Overall, the report found that China wants to leverage its economic, diplomatic and strategic strength to "establish regional preeminence and expand the country's worldwide influence".
"China is developing a stealthy, long-range strategic bomber with a nuclear delivery capability that could be operational within the next 10 years".
It is also the first such report since the adoption of a new national defense strategy in January, which called "inter-state strategic competition, not terrorism", the primary concern for the US.
"Over the last three years, the PLA has rapidly expanded its overwater bomber operating areas, gaining experience in critical maritime regions and likely training for strikes against United States and allied targets", it added.
A two-page fact sheet accompanying the report offers clues as to China's actual military priorities: the current goal is mechanization, with partial "informatization" being a goal for 2020 and "basic modernization" by 2035.
The East China Sea and the South China Sea have been flashpoints for provocative military behaviour from China and its neighbours, to the ire of the US.
The Pentagon suspects that China might be training for strikes against United States targets as well as sending a message to other regional actors that Chinese capabilities are improving.
The Pentagon report also said China's space program was progressing rapidly.
In 2017, Beijing actually cut 300,000 personnel from its ground forces and reorganized them on a brigade structure.
It also says that China is pursuing a nuclear capability on its long-range bombers, saying the Chinese air force "has been re-assigned a nuclear mission".
In regards to Taiwan, the reports warns that China "is likely preparing for a contingency to unify Taiwan with China by force".
Has China responded to the report's claims?
The Guardian notes that China increased its 2017 military spending to $190 billion as the country seeks to "increase its global influence".
The report, released on Thursday, comes as China and the U.S. plan to hold trade talks, offering hope they might resolve an escalating tariff conflict that threatens to degenerate into an all-out trade war.
And China has been expanding what appear to be military facilities on islands in the South China Sea and has landed bombers on the outposts during training exercises.
"The PLA continues to strengthen its military space capabilities despite its public stance against the militarisation of space", it said. Five other countries - including the Philippines and Vietnam - also have claims in the waters, which have led to clashes over fishing rights and energy exploration.
An article published by the Sina military channel yesterday said that the artillery deployed in the drills were PLL-09, a Chinese 122-millimeter self-propelled howitzer.
In June, U.S. Defense Secretary Jim Mattis became the first Pentagon chief to visit China since 2014.