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A Chinese paramilitary officer rides a scooter in Beijing on Wednesday. Beijing dismissed an annual Pentagon report that accused it of widespread cyberspying on the U.S. government, rejecting it as an "irresponsible

BEIJING -- China on Wednesday accused the United States of sowing discord between it and its neighbors after the Pentagon said Beijing is using espionage to fuel its military modernization, branding Washington the "real hacking empire.”

The latest salvo came a day after China's foreign ministry dismissed as groundless a Pentagon report that accused China for the first time of trying to break into U.S. defense computer networks.

The Pentagon also cited progress in Beijing's effort to develop advanced-technology stealth aircraft and to build an aircraft carrier fleet to project power further offshore.

The People's Liberation Army Daily called the report a "gross interference in China's internal affairs.”

"Promoting the ‘China military threat theory’ can sow discord between China and other countries, especially its relationship with its neighboring countries, to contain China and profit from it," the newspaper said in a commentary that was carried on China's Defense Ministry website.

The United States is "trumpeting China's military threat to promote its domestic interests groups and arms dealers,” the newspaper said, adding that it expects "U.S. arms manufacturers are gearing up to start counting their money.”

The remarks in the newspaper underscore the escalating mistrust between China and the United States over hacking, now a top point of contention between Washington and Beijing.

A U.S. computer security company, Mandiant, said in February a secretive Chinese military unit was likely behind a series of hacking attacks that targeted the United States and stole data from more than 100 companies.

That set off a war of words between Washington and Beijing.

China has said repeatedly that it does not condone hacking and is the victim of hacking attacks -- most of which it says come from the United States.

"As we all know, the United States is the real 'hacking empire' and has an extensive espionage network," the People's Daily, a newspaper regarded as a mouthpiece of the Chinese Communist Party, said in a commentary.

"In recent years, the United States has continued to strengthen its network tools for political subversion against other countries,” the article said.

"Cyber weapons are more frightening than nuclear weapons," the People's Daily said. "To establish military hegemony on the Internet by repeatedly smearing other countries is a dangerous and wrong path to take and will ultimately end up in shooting themselves in the foot."

Related links:

Report: China snooping around Pentagon computers

'Not based in fact': China angrily denies being behind widespread US hacking

Analysis: As cyberthreat looms, here's what really matters

By Ed Flanagan, NBC News

BEIJING – China ratcheted up criticism Friday of the United States following back and forth charges about cyberwarfare.

A day earlier, the government responded angrily to accusations that it was directly involved in a hacking scheme designed to trick American government workers, Chinese political activists, journalists and Asian regional defense representatives into giving up their Google email passwords. "Hacking is a problem that troubles the entire world, and China has always been targeted,” Hong Lei, a spokesman for the Foreign Ministry said Thursday. “The Chinese government resolutely opposes hacking and any other forms of cyber-crime."

And today, Chinese newspapers picked up where the government left off, publishing an inordinate amount of commentary on the Google hacking incident. The Global Times, China’s reliably nationalistic newspaper, alone carried three separate articles on the matter. 

China’s media coverage of the latest incident highlights many of the government’s talking points. Beijing contends that it has enough problems controlling hacking domestically, it couldn’t be exporting it.

Who is the victim? China
Late last year, China’s state news agency, Xinhua, reported that in the first half of 2010, 60 percent of China’s Internet users were subjected to some form of hacking and that over 30 percent of users had passwords stolen.

While positioning itself as a victim relatively unprepared to deal with increasingly sophisticated cyber threats, China has also framed the United States’ own cyber defense and warfare capabilities as far superior technologically and subsequently a larger threat to global stability.

This storyline took a sudden, dramatic turn just days ago after the Wall Street Journal reported on the Pentagon’s first formal cyber warfare strategy plan. Though not yet officially released to the public, the document allegedly argues for “equivalency” when meting out retaliation in response to cyber-attacks.

Or as one military official put it: "If you shut down our power grid, maybe we will put a missile down one of your smokestacks."

Predictably, news of the Pentagon’s strategic document in light of the Google hacks has been cited by the Chinese press as another example of the United States attempting to achieve strategic dominance.

The People’s Daily, the Communist Party’s official paper, was quick to jump on that idea, writing, “The U.S. is making the game rules of cyber war in order to seize the commanding heights of future cyber warfare.”

The article pumped up the rhetoric by quoted Lin Zhiyuan, from the Chinese Academy of Military Sciences, as saying: “The U.S. seeking ‘cyber dominance’ will definitely trigger a trend of building up cyber troops in the world.”

Lin’s line serves both as justification and warning for the necessity of China’s army of “cyber warriors,” known here as the “Blue Army.” The very existence of this 30-strong commando unit of cyber warriors was only acknowledged by a defense ministry spokesman late last month.

A recent report from the People’s Liberation Army Daily described a simulated cyber battle in which the Blue Army successfully defended China’s military networks against an army of hackers four times its size, belying the high degree of competency of its force.

Yet, despite the apparent triumph, defense ministry spokesmen continue to understate the unit’s capabilities, characterizing their ability to defend China from cyber attack as weak.

Who frames the issue?
Equally apparent in Chinese reports on the Google hackings is the apparent frustration with which a Western entity like Google can appear to frame and dictate the discussion. 

The Global Times’ coverage underscores an argument China frequently makes during these “he said, she said” disputes that erupt from time to time in the Sino-U.S. relationship: he who shouts loudest, longest wins. 

“Powerful Western public opinion makes people think that it is the Chinese who have done something bad,” said Professor Zhang Shaozhong of China's National Defense University in one article. “China needs to change its passive state it suffers whenever something bad happen.”

The idea that China must stand up and repudiate what it considers false accusations or face being found guilty in the court of public opinion was seconded in an editorial published Friday in the Global Times on the need for greater information transparency in China.

“In an era that people compete for voice and attention, silence often means tacit consent,” wrote one editor. “One who does not take the initiative to set an issue will be harassed by issues set by others.”