DIA Director Robert Ashley said: "Beijing's longstanding interest to eventually compel Taiwan's reunification with the mainland and deter any attempt by Taiwan to declare independence has served as the primary driver for China's military modernisation".
China has tripled its military spending since 2002, hitting roughly £155billion past year.
"As it (China's military power) continues to grow in strength and confidence, our nation's leaders will face a China insistent on having a greater voice in global interactions, which at times may be antithetical to United States interests", Lieutenant General Robert Ashley, director of the DIA, wrote in the report. It has used domestic laws that force foreign partners to share key secrets in exchange as they look to have access to the vast Chinese market.
"Rather, China has routinely adopted the best and most effective platforms found in foreign militaries through direct purchase, retrofits, or theft of intellectual property".
"China's military strategy remains focused on developing the capability to dissuade, deter, and if ordered, defeat a potential third-party intervention in regional conflicts", says the report.
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A new type of naval destroyer developed domestically by China, called the Type 055 Renhai class, "will be one of the most advanced and powerful ships in the world", the report stated. "In some areas, it already leads the world".
The developments on Thursday came as China, which considers Taiwan a renegade province, has been pressing companies around the world to change the way they refer to the island amid renewed threats to use force to gain control over it.
"The biggest concern is that they are going to get to - they are getting to a point where the PLA leadership may actually tell Xi Jinping that they are confident in their capabilities", the official said, referring to China's leader.
According to the report, by 2025 China will have made new medium- and long-range stealth bombers capable of striking regional and global targets.
"These countries continue to develop, test and proliferate sophisticated anti-satellite weapons to hold United States and allied space assets at risk", the Air Force report says.
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In its Wednesday frontpage story, the Hong Kong paper alleged that several members of a Hong Kong independence student group had traveled to Taiwan and met with Tsai's envoy at the Academia Historica, an institution resorting under the Presidential Office.
"These bases, and other improvements to the PLA's ability to project power during the next decade, will increase China's ability to deter the use of conventional military force, sustain operations overseas, and hold strategic economic corridors at risk", it says. "We reserve the option for all the necessary means".
Taiwanese President Tsai Ing-wen refused to acknowledge a "one China" solution and said she will not back down, despite losing re-election to a more Beijing-friendly opponent.
A dispute over control of Taiwan has been a driving factor in the increase of modernization. "The challenge, of course, is for measuring against a globally active USA military that has many different missions and many different tasks, so I think there's a very long way for the PLA to reach that level". And we have - it's not in the Chinese interests for a crisis to spiral in the South China Sea.
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