WASHINGTON (Reuters) - A Pentagon report released on Tuesday singled out Pakistan as a possible location for a future Chinese military base, as it forecast that Beijing would likely build more bases overseas after establishing a facility in the African nation of Djibouti.
The prediction came in a 97-page annual report to Congress that saw advances throughout the Chinese military in 2016, funded by robust defense spending that the Pentagon estimated exceeded $180 billion.
That is higher than China's official defense budget figure of 954.35 billion yuan ($140.4 billion). Chinese leaders, the U.S. report said, appeared committed to defense spending hikes for the "foreseeable future," even as economic growth slows.
The report repeatedly cited China's construction of its first overseas naval base in Djibouti, which is already home to a key U.S. military base and is strategically located at the southern entrance to the Red Sea on the route to the Suez Canal.
"China most likely will seek to establish additional military bases in countries with which it has a longstanding friendly relationship and similar strategic interests, such as Pakistan," the report said.
Djibouti's position on the northwestern edge of the Indian Ocean has fueled worries in India that it would become another of China's 'string of pearls' of military alliances and assets ringing India, including Bangladesh, Myanmar and Sri Lanka.
The report did not address India's potential reaction to a Chinese base in Pakistan.
But Pakistan, the U.S. report noted, was already the primary market in the Asian-Pacific region for Chinese arms exports. That region accounted for $9 billion of the more than $20 billion in Chinese arms exports from 2011 to 2015.
Last year, China signed an agreement with Pakistan for the sale of eight submarines.
China's Defence Ministry expressed its "resolute opposition" to the contents of the report, saying it hyped up the China threat theory.
China follows the path of peaceful development and its defense expenditures are "open and transparent", it said in a statement.
"The criticism in the U.S. report is pure conjecture," it added. "We hope the U.S. side can rationally and objectively view China's national defense and military building."
At a daily news briefing earlier, Foreign Ministry spokeswoman Hua Chunying dismissed the comment on Pakistani bases as "conjecture" and declined a specific response.
But China and Pakistan enjoyed friendly cooperative ties that did not target any third parties, she added.
The Pentagon report flagged Chinese military advances, including in space and at sea.
It cited China's 2016 launch of the first experimental quantum communications satellite, acknowledging that it represented a "notable advance in cryptography research."
As in past years, the Pentagon renewed its concerns about cyber spying, saying U.S. government-owned computers were again targeted by China-based intrusions through 2016.
"These and past intrusions focused on accessing networks and extracting information," the report said.
"China uses its cyber capabilities to support intelligence collection against U.S. diplomatic, economic, and defense industrial base sectors."
In a section discussing China's Navy, the report predicted that China's first domestically designed and produced aircraft carrier would likely reach initial operating capability in 2020.
On the issue of self-ruled Taiwan, which China claims as its own, the Pentagon said Chinese reforms to improve joint operations by different parts of its military would help in the event of any operation against the island.
"The structural reforms now reshaping the PLA will, if fully implemented, improve the force's ability to conduct complex joint operations, including those that would be involved in a Taiwan contingency."
Reporting by Phil Stewart; Additional reporting by Michael Martina and Ben Blanchard in BEIJING; Editing by James Dalgleish and Clarence Fernandez