The annual report on China's military, released Friday, is likely to add to rising tension between Washington and Beijing at a time when U.S. lawmakers are considering bills that would punish China for what they contend are predatory trade practices.
The report was released on the day the largest high-level Chinese delegation ever to visit the United States left Washington after economic meetings with frustrated lawmakers and with senior Bush administration officials yielded few results.
In the report, the Defense Department explicitly describes what would happen if China should attack Taiwan, the self-governing democratic island that Beijing claims as its own. It says China does not yet have "the military capability to accomplish with confidence its political objectives on the island, particularly when confronted with the prospect of U.S. intervention."
An attack could severely damage China's economy and lead to international sanctions, spur a Taiwan insurgency that could tie up the Chinese military for years, and possibly cause Beijing to lose its coveted hosting rights for the 2008 Olympics, the report said.
"Finally, China's leaders recognize that a conflict over Taiwan involving the United States would give rise to a long-term hostile relationship between the two nations — a result that would not be in China's interests," the report said.
Michael Pillsbury, a former Pentagon official who now serves as an adviser on China issues, called the Taiwan language the "most blunt warning in any U.S. document in history to China of the really bad things that will happen if they attack Taiwan."
The Chinese Embassy did not return messages Friday seeking comment on the Pentagon report. But China has reacted angrily to previous reports and has insisted that its multibillion-dollar military buildup is defensive.
The report comes after high-level U.S.-China economic meetings this week failed to reach any breakthrough on the countries' biggest economic dispute: China's currency, which American manufacturers say is undervalued by as much as 40 percent. That makes Chinese products cheaper for Americans and U.S. goods more expensive in China.
The Pentagon report also said the People's Liberation Army has been acquiring better missiles, submarines and aircraft and should more fully explain the purpose of a military buildup that has led some to view China as a threat. It noted, however, that "the PLA remains untested in modern warfare."
Loren Thompson, a defense analyst with the Lexington Institute, said China's military still is relatively modest, despite the country's huge population and booming economy.
"There really isn't much in China's military programs that would lead you to the conclusion that they want to do anything beyond being influential in East Asia," he said.
If the Bush administration were truly worried about the possibility of a Chinese military challenge, he said, it would be rethinking the vibrant trade ties between the countries, which it has yet to do.
"If China was really a threat, would we be moving our factories there at the rate of one a day?" he asked. "During the Cold War, nobody in America ever proposed building television sets or cars in Russia."