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"They clearly have the 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 said.
But he said the advances in weaponry underlined the importance of building a dialogue with the Chinese military, and added he hoped his visit starting Sunday would lay the ground for deeper defence ties with Asia's rising power.
"My hope is that, through the strategic dialogue that I'm talking about, that maybe the need for some of these capabilities is reduced," Gates said.
With Chinese President Hu Jintao due in Washington for a pivotal state visit on January 19, both sides are anxious to show progress in defence ties, which China has repeatedly suspended over US arms sales to Taiwan.
"It's pretty clear the Chinese wanted me to come before President Hu visits Washington," Gates said.
"My own view is a positive constructive, comprehensive relationship between the United States and China is not just in the mutual interests of the two countries, it's in the interest of everybody in the region and I would say across the globe."
Days before the US defence chief's highly symbolic trip, photographs appeared showing a prototype of China's first stealth fighter, the J-20, at an airfield in the southwest.
"We knew they were working on a stealth aircraft," Gates said when asked about the warplane.
"What we've seen is they may be somewhat further along in the development of that aircraft than our intelligence had predicted," he said.
But he added "there is some question about just how stealthy" the new fighter really is.
Gates also said he had been concerned about China's pursuit of "anti-ship, cruise and ballistic missiles ever since I took this job" four years ago.
He also said the development of China's anti-ship missile was at an advanced stage but it was unclear whether the weapon was fully operational.
Due to the potential threat posed by Chinese missiles and other hardware, Gates said his proposed defence budget unveiled on Thursday placed a priority on technology designed to counter "anti-access" weapons.
The proposed Pentagon budget for 2012 calls for funding for a new long-range nuclear bomber, electronic jamming devices for the Navy, improvements to radar for F-15 fighters, a satellite launch vehicle and an unmanned naval "strike-and-surveillance aircraft".
Although China may be years away from fielding fully-capable anti-ship missiles or warplanes, analysts say that it is gaining ground and that the country's military leaders are displaying an increasingly assertive stance.
Aware of the Asian power's growing economic and military might, the United States for years has appealed to China to back a more "durable" dialogue -- similar to US-Soviet exchanges during the Cold War -- to avoid miscalculations.
But China has instead opted to break ties in order to register its displeasure with Washington, particularly over billions of dollars in weapons deals to Taiwan.
Gates, who last visited China in 2007, has yet to persuade the Chinese to embrace a permanent military dialogue and acknowledged that top leaders would likely raise the issue of weapons sales to Taiwan during the trip.
The Pentagon chief is due to meet Hu and his Chinese counterpart, General Liang Guanglie, as well as visit the army's Second Artillery Corps headquarters outside of Beijing, which is China's nuclear command center.
The talks were also expected to cover recent tensions on the Korean peninsula, including China's role in helping to ease a recent crisis that began after Pyongyang shelled a South Korean island.
"We recognize that China played a constructive role in lessening tensions on the peninsula in the latter part of last year," Gates said.
"Speaking in broad terms, I think one of our goals is to see if we can get out ahead of these periodic provocations by the North Koreans and bring greater stability to the peninsula," he said.
"We have a mutual interest in that."
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