The Chinese development of its first radar-evading fighter jet, as well as an antiship ballistic missile that could hit American aircraft carriers, had persuaded him to make improvements in American weaponry a priority, Gates said on the eve of his visit to Beijing.
"They clearly have potential to put some of our capabilities at risk, and we have to pay attention to them, we have to respond appropriately with our own programmes," Gates was quoted as saying by New York Times.
At the same time, Gates doused China`s recent rollout of its new stealth fighter jet, the J-20, saying that even though it was a matter of concern, there "is some question about just how stealthy" it is.
Gates made his comments to reporters on his plane en route to Beijing, where he is due to arrive today for three days of talks with Chinese President Hu Jintao and top generals that are meant to promote a more open and stable relationship between the American and Chinese militaries.
It is unclear what effect Gates`s comments will have on the talks, which are occurring a week before President Hu is to meet President Barack Obama in Washington, The Times said.
The American weapons that Gates was referring to included investments in a new long-range nuclear-capable bomber aircraft, which the Pentagon had stopped developing in 2009, as well as a new generation of electronic jammers for the Navy that are designed to thwart a missile from finding and hitting a target, it said.
At a Pentagon briefing on Thursday, Gates said that the jammers would improve the Navy`s ability to "fight and survive" in waters where it is challenged.
Gates was also referring to continued investment in the Joint Strike Fighter, the Pentagon`s newest radar-evading fighter jet.
The Pentagon has not provided any estimate of the total cost of the three programmes or others meant to counter the Chinese buildup in the Pacific.
Although Pentagon officials say that China is a generation or more behind the United States in military technology, Gates said he has been worried about the Chinese buildup in his four years as defense secretary.
He also acknowledged that the Pentagon and intelligence agencies had underestimated how quickly the Chinese could act.
"We`ve been watching these developments all along," Gates said.
"I`ve been concerned about the development of the antiship cruise and ballistic missiles ever since I took this job," he added.
"We knew they were working on a stealth aircraft. I think that what we`ve seen is that they may be somewhat further ahead in the development of that aircraft than our intelligence had earlier predicted."
Gates said he hoped his talks with Chinese leaders would reduce the need for more American weaponry in the Pacific. He also said that if Chinese leaders considered the United States a declining power because of the financial crisis, they were wrong.
"I`ve watched this sort of cyclical view of American decline come around two or three times, perhaps most dramatically in the latter half of the 1970s," he said.
"And my general line for those both at home and around the world who think the US is in decline is that history`s dustbins are filled with countries that underestimated the resilience of the United States."