China has kept up major investments in its armed forces and made advances in hi-tech weaponry that outpaced other countries in the region, the Defense Department said in its annual report to Congress on Beijing's military.

Chinese "armed forces continue to develop and field disruptive military technologies, including those for anti-access/area-denial, as well as for nuclear, space, and cyber warfare, that are changing regional military balances and that have implications beyond the Asia-Pacific region."

The military buildup has allowed China to help with peacekeeping, humanitarian and counter-piracy missions, but could also allow it to "project power to ensure access to resources or enforce claims to disputed territories," the report said.

The Defense Department also confirmed in the document for the first time that the Chinese have built a new naval base at Hainan Island that can serve its growing fleet of submarines, including those equipped with ballistic missiles.

"The port, which has underground facilities, would provide the PLA (People's Liberation Army) Navy with direct access to vital international sea lanes, and offers the potential for stealthy deployment of submarines into the deep waters of the South China Sea," the Pentagon said of the base, which has been the subject of numerous media reports.

The Chinese accused the United States of spying near Hainan Island after a naval standoff earlier this month involving a US surveillance ship designed to track submarines with underwater sonars.

Washington charged its ship was harassed in international waters by Chinese vessels that veered dangerously close to the USNS Impeccable. After the incident, the US Navy sent in a heavily-armed destroyer to escort the surveillance ship.

The Pentagon report was written before the standoff but a senior defense official said Chinese actions appeared to be "consistent" with their military's stated mission of safeguarding against posssible threats to its sovereignty.

"China is very, very sensitive about what it perceives to be its territorial claims," the official, who asked not to be named, told reporters.

After the incident in the South China Sea, China charged the US Navy had entered what it considers to be an "economic exclusion zone."

The Chinese military has put a priority on cyber warfare and there have been numerous intrusions against US government and other computer networks around the world that "appear to have originated within" China, the report said.

The intrusions were focused on extracting information but "the accesses and skills required for these intrusions are similar to those necessary to conduct computer network attacks," the report said.

"It's something we are concerned about given the ability to access sensitive information," said the senior defense official.

Indian and Belgian government officials reported their computer networks had been targeted by suspected Chinese hackers last year and US authorities were investigating an incident.

The report also said China had sold nearly seven billion dollars worth of conventional arms in the global market, with Pakistan as the main customer.

Beijing usually rejects Washington's annual assessment of its military as a distorted portrayal of spending that it says is for purely defensive purposes.

But China's lack of transparency in reporting military spending and security policy "poses risks to stability by creating uncertainty and increasing the potential for misunderstanding and miscalculation," the report said.

Citing the report, the Defense Department called for more dialogue with China's military to reduce mutual suspicions.

"The more dialogue, the more interaction we have the better chance we have to ... reduce or hopefully eliminate the possibility of any misunderstanding or miscalculation between us," press secretary Geoff Morrell told a news conference.

China announced plans a year ago to increase its military budget by nearly 18 percent.

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Washington (AFP) March 25, 2009
US President Barack Obama said Wednesday that he wanted to "reset" US relations with Russia but argued NATO should still be open to countries which aspire to join the alliance.