The Defense Department released a report on Thursday that warned China is dramatically upgrading its military capabilities and expanding its ability to project power, from Taiwan and the contested islands of the South China Sea to the Arctic Circle.

The Pentagon report said China has aggressively used technology theft to rapidly modernize its military forces, as summarized by CNN:

“China uses a variety of methods to acquire foreign military and dual-use technologies, including targeted foreign direct investment, cyber theft, and exploitation of private Chinese nationals’ access to these technologies, as well as harnessing its intelligence services, computer intrusions, and other illicit approaches,” the Congressionally mandated Department of Defense report said. “China obtains foreign technology through imports, foreign direct investment, the establishment of foreign research and development (R&D) centers, joint ventures, research and academic partnerships, talent recruitment, and industrial and cyber espionage,” the report added. The Chairman of the Joint Chiefs of Staff, Gen. Joseph Dunford, recently warned Congress that US companies that did business in China were often indirectly benefiting the Chinese military, citing Google as an example. The report said that China had used these techniques to acquire sensitive, dual-use, or military-grade equipment from the United States, including aviation and antisubmarine warfare technologies.

The Pentagon said China’s real-world military development has been focused on enhancing its ability to project power through naval warships, long-range bombers, and advanced missiles, including hypersonic weapons that would be extremely difficult to track or intercept with current technology. This development was accompanied by advances in cyber espionage intended to turn the Internet into a force multiplier.

The report highlighted China’s use of a “maritime militia” of fishing boats with paramilitary crews to slowly, inexorably annex disputed islands in the South China Sea as an example of how Beijing infuses its political agenda with just enough military muscle to avoid a direct confrontation with its most powerful adversaries.

If push soon comes to shove, however, the Pentagon cautioned Chinese forces are “increasingly able to project power” and “contest U.S. military superiority.”

One exercise of Chinese power projection deemed particularly interesting by U.S. analysts is the Arctic, where Beijing plans to establish protected shipping lanes as part of its Belt and Road Initiative (BRI). The Defense Department foresaw China establishing military bases around the world to secure Belt and Road trade routes, including a surface and submarine presence in the Arctic.

“Civilian research could support a strengthened Chinese military presence in the Arctic Ocean, which could include deploying submarines to the region as a deterrent against nuclear attacks,” the Pentagon report said.

The Pentagon anticipated China will field between 65 and 70 submarines by 2020, roughly a dozen of them nuclear-powered. That undersea fleet should be large enough to provide China with a “continuous nuclear deterrence at sea,” essentially meaning some of China’s weapons will be constantly deployed on submarines that could not easily be destroyed by an enemy first strike.

The report considered several scenarios for China using military force against Taiwan. Even with its upgraded military capability, China seems unlikely to launch an all-out invasion as long as the Taiwanese keep their defenses strong and do not force the issue by declaring full independence, but several lesser users of force are possible, such as China attempting to pressure Taiwan into reunification.

“China could use missile attacks and precision air strikes against air defense systems, including airbases, radar sites, missiles, space assets, and communications facilities to degrade Taiwan’s defenses, neutralize Taiwan’s leadership, or break the Taiwan people’s resolve,” the report said.