China's military spending exceeded $145 billion last year as it advanced a program modernizing an arsenal of drones, warships, jets, missiles and cyberattacks, the Pentagon said Thursday, presenting a far higher figure than Beijing's official tally.

The Pentagon's estimate, using 2013 prices and exchange rates, was 21 percent above the $119.5 billion announced earlier by China. It was detailed in an annual report to Congress that cited steady progress in Chinese defense capabilities.

It acknowledged that estimating such military expenditures can be difficult, in part because of China's "poor accounting transparency and incomplete transition from a command economy."