Reuters. China calls US the 'real hacking empire' after Pentagon report

China on Wednesday accused the United States of sowing discord between China and its neighbours after the Pentagon said Beijing is using espionage to fuel its military modernisation, branding Washington the "real hacking empire".

The latest salvo came a day after China's foreign ministry dismissed as groundless a Pentagon report which 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 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 neighbouring countries, to contain China and profit from it," the newspaper said in a commentary that was carried on China's Defence Ministry's 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.