China can dispel global worries about its strategic intentions and ensure future prosperity by opening up its political system, Rumsfeld told future Chinese leaders on Wednesday.
China's prosperity and other countries' attitudes about the nation "may well depend on internal political events here", Rumsfeld said to cadres at the Central Party School in Beijing, where communist leaders are groomed.
The defence secretary is trying to use his first trip to China as US defence chief to boost bilateral military ties and register the Pentagon's concerns about what it calls the rapid growth and secrecy of the Chinese military.
"A growth in China's power projection understandably leads other nations to question China's intentions," he said, stressing a major theme in the Pentagon's approach to China.
"The rapid and, from our perspective at least, non-transparent nature of this build-up contributes to their uncertainty."
Regional power balance
Rumsfeld was echoing a speech he made in Singapore in June in which he said China's rapid military expansion was upsetting the balance of power in Asia, where the United States maintains key alliances with South Korea and Japan.
Chinese Defence Minister Cao Gangchuan told Rumsfeld the country's priority was to develop the economy and raise living standards.
Donald Rumsfeld (L) complained
about the US being sidelined
"It is not necessary or even possible for us to massively increase the defence budget," he said, putting a spending figure of $30.2 billion for the current year at the current exchange rate.
"That is indeed the true budget," he said.
Rumsfeld said the meeting with Cao had been "constructive and candid and useful".
US being sidelined
"I sense a desire on the part of the minister to find activities and ways we can work with each other that will contribute to demystifying what we see of them and what they see of us," he said.
In a question-and-answer session with the party school students, Rumsfeld shrugged off suggestions that the US was sending China mixed signals, saying it was the other way around.
"We see mixed signals and we seek clarification," he said, citing China's limited response to US requests for broader military exchanges and US exclusion from the East Asian Summit in Kuala Lumpur in December.
Rumsfeld also complained that the Shanghai Cooperation Organisation - a regional security forum grouping China, Russia and Central Asian states - sought to oust US military presence from Uzbekistan.
"History suggests that greater openness in the military and economy fields are related, in the end, to openness in the political sphere"
US defence secretary
He was due to talk on Wednesday with Chinese President Hu Jintao and will visit China's Second Artillery Corps, a strategic missile facility at Qinghe, outside Beijing.
Rumsfeld told 30 young officials that China's tremendous economic and trade growth gave it new responsibility for "the international system's health and success" and made the transparency of Chinese decision-making a critical issue.
"History suggests that greater openness in the military and economy fields are related, in the end, to openness in the political sphere," he told the cadres through a translator.
Human rights groups say China has failed to match the economic liberalisation that has turned the country into a powerhouse with reforms in its one-party political system.
Rumsfeld's week-long trip also includes stops in South Korea, Mongolia, Kazakhstan and Lithuania.