China has tripled its military spending since 2002, hitting roughly £155billion a year ago.
The report outlines several key themes in China's military strategy, including the concept of "active defense".
Top American defense officials have long viewed China's military as a rising power that eventually seeks parity with the US military force, leading the Pentagon to list it - alongside Russian Federation - as the top potential security threat in its latest National Defense Strategy released previous year.
"The biggest concern is that they are going to get to a point where the [Chinese military] leadership may actually tell [Chinese President] Xi Jinping that they are confident in their capabilities", the official said on condition of anonymity.
China past year ramped up pressure on foreign companies including Marriott International and Qantas for referring to Taiwan and Hong Kong as separate from China in drop down menus or other material. "By doing so, China has been able to focus on expediting its military modernization at a small fraction of the original cost", it said.
After making some of the most advanced weapons in the world China is in the cusp of imposing its will in the region, which includes India. "In some areas, it already leads the world", Ashley wrote.
According to the report, by 2025 China will have made new medium- and long-range stealth bombers capable of striking regional and global targets.
Jeremy Corbyn tables no confidence motion in Theresa May's government
The defeat leaves May's leadership wobbling and the government with just a few days, until Monday, to come up with a "Plan B". MPs voted 432 to 202 to defeat the proposal, the worst parliamentary defeat for a government in recent British history.
It says, "China has built or acquired a wide array of advanced platforms", including submarines, major surface combat ships, missile patrol craft, maritime strike aircraft and land-based systems that employ new, sophisticated anti-ship cruise missiles and surface-to-air missiles.
China has also outpaced competitors in its ballistic missiles systems, creating more precise systems to carry conventional or nuclear weapons than others including the United States and Russian Federation, largely because those nations were bound by treaty obligations that China was not, according to the DIA assessment.
"These bases, and other improvements to the PLA's ability to project power during the next decade, will increase China's ability to deter the use of conventional military force, sustain operations overseas, and hold strategic economic corridors at risk", it says.
And the Chinese leader added that "we make no promise to renounce the use of force".
Beijing has stepped up pressure on Taiwan since Tsai, from the pro-independence ruling party, took office in 2016. "We reserve the option for all the necessary means".
While the report says China has increased its military footprint in the South China Sea and has placed additional military facilities on man-made islands there, the Pentagon assesses that China is seeking to avoid a conflict.
The Mainland Affairs Council (MAC) said Thursday it would investigate a reporter for Hong Kong's Ta Kung Pao (大公報) newspaper after it wrongly alleged that President Tsai Ing-wen (蔡英文) had sent a secret envoy to meet with Hong Kong independence activists. "We know in the past that they have ... considered themselves a developing, weaker power". "The challenge, of course, is for measuring against a globally active US military that has many different missions and many different tasks, so I think there's a very long way for the PLA to reach that level".