China's military modernisation will focus on strengthening its navy and air force as it faces security threats from border spats, historical disputes and self-ruled Taiwan, a defence white paper released on Friday said.

But China, whose increasing defence spending and military build-up has been a source of friction with the United States, will never engage in an arms race or threaten any other nation, the policy paper said.

"The navy will gradually ... raise its marine combat and nuclear counter-attack capabilities," it said.

"The air force aims at speeding up its transition from territorial air defence to both offensive and defensive operations, and increasing its capabilities in the areas of air strike, air and missile defence, early warning and reconnaissance and strategic projection."

President Hu Jintao this week urged the building of a powerful Chinese navy that was prepared "at any time" for combat.

The report also defended China's rising military spending, pointing out that it spends less per capita than the United States, Britain, France or Russia and saying it was committed to peaceful development.

Describing China's general security situation as good, the 83-page document nonetheless wasted little time in denouncing Taiwan independence moves, saying the island over which Beijing claims sovereignty was a serious threat to regional stability.

"The struggle to oppose and control 'Taiwan independence' splittist forces and their activities is complex and grim," it said.

China and Taiwan have faced off since 1949 when Nationalist forces fled to the island after losing the Chinese civil war to the Communists.

Liu Te-shun, vice chairman of Taiwan's policy-making Mainland Affairs Council, said the release of the white paper raised China's military threat towards Taiwan and cast a cloud over the normalisation of cross-strait ties.

"China's 2006 defence white paper still deliberately avoids the world's misgivings about its expanded military and the truthfulness of the increase of its national defence budget," Liu told a news conference in Taipei on Friday.

"It will only increase suspicion among the international community about the rise of China," he said.

Analysts said the report reflected China's primary goal of deterring both Taiwan independence and the prospect of U.S. intervention in the Taiwan Strait.

"China does not want to develop ... the kind of power projection capability that would match the United States in the long term," said Li Mingjiang, an assistant professor at the Singapore Institute of Defence and Strategic Studies.

"Its specific focus is on Taiwan, on the worst-case scenario for Taiwan moving towards independence, then declaring independence and U.S. intervention," he said.

OTHER THREATS

The report also said China was facing threats from other, unnamed neighbours. "The issues of border complexities and sensitive historical problems still have an effect on China's security environment," it said.

China has fought brief border wars with India, Vietnam and the former Soviet Union, and continues to dispute the ownership of islets in the South China Sea with Vietnam, Taiwan, Malaysia, Brunei and the Philippines.

China also remains wary of Japan, which occupied parts of the country between 1931 and 1945 and which called on Beijing earlier this year to be more open about its military.

Japan's Kyodo news agency said on Friday that Tokyo held a joint navy exercise with Washington for the first time last month under the assumption that China had invaded the disputed Senkaku islands -- known as Diaoyus in China -- in the East China Sea.

The report also defended the rise in China's defence expenditure, officially projected to be some $36 billion in 2006, up about 15 percent from the previous year. Many foreign experts believe the real figure is significantly higher.

"This increase is to compensate for topping up basic defence weaknesses," it said.