China is carrying out systematic cyber-espionage on the U.S. military and private businesses to acquire technology, the Pentagon charged Monday in its most blunt assessment yet.

In its annual report to Congress on the People’s Liberation Army of China, the Defense Department stresses the threat of cyber-espionage, which has led to top-level complaints to Beijing by Washington.

The report says China “is using its computer network exploitation capability to support intelligence collection against the U.S. diplomatic, economic and defense industrial base sectors.”

Cyber-spying on American targets appears “to be attributable to the Chinese government and military,” states the report, and, “The access and skills required for these intrusions are similar to those necessary to conduct computer network attacks.” 

The Chinese government has denied orchestrating or condoning hacking operations against U.S. networks, the Washington Post notes.

The U.S. has also used cyberwarfare tactics, most notably in its campaign to thwart Iran's nuclear program, but U.S. officials have said the country does not steal commercial or technological secrets, the Financial Times points out.

“China continues to leverage foreign investments, commercial joint ventures, academic exchanges, the experience of repatriated Chinese students and researchers, and state-sponsored industrial and technical espionage to increase the level of technologies and expertise available to support military research, development, and acquisition,” the report says.

“In 2012, numerous computer systems around the world, including those owned by the U.S. government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military.”

The Pentagon also noted that China is also stepping up its conventional weapons and aerospace systems, saying China is rapidly upgrading an armed force that two decades ago was regarded as “a poorly equipped, ground forces-centric military.”

Significantly, China rolled out last year its first aircraft carrier and invested heavily in short- and medium-range ballistic missiles.

David Helvey, deputy assistant secretary of defense for East Asia, told reporters Monday that the U.S. government would like greater insight into China’s military policy and defense goals.

“What concerns me is the extent to which China’s military modernization occurs in the absence of the kind of openness and transparency that others are certainly asking of China,” he said.

The Pentagon report said one of Beijing’s most pressing defense priorities is the future status of Taiwan, the economic powerhouse island that China claims as part of its territory. The Chinese government, the report said, “is capable of increasingly sophisticated military action against Taiwan.”

China has watched warily as the United States has bolstered its military presence in Asia, part of an Obama administration plan to “pivot to Asia” as it winds down the war in Afghanistan. As part of that shift, the United States hopes to build a more robust partnership with Beijing as they confront common problems, the report said.

“The complexity of the security environment both in the Asia-Pacific region and globally calls for a continuous dialogue between the armed forces of the United States and China,” the report concluded.