China said Wednesday it will increase its defense budget 7.2% this year, as it continues its campaign to build a larger, more modern military to assert its territorial claims and challenge the U.S. defense lead in Asia.

China’s military spending remains the second largest behind the U.S. and it already has the world’s largest navy.

The budget, which adds up to about $245 billion, was announced at the National People’s Congress, the annual meeting of China’s legislature. The Pentagon and many experts say China’s total spending on defense may be 40% higher or more because of items included under other budgets.

The boost is the same percentage as last year, far below the double-digit percentage increases of previous years and reflecting an overall slowdown in the economy. The nation’s leaders have set a target of around 5% growth for this year.

Tensions with the U.S., Taiwan, Japan and neighbors who have overlapping claims to the crucial South China Sea are seen as driving spending on increasingly high-tech military technologies. Those include stealth fighters, the country’s three — soon to be four — aircraft carriers, and a broad expansion of its nuclear arsenal.

China generally ascribes the budget increases to exercises and maintenance and improving the lives of its 2 million service members.