The Pentagon's annual report to Congress on Chinese military activities has claimed that China has increased its defence capabilities and deployed more troops along the border with India.
The US Defense Department said that China is expected to add substantial military infrastructure, including communications and surveillance systems, to artificial islands in the South China Sea this year.
"We have noticed an increase in capability and force posture by the Chinese military in areas close to the border with India," Deputy Assistant Secretary of Defence for East Asia Abraham M Denmark said over the weekend.
However, the report has been condemned by Beijing. China has claimed that the facts have been distorted and that it may "severely damage" mutual trust between the countries.
China's Defense Ministry spokesman Yang Yujun expressed "strong dissatisfaction" and "firm opposition" to the Pentagon report and said it has "severely damaged mutual trust", state news agency Xinhua reported.
The report "hyped up" China's military threat and lack of transparency, "deliberately distorted" Chinese defense policies and "unfairly" depicted Chinese activities in the East and South China seas, Yang was quoted as saying.
"China follows a national defense policy that is defensive in nature," Yang said, adding that the country's military build-up and reforms are aimed at maintaining sovereignty, security and territorial integrity and guaranteeing China's peaceful development.
The Pentagon report comes at a time of heightened tension over maritime territories claimed by China and disputed by several Asian nations. Washington has accused Beijing of militarizing the South China Sea while Beijing, in turn, has criticized increased US naval patrols and exercises in Asia.
The US report renewed accusations against China's government and military for cyber attacks against US government computer systems, a charge Beijing denies. The Pentagon said attacks in 2015 appeared focused on intelligence collection.