WASHINGTON - Major investments in aircraft, a space program and maritime technologies by China that have closed the technical gap with the United States military put strengthening Sino-US ties at a premium, said a new Pentagon report.

The Wednesday report to Congress, which in the past has been a source of tension between the two nations, said China's military buildup will increase the risk of misunderstandings and miscalculations between the two. The annual report addressed the current and future course of military development of the People's Liberation Army (PLA), China's security and military strategy and US-China military ties.

The report, according to the Los Angeles Times, said "China is developing a new stealth fighter, recently conducted sea trials on its first aircraft carrier and carried out a record number of satellite and other space launches in the last year".

Thanks to major investments into its military over the past decade, many of China's technologies have reached maturity whereas others will become operational in the next few years, the report said.

It predicts that by 2020, the PLA will become a "modern, regional-focused military", directly stating that Beijing is focusing its military buildup on Taiwan, according to Bloomberg.

The report also predicts that Beijing will likely build multiple aircraft carriers with support ships over the next decade.

In a news conference, Deputy Assistant Secretary of Defense for East Asia Michael Schiffer said China would continue to develop the aircraft carrier it bought from Ukraine in 1998.

Aside from firing warnings to Congress, it praised China's new role in international communities and its growing involvement in international peacekeeping efforts, counter-piracy operations, humanitarian assistance and disaster relief, and the evacuation of Chinese citizens from overseas trouble spots.

But the Pentagon is highly concerned about China's rapid military buildup as the two countries jostle for control in the highly competitive Asia-Pacific region.

"The pace and scope of China's sustained military investment have allowed China to pursue capabilities we believe are potentially destabilizing to regional military balances, increase the risk of misunderstanding and miscalculation and may contribute to regional tensions and anxieties," said Schiffer at Wednesday's news briefing about the report.

"Such capabilities could increase Beijing's options to use military force to gain diplomatic advantage, advance its interests or resolve military disputes in its favor."

Therefore, strengthening military ties with China is a "critical part of our strategy to shape China's choices as we seek to capitalize on opportunities for cooperation with mitigating risks," the report said.

The report said that the lack of transparency about China's military development is one of the challenges for US-China military relations.

Douglas Paal, at the Carnegie Endowment for International Peace, said that among many challenges, the greatest is "deep strategic mistrust".

"Chinese and American military officers have different understandings of the meaning of common terms and actions, and greater exchanges may help keep these from becoming the basis for wrong conclusions and decisions in a time of crisis," he said.

The US arms sales to Taiwan last January damaged military ties, hurting diplomatic exchanges until the end of 2010. With a new arms sale to Taiwan looming, the White House will make a decision by Oct 1 what to sell to Taiwan.

Paal said the decision of the arms sales will be driven by pre-existing policy considerations.

"What needs to be done will fall in the middle of the policy spectrum of choices," he said.