Boeing Warns of the High Cost of Keeping China Down

US defence spending must be kept at record levels to cope with the threat of global terrorism and the emergence of China as a military rival, the UK's Financial Times newspaper reported yesterday.

Speaking to an audience at the Paris Air Show, Boeing defence chief Jim Albaugh forecast a slowdown in the Pentagon budget but warned that a decline would leave the US relying on old weapons following recent conflicts.

"Right now it's a lot different to after the end of the cold war. Then the threat really went away and the equipment for the most part was new," he was reported to say.

Several of the company's projects face substantial cuts during the current round-up of budget negotiations in the US Senate and Congress including the $200bn Future Combat Systems program to modernise the US army's battlefield equipment, the US missile defence system and an airborne laser weapon.