Washington: With a major military build-up in progress and its holding of the largest share of US debt, China poses a challenge to US' economic and national security, a top Republican Senator has said, pointing out that several of its neighbours were also feeling the heat of Beijing's aggressive posturing.

Senator John Cornyn from Texas said in his remarks at Washington-based think tank, the Heritage Foundation that China has continuously under-reported its defence spending and has reinforced its territorial ambitions by making renewed claims in the South China Sea and Arunachal Pradesh.

However, for the US the biggest concern remains China's ownership of a huge percentage of American debt amounting to USD 1.1 trillion of US securities.

"Just as our national debt is a huge challenge regardless of the Chinese connection, we know that China represents a challenge to our country above and beyond its investment in our debt.

"Many of China's neighbours remain concerned about its military build-up and its territorial ambitions," he said.

Cornyn, who also co-chairs the Senate India Caucus, said that China's official press agency reported in March that the country would increase its military budget this year by more than 12 per cent, an increase of 7 1/2 per cent.

However, he pointed out that the official Chinese estimates were "wrong".

"The Chinese repeatedly underestimate the extent of their defense spending. The Pentagon estimates the Chinese official budget of some USD 90 billion is far less than the USD 150 billion that they will actually spend. So it's off by USD 60 billion, the Pentagon estimates," he said.