(Reissues after Philippine Defence Department corrected amount awarded to $2 million from $6.6 million)

MANILA, Sept 3 (Reuters) - China will give the Philippines about $2 million worth of "non-lethal" military equipment to carry out development projects in areas where communist and Muslim rebels operate, officials said on Monday.

The equipment includes vehicles such as bulldozers and dump trucks for the Philippine military, Defence Secretary Gilberto Teodoro said, after talks with Chinese Defence Minister Cao Gangchuan, who is on a five-day visit.

"These donations are part of confidence-building measures to bring our two countries closer in terms of defence and military relations," Teodoro told reporters.

Since 2004, China has donated about $2.5 million worth of engineering equipment and transport vehicles to the Philippine military. Dozens of Filipino defence and military officials have also attended Chinese strategic and tactical courses.

But Washington remained Manila's main security ally in the region, President Gloria Macapagal Arroyo told Reuters in an interview in July, playing down talk of increasing ties with China.

Arroyo has made frequent visits to China and has appointed at least four special envoys to deal with growing economic, cultural and political relations with Beijing.

For the last two years, the two sides have been holding annual defence meetings as well as exchanging intelligence and other information to fight terrorism, narcotics and forms of transnational crime.

Teodoro said the two sides avoided discussions on a territorial spat in the South China Sea.

In 1995, Chinese built a structure on a submerged reef in the Spratlys, a territory within the Philippines' 200 mile exclusive economic zone and claimed by Manila as part of its Kalayaan (Freedom) chain of islands.

In 2002, China and the Philippines, together with other members of the Association of South East Asian Nations (ASEAN) signed the Declaration on the Conduct of Parties in the South China Sea to reduce tension in the disputed area.

Cao will meet Arroyo and other senior government officials, including the leaders of the two chambers of Philippine Congress, during his visit.

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