China has engaged in widespread cyber espionage in a bid to extract information about the U.S. government's foreign policy and military plans, said a Pentagon report issued Monday.

China kept up a steady campaign of hacking in 2012 that included attempts to target U.S. government computer networks, which could provide Beijing a better insight into America's policy deliberations and military capabilities, according to the Pentagon's annual assessment of China's military.

"China is using its computer network exploitation (CNE) capability to support intelligence collection against the U.S. diplomatic, economic, and defense industrial base sectors that support U.S. national defense programs," said the report to Congress.

"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," it said.

The report marked the most explicit statement yet from the United States that it believes China's cyber spying is focused on the U.S. government, as well as American corporations.

Although President Barack Obama's administration has demanded China stop widespread cyber theft, officials have tended to focus their public comments on the hacking of private business networks and not U.S. government agencies.

The information targeted by the cyber spying could possibly benefit China's arms and technology sectors, as well policymakers interested in U.S. leaders' thinking on China-related issues, the report said.

The cyber spying could assist Chinese military planners in "building a picture of U.S. network defense networks, logistics, and related military capabilities that could be exploited during a crisis," it said.

U.S. officials have grown alarmed over what they call increasingly brazen hacking from China that has penetrated defense contractors including Lockheed Martin and a host of other organizations and agencies.

The digital espionage was part of a broader industrial espionage effort that seeks to secure military-related US and Western technology, allowing Beijing to scale back its reliance on foreign arms manufacturers.

"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 said.

Apart from describing the Chinese military's focus on cyber warfare, the Pentagon report portrayed a steady build-up of Beijing's armed forces, with investments in anti-ship missiles, space satellites, a new aircraft carrier and stealth fighter jets.

China in March announced a 10.7 percent increase in its annual defense spending, with a budget of $114 billion.

But the report estimated China's total military spending for 2012 was much higher, between $135 billion and $215 billion.

Although China's top strategic concern remained Taiwan, its "military modernization has begun to focus to an increasing extent on capabilities and mission sets that extend beyond immediate territorial concerns," David Helvey, deputy assistant secretary of defense for East Asia, told reporters.

The report said much of China's investments are concentrated on missiles and other weaponry to attack "military forces that might deploy or operate within the western Pacific," where Beijing stakes territorial claim to an arc of disputed islands.

The Pentagon has been particularly concerned about the DF-21D anti-ship ballistic missile, as well as air defenses and other weapons that could hit destroyers or aircraft carriers from a long distance.

"Obviously, something that can hold at risk large surface ships, including aircraft carriers, is something we pay attention to," Helvey said.

But the report stressed "positive momentum" in military relations between the United States and China, citing more high-level contacts and a joint counter-piracy exercise in the Gulf of Aden last year. (AFP)