U.S. Defense Secretary Ash Carter listed a rising China and North Korea's nuclear programs as among the challenges facing the United States as he called Tuesday for defense outlays in fiscal 2017 to be maintained at current levels.

One of the challenges is "the Asia-Pacific region, where China is rising and where we're continuing and will continue our rebalance, so-called, to maintain the stability in the region that we have underwritten for 70 years," Carter said, referring to President Barack Obama's policy of putting priority on Asia.

Carter said China appears to be using artificial islands it created on submerged reefs in the South China Sea for military purposes and that the U.S. military will continue to operate ships and aircraft in the area to demonstrate that there is no legal basis in Beijing's claim to the islands.