BEIJING (AP) – China lashed out at the United States on Sunday, rejecting a Pentagon report about Beijing's defense buildup as exaggerated and misleading and saying that such rhetoric threatened attempts to improve military and trade links.

"Once again this (annual) report one-sidedly plays up the 'China threat,"' said an editorial in the People's Daily newspaper. "The report, which attempts to mislead international opinions with falsehoods, obviously runs counter to developing bilateral ties and military relations between the two countries."

China's government has yet to publicly respond to the report but the paper is the official mouthpiece of the ruling Communist Party.

The annual report from the U.S. Defense Department on China's military, released Friday, 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."

The People's Daily editorial by staff writer Xi Laiwang said "China maintains a certain level of military strength out of an objective need for self defense, which is proper in order to safeguard its national security and territorial integrity and does not pose a threat to any country."

China announced in March it would boost military spending by 17.8 percent in 2007 to 350.92 billion yuan (US$44.94 billion; €34.14 billion), the biggest jump in more than a decade. But analysts believe the true figure is several times higher.

One of the apparent goals is to strengthen China's ability to back up threats to attack Taiwan, the self-ruled neighboring island that the communist Beijing government claims as its own territory.

The two sides split during civil war in 1949 and China has threatened to attack if Taiwan takes steps toward formal independence.

The Pentagon report said that despite Beijing's massive military buildup, it lacked the power for a successful attack against the island.

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," it said.

The editorial did not respond to that assertion directly but said the U.S. remained unfairly critical of Beijing's campaign to promote reunification with Taiwan and to prevent it from formally declaring independence.

The article also chided Washington for its own military buildup.

"It is clear to all that the United States currently has the world's most powerful military," it said. "Despite this fact, the United States is still pushing forward its military transformation in pursuit of absolute military advantage."

U.S. President George W. Bush has requested US$481 billion (€357.9 billion) this year for the Pentagon and an additional US$145 billion (€108 billion) for military operations in Iraq and Afghanistan.