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In its yearly report to Congress on the Chinese military, the department said China continued to develop its nuclear capacity by fielding long-range ballistic missiles, The Financial Times reported. The report also said the People's Liberation Army was improving its capabilities with the development of cruise missiles and its abilities to operate in cyberspace.

The Pentagon said it believes the Chinese military was behind a huge cyber-attack in 2007 on a computer network serving the office of U.S. Defense Secretary Robert Gates.

In its report, the Pentagon said the Chinese navy was becoming familiar with open-water operations and conducting exercises in international waters. The air force was bettering its bombers' potential strike range by improving its radar systems and aerial refueling, the British newspaper said.

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