China has denied a US Pentagon report that suggested Beijing was modernising its military to prepare for a possible forced reunification with Taiwan.

The official China Daily newspaper quoted Foreign Ministry Spokesman Kong Quan saying that China's defence policy remained defensive and that the country had not taken part in any arms race.

China is a peace-loving country whose national defence policy is defensive

Kong Quan, Foreign Ministry Spokesman

The Pentagon's annual report, which was released last Friday, suggested China's defence spending was much higher than the $20bn Beijing officially acknowledges.

"Preparing for a potential conflict in the Taiwan Strait is the primary driver for China's military modernisation," the report said.

The report was seen as significant because it was the first to question China's commitment to a peaceful settlement with Taiwan.

Taiwan broke with Beijing in 1949 and China still views the island as a renegade province.

Deterrent

China has stepped up military spending in recent years, and the report estimated the annual defence budget could be as much as $80bn.

Most of the spending has gone towards modernising the armed forces, but some has been channelled into missile and air defence that could challenge Taiwan.

Chinese leaders argue that Beijing has to be on guard against Taiwan, for example by deploying missiles along its coastline facing the island.

They affirm that the aim is to stop the island from moving away from reunification with mainland China and towards formal independence.

It is an anxiety that has been sharpened since Chen Shui-bian of the historically pro-independence Democratic Progressive Party won Taiwan's presidency more than two years ago.

The BBC's Francis Markus in Shanghai says this is bound to shape Beijing's reaction to the Pentagon report.

One academic whose thinking broadly reflects government views on the Taiwan issue said that what Washington views as coerciveness, Beijing regards as deterrents.

He said that although China did not intend to use force to compel Taiwan into reunification, the more Beijing perceived the island as moving towards formal independence, the more it would have to step up what he called "deterrent measures".