WASHINGTON --China is honing "credible options" to attack Taiwan and could act with scant warning against what it sees as a U.S.-backed rogue province, the Pentagon has warned.

In a long-delayed annual report to Congress, the Defense Department said on Friday that China feared Taiwan's permanent separation from the mainland could serve as a strategic foothold for the United States.

At the same time, winning control over the self-governing island of 23 million people would let China move its defensive perimeter farther out as it seeks to curb U.S. regional clout.

Beijing is now focusing on intimidating Taiwan into reaching a settlement with it, the report said, adding that thanks largely to Russian arms supplies, Beijing was gaining "an increasing number of credible options to intimidate or actually attack Taiwan."

Taiwan, an island off the Chinese coast, has claimed independence from Beijing since the communists took control of mainland China in 1949. China, which regards Taiwan as a renegade province, intends to one day reunify the island with the mainland, by force if necessary.

U.S. policy has been to help Taiwan maintain a defense capability, but Washington does not favor Taiwanese independence.

'Shock effect'

"China's doctrine is moving toward the goal of surprise, deception and shock effect in the opening phase of a campaign," said the annual report on Chinese military power. "China is exploring coercive strategies designed to bring Taipei to terms quickly."

Such options include possible air and missile campaigns or a naval blockade.

The sobering assessment is the first time the United States has taken stock of Chinese military trends since Bush took power in January last year, and the first since June, 2000.

Previous reports released during the Clinton administration said that China lacked sufficient military might for outright confrontation.

But China has pushed ahead with modernizing its military -- bolstering its arsenal with medium-range missiles and new submarines and destroyers -- a move the Pentagon says has been spurred by a potential conflict in the 100-mile (160-km) wide Taiwan Strait.

In March, Beijing announced a 17.6 percent or $3 billion increase in spending, bringing the publicly reported total to $20 billion.

But total military spending in fact is closer to $65 billion, and annual spending could increase in real terms three- to four-fold by 2020, the Pentagon said.

Troubling

China is seeking to "diversify its options for use of force against potential targets such as Taiwan and to complicate United States intervention in a Taiwan Strait conflict," the report said.

"While it professes a preference for resolving the Taiwan issue peacefully, Beijing is also seeking credible military options," it said.

"Should China use force against Taiwan, its primary goal likely would be to compel a quick negotiated solution on terms favorable to Beijing."

One of the most troubling developments is China's buildup of short-range ballistic missiles in Fujian province, opposite Taiwan, the report said. They now total about 350 missiles and are growing at 50 missiles per year.

"The accuracy and lethality of this force also are increasing," the report said, adding the missiles are ready for "immediate application" if called upon.

Rising China threat

China's growing clout, including computer hacking and air and missile attacks, also presented challenges to "other potential adversaries, such as the Philippines and Japan," the report said.

China is at odds with the Philippines and others over boundaries in the South China Sea, and Beijing opposes any expansion of Japanese power in the region.

China is developing variants of the mobile CSS-6 missile that would pose a threat to the Japanese island of Okinawa, where thousands of American forces are based, the report said.

China, which also strongly opposes Bush's plans to build a missile shield, currently fields about 20 ocean-hopping ballistic missiles capable of hitting the United States -- a number that will rise to about 30 by 2005 and may reach 60 by 2010.

Another problem area is China's recent acquisition of Russian-made submarines, which could be used to cut off Taiwan's sea lanes and to threaten American forces that might respond.

In 1996, President Clinton sent two U.S. carrier battle groups to the region to signal support for Taiwan after China fired missiles into the sea off Taiwan's two main ports.

Kurt Campbell, the Pentagon's top policy-maker on China under Clinton, said in an interview quoted by wire reports that the real worry for some U.S. officials was not the declining Russian arsenal "but the rising Chinese one."

-- CNN's Pentagon correspondent Barbara Starr contributed to this report