"The Pentagon report is full of Cold War thinking and cliches on the China threat," foreign ministry spokesman Liu Jianchao said of the report issued over the weekend.

"It takes pain to exaggerate China's military force and expenditures and I think it is full of ulterior motives.

"We stand ready to exert our utmost sincerity and utmost efforts to seek peaceful reunification, but we will never allow Taiwan independence and never allow anybody in any form to separate Taiwan from China."

In the report, the Pentagon warned that China was developing a variety of "credible military options" to prevent Taiwan from achieving independence, including tools to discourage the United States from coming to the island's aid.

It said Beijing's arsenal arrayed against Taiwan includes approximately 500 short-range ballistic missiles deployed in the Nanjing military district.

If equipped with adequate guidance systems, these missiles could destroy key Taiwanese leadership facilities, military bases and communication and transportation nodes with minimal advanced warning, Pentagon analysts pointed out.

Some of these weapons are believed to be capable of hitting US military bases in Okinawa, Japan.

Liu insisted that "the Chinese people love peace," but also reiterated Beijing's longstanding threat to retake Taiwan by force should the territory move down the road toward formal independence.

"Taiwan is a part of China, the Chinese people adopt the policy of peaceful unification and one country two systems ... the separatist forces of Taiwan are the biggest threat to peace and stability," he said.

His comments came as some 18,000 soldiers of the People's Liberation Army prepared for amphibious landing and guided missile exercises aimed at "controlling the Taiwan Strait".

WAR.WIRE