"If China recovers more quickly than other (countries), its weight will increase in the region compared to other players," Ernst Uhrlau, head of the Bundesnachrichtendienst (BND), told the Handelsblatt daily in an interview.
"And internationally, if China becomes the motor of the (global) economic recovery, the country will ... have greater influence on the rules of the game. We are most likely experiencing a geopolitical metamorphosis."
China has doubled its stated defence budget since 2006 and in March announced it would spend 480 billion yuan ($70 billion) in 2009, a 14.9-percent increase on the year before. Experts say actual spending is considerably higher.
The United States, Japan and their allies such as Germany have long expressed concern about China's military build-up and what they see as a lack of transparency about the intent behind the expansion.
In March a Pentagon report said China's pursuit of sophisticated weaponry was altering Asia's military balance and could be used to enforce its claims over disputed territories.
In February the BND, whose job is to inform the government about security and foreign policy issues, compiled a secret report on the possible outcomes of the global downturn, the Handelsblatt said. It laid out three different scenarios: that the economy starts to recover in 2009 and the current balance of power is maintained; that China recovers
more quickly and emerges stronger; and that the economy fails to recover.
Supporting the second scenario is the fact that China is devoting a large part of its economic stimulus package to modernise its infrastructure but also its military, Uhrlau said.
"Under this scenario others would be caught in China's wake, because growth primarily comes from there. Certain inbalances in Asia would be strengthened. India for example would be affected," he said.
Uhrlau also said that the global recession might lead to more people joining Islamic extremist groups because these organisations see the crisis as "proof that the West's supposed domination has lapsed."
"This could boost recruitment for militant or Jihad groups," he said.