside world.

"In life you can't have it both ways," Rumsfeld said.

"You can't be successful economically and engage the rest of the world, and have people milling around your country and selling things and buying things and engaging in exchanges, and have them at the same time worried or wondering about some mystery that they see as behavior that is unsettling," he said.

"If the rest of the world looks at China and sees a behavior pattern that is mysterious and potentially threatening, it tends to affect the willingness to invest," he said.

Rumsfeld also held bilateral meetings with Singapore's Defense Minister Teo Chee Hean and Australian and Indian counterparts Brendan Nelson and Pranab Mukherjee.

Mukherjee said India's relations with China were improving but stressed the need for greater information sharing.

China was represented at the conference here by a lower level foreign ministry official, Tan Qingsheng, even though Rumsfeld had urged Beijing to participate at a higher level when he visited the Chinese capital in October.

On other issues, Rumsfeld expressed concern about China and Russia's role in forming the Shanghai Cooperation Organization, a group of central Asian nations that has called for a withdrawal of US forces from Afghanistan.

He said US relations with Russia are better than they have been in decades.

"But in other ways Russia has been less helpful, as when they seek to constrain the independence and freedom of action of some neighboring countries," he said.

He also criticized a move to admit Iran to the Shanghai Cooperation Organization.

"It strikes me as strange that one would want to bring into an organization that says it's against terrorism ... one of the leading terrorist nations in the world -- Iran," he said.

Asked about rising anti-American sentiment around the world, Rumsfeld said he was concerned about it, but believed that "the ultimately truth wins out".

"In Iraq, some people like the good old days that never were. Saddam Hussein was no sweetheart," he said.

"Do I recognize that the United States is closely identified with Israel and that the bulk of that region tends to be anti-Israel and blames the plight of the Palestinians on the Israelis, and by extension on the United States? I do recognize that," he said.

He suggested, however, that Al-Qaeda has been "enormously successful" in manipulating a free press to spread disinformation and weaken the will of its opponents.

"The United States clearly has to be sensitive to world opinion. We also have high regard for having 3,000 people killed on September 11 in our country, and we don't intend for that to happen again," he said.

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