A Pentagon report into Chinese military capability says that the People's Republic "is expanding from the traditional land, air, and sea dimensions of the modern battlefield to include space and cyber-space."
The "ANNUAL REPORT TO CONGRESS: Military Power of the People’s Republic of China 2007," was released by the Office of the Secretary of Defense on Friday, though elements of it had been leaked earlier.
In it, the US military warns that the Chinese communists are developing new nuclear weapons, spy satellites, anti-spacecraft laser beams and "information warfare units to develop viruses."
The Pentagon analysts suggest that China is seeking to update its relatively small, old-fashioned nuclear arsenal. Beijing at present has just 20 proper ICBMs able to hit targets worldwide, and eighty or ninety other missiles which would only be useful for nuking things in its own backyard. The ICBMs are in traditional, fixed land silos - vulnerable to a stealthy pre-emptive strike. (China does have a single, elderly nuclear-missile submarine, but this isn't seen even by the most hawkish as a serious threat.)
Twenty fixed ICBMs is a bare-minimum deterrent force, putting China very much at the bottom of the major-power nuclear league table behind France and even the UK. The USA might, in the near future, be able to largely disregard such an arsenal. The US missile defence effort, combined perhaps with a pre-emptive American strike, might offer a scenario in which the chance of any Chinese nuke reaching the US mainland was low.
Unsurprisingly, the PRC is moving to upgrade its nuke armoury, in particular by acquiring new ICBM-firing submarines. Once these are in place, China can feel sure once more of its ability to nuke the continental US.
That doesn't mean that the Chinese will do so; indeed the PRC has declared that it will never be the first to use nukes, a stance which the US itself doesn't always take.
But the Pentagon says that "China’s assertion of a nuclear 'no first use' policy ... is ambiguous."