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The Pentagon on May 8 released its annual report on China’s military modernization and strategic goals. According to the 98-page document, the “primary driver” of China’s military investment remains preparation for a potential conflict in the Taiwan Strait. However, China also remains focused on potential contingencies in the East and South China Seas, as well as missions that extend beyond its immediate periphery, such as power projection, sea lane security, counter-piracy, peacekeeping, and humanitarian assistance/disaster relief, states the report. From 2005 to 2014, China’s officially disclosed military budget increased by an average of 9.5 percent per year in inflation-adjusted terms, and spending is expected to continue at comparable levels for the foreseeable future. “China’s military modernization has the potential to reduce core US military technological advantages” as “China is investing in capabilities designed to defeat adversary power projection and counter third-party—including US—intervention during a crisis or conflict,” states the report.  In 2014, the People’s Liberation Army continued to improve its cruise missiles; short- and medium-range ballistic missile; high performance aircraft; integrated air defense; information operations; and amphibious and airborne assault capabilities. The Defense Department is committed to building a military-to-military relationship with China, though at the same time it must “monitor China’s evolving military strategy, doctrine, and force development,” states the report. (Read the full report; Caution, large-sized file.)