WASHINGTON, June 5, 2014 – China continues to modernize and improve its military capabilities, according to an annual DOD report to Congress, and is also preparing for contingencies in the South and East China Seas where Beijing has been involved in increasingly tense territorial disputes with its neighbors.

The just-released “Military and Security Developments Involving the People’s Republic of China for 2014” report said China’s military expenditures continue to grow in keeping with its goal of being a regional and world power.

The main mission for the People’s Liberation Army, the report said, is to improve the capacity of its armed forces to fight and win short-duration, high-intensity regional contingencies.

China continues to prepare for potential conflict in the Taiwan Strait — which includes deterring or defeating the United States, according to the report.

“The People’s Liberation Army also is placing emphasis on preparing for contingencies other than Taiwan, including potential contingencies in the South and East China Seas,” the report says.

The PLA Navy, the report said, conducted its largest-ever fleet exercise in the Philippine Sea.

China also conducted a series of joint military exercises in September and October, according to the report. “These exercises combined PLA ground, navy and air forces in large-scale maneuvers along China’s southern and southeastern coasts,” the report said.

“As China’s interests, capabilities, and international influence have grown, its military modernization program has also become increasingly focused on military investments for a range of missions beyond China’s coast, including sea lane security, counterpiracy, peacekeeping and humanitarian assistance/disaster relief,” the report says. The United States has worked with China on some of these missions.

Chinese leaders, the report said, see this era as a “period of strategic opportunity” to advance national development.

China is using the strategic space to prioritize economic growth and development and to achieve “national rejuvenation” by 2049, according to the report.

“At the same time, Chinese leaders express a desire to maintain peace and stability along their country’s periphery; expand their diplomatic influence to facilitate access to markets, capital, and resources; and avoid direct confrontation with the United States and other countries,” the report said.

Following this strategy, China’s presence is growing in all regions of the world, the report said. This has led to friction between some of its regional neighbors, including allies and partners of the United States.

The U.S.-China relationship is expanding and improving, the report said. In the military area there are questions about the rate of growth. The Chinese have not been transparent about their spending, with U.S. experts believing the country spends roughly $145 billion on defense, far beyond the $119 billion that China has officially announced.

China has sustained its investments in strategic forces modernization, as well as key anti-access/area-denial capabilities such as advanced intermediate- and medium-range conventional ballistic missiles, long-range land-attack and anti-ship cruise missiles, counter-space weapons, and offensive cyber capabilities, according to the report.