China is exploiting Western commercial technology, carrying out aggressive cyber espionage and buying more anti-ship missiles as part of a steady build-up of military power, the Pentagon said Friday.
Beijing is working to take advantage of "mostly US" defense-related technologies in the private sector as part of a long-running effort to modernize the country's armed forces and extend China's reach in the Asia-Pacific region, the Pentagon wrote in a report to Congress.
"One of the PRC's (People's Republic of China) stated national security objectives is to leverage legally and illegally acquired dual-use and military-related technologies to its advantage," it said.
And China, which has the world's second largest defense budget behind the United States, "openly espouses the need to exploit civilian technologies for use in its military modernization" and dual-use technology transfers could have a "substantial" cumulative effect in boosting the country's army.
The Pentagon warned that "interactions with Western aviation manufacturing firms may also inadvertently benefit China's defense aviation industry."
European aerospace giant Airbus opened a production line for the A320 aircraft in China in 2009. The Defense Department pledged to prevent exports of advanced technologies that could be diverted to China's military.
Echoing recent warnings from intelligence officials, the Pentagon blamed China for "many" of the world's cyber intrusions over the past year that have targeted US government and commercial networks, including companies "that directly support US defense programs," it said.
The report warned that "Chinese actors are the world's most active and persistent perpetrators of economic espionage," and predicted that those spying efforts would continue, posing "a growing and persistent threat to US economic security."
China's investments in cyber warfare were cause for "concern," said David Helvey, acting deputy assistant secretary of defense for East Asia and Asia Pacific Security Affairs. Beijing was clearly "looking at ways to use cyber for offensive operations," Helvey told reporters, adding that there was no sign that China was ramping up digital activities.
The American military has long worried that China could potentially limit the reach of US naval ships in the western Pacific with new weapons, and the Pentagon report underlined those concerns, pointing to Beijing's growing arsenal of missiles.
"It is also acquiring and fielding greater numbers of conventional medium-range ballistic missiles (MRBMs) to increase the range at which it can conduct precision strikes against land targets and naval ships, including aircraft carriers, operating far from China's shores beyond the first island chain," said the report.
China was pouring money into advanced air defenses, submarines, anti-satellite weapons as well as anti-ship missiles that could all be used to deny an adversary access to strategic areas, such as the South China Sea, the report said.
US strategists -- and some defense contractors -- often refer to the threat posed by China's so-called "carrier-killer" missiles but Helvey said the anti-ship weapons currently have "limited operational capability."
China's military budget officially reached $106 billion in 2012, an 11.2 percent increase. But the US report said China's defense budget does not include major expenditures such as improvements to nuclear forces or purchases of foreign-made weapons. Real defense spending amounts to $120 to $180 billion, the report said.
US military spending, however, still dwarfs Chinese investments, with the Pentagon's proposed budget for 2013 at more than $600 billion.
Despite a sustained increase in defense spending over the past decade, China had experienced setbacks with some satellite launches and ambitious projects to produce a fifth-generation fighter jet and modern aircraft carrier still faced challenges, the report said.
Although looking to expand its traditional missions to include counter-piracy and humanitarian efforts, the People's Liberation Army's top priority remained a possible conflict in the Taiwan Strait, with China focused on preventing the United States from intervening successfully in support of Taiwan, the report said.