Missile shield may spark China nuclear upgrade: officer VIENNA (Reuters) - China may need to modernize its nuclear arsenal to respond to the destabilizing effect of a planned U.S.-backed missile defense system, a senior Chinese military officer said on Wednesday. "It undermines the strategic stability," said Major General Zhu Chenghu of China's National Defense University about the U.S.-led development of a missile shield, which has also alarmed Russia. "We have to maintain the credibility of deterrence," he told Reuters on the sidelines of a panel discussion on nuclear disarmament, referring to the military doctrine that an enemy will be deterred from using atomic arms as long as he can be destroyed as a consequence. The United States is spending about $10 billion a year to develop, test and deploy missile defenses, which would include a European shield as part of a layered system. The defenses would also include ship-based interceptors that could be deployed in the Middle East and Asia-Pacific - for instance as a hedge against North Korea - plus ground-based missile interceptors in silos in Alaska and California. The United States says the system in Europe - which is to be deployed in four phases by about 2020 - is intended to counter a potential threat from Iran and poses no risk to Russia. But Moscow says the interceptors that the United States and NATO are deploying will be able to destroy its own warheads in flight by about 2018, upsetting the post-Cold War balance of power. The comments by Zhu - who stirred controversy in 2005 by suggesting China could use nuclear weapons if the United States intervened militarily in a conflict over Taiwan - indicated this is an argument that also resonates in China. China "will have to modernize its nuclear arsenal" because the deployment of a missile defense system "may reduce the credibility of its nuclear deterrence," Zhu told the seminar. Therefore Beijing will have to improve its capabilities of survival, penetration ... otherwise it is very difficult for us to maintain the credibility of nuclear deterrence. Joseph Cirincione, president of the Ploughshares Fund, a global security foundation, said any American military planner in Zhu's position would say the same. Planned anti-missile systems and other advanced weapons in the future could "make it theoretically possible for the U.S. to launch a first strike on China, knock out most of its 40 or so long-range missiles, and intercept any left that were launched in response," he said. "Missile defenses, however benign they appear to the side building them, always force others nations to improve and increase their offensive weapons," Cirincione, who also took part in Wednesday's discussion in Vienna, said in an e-mail. The European system is to include interceptor missile installations in Poland and Romania and a radar in Turkey as well as interceptors and radars on ships based in the Mediterranean Sea. The United States and Russia hold the vast majority of the world's nuclear weapons. China, France and Britain are the three other officially recognized nuclear-armed countries, but their arsenals are much smaller. China closely guards information about its nuclear weapons. However, the U.S. Department of Defense has said that China has about 130-195 deployed nuclear-capable ballistic missiles. Additional reporting by Jim Wolf in Washington; Chris Buckley and Ben Blanchard in Beijing; Editing by Andrew Heavens