In a rare Pentagon appearance, President Barack Obama announced his historic decision to drastically cut the number of soldiers and Marines by 100,000.

Mr. Obama went on to say that despite his plan to significantly downsize troop levels and cut nearly a half a trillion dollars from the Department of Defense budget over the next ten years, American defense spending will still outstrip that of other nations.

I firmly believe, and I think the American people understand, that we can keep our military strong and our nation secure with a defense budget that continues to be larger than roughly the next 10 countries combined.

But critics argue that Mr. Obama’s statement paints a misleading picture about America’s dominance in defense spending, especially as it pertains to China.

China’s publicly announced military spending in 2011 was 601.1 yuan ($91.4 billion), representing an annual increase of 13 percent since 1989. But defense experts have long known that China hides its actual military spending. According to the Pentagon’s Annual Report to Congress, China’s real defense budget is likely upwards of $150 billion annually; however, “estimating actual PLA [People’s Liberation Army] military expenditures is a difficult process due to the lack of accounting transparency” and the fact that “China’s published military budget does not include major categories of expenditure.”

Still, even the Pentagon’s figures, say military analysts, do not capture the full picture of China’s military spending because they do not take into account the so-called “purchasing power parity exchange rate,” which takes into consideration the relative difference in costs of production and labor between nations. When those factors are accounted for, reports the American Enterprise Institute, China’s actual level of military spending may well be over $300 billion, not China’s officially reported $91.4 billion. While experts agree that the purchasing power parity exchange rate is complex to calculate, when taken into consideration, the combined military spending of the next 10 nations far outstrip America’s defense spending.

China’s budgetary “shell game” follows Premier Deng Xiaoping credo that China’s military strategy must be to: “hide our capacities and bide our time.” Indeed, as a recent book by PLA Air Force Colonel Dai Xu ominously notes, “China cannot escape the calamity of war, and this calamity may come in the not-too-distant future, at most in 10 to 20 years. If the US can light a fire in China’s backyard, we can also light a fire in their backyard.”

Before Mr. Obama finalizes his official 10-year plan to dramatically restructure and redefine the United States military, he would do well to remember that China’s military operates by Premier Deng Xiaoping’s dictum: “hide our capacities and bide our time.”