WASHINGTON and TAIPEI, Taiwan — The release of the 2011 annual Pentagon report on Chinese military modernization, criticized by some in Washington for lacking substance and some in China as falsely portraying a Chinese threat, highlights the importance of military-to-military ties and greater interaction.

“Look at it like fondue. The meat is there, but it has to be cooked,” said Mark Stokes, former senior country director for China and Taiwan in the office of the U.S. assistant defense secretary.

“Military and Security Developments Involving the People’s Republic of China” is not the original name of the report. Two years ago, elements in the U.S. government decided to change the name from “Military Power of the People’s Republic of China” in an effort to soften the tone and placate China. Stokes said that the report is actually getting “better with each passing year in terms of style and format,” but ultimately it is an official Pentagon report and “reflects consensus” with “only marginal changes from previous years.”

In its annual report to Congress, released Aug. 24, only a week after U.S. Vice President Joe Biden visited Beijing to explain why the U.S. would not default on its debt, the Pentagon presents a diplomatic but watchful stance toward the country and urges stronger military-to-military relationships between the two powers.

“Although China’s expanding military capabilities can facilitate cooperation in pursuit of shared objectives, they can also increase the risk of misunderstanding and miscalculation,” the report says.

“Strengthening our military-to­military relationship is a critical part of our strategy to shape China’s choices as we seek to capitalize on opportunities for cooperation while mitigating risks,” the report says. However, observers in Taipei argue better military cooperation between China and the U.S. could leave Taiwan feeling abandoned. The U.S. is expected to deny Taiwan’s request for new F-16C/D fighters in September. The implication of denying new fighter aircraft to Taiwan while a Pentagon report points to rapid militarization of China suggests a Jekyll-Hyde approach to dealing with a rising China.

Many in Washington argue that ties between China and Taiwan have improved to the point that new F-16s would disrupt a potential cross-strait peace accord. However, cross-strait relations also have security implications for the United States, said Lin Cheng-yi, research fellow at Academia Sinica in Taipei, Taiwan.

“With tensions between China and Taiwan declining, China has become more active in claiming sovereignty over the disputed islands in the East China Sea and South China Sea,” Lin said. “With the disappearance of the Taiwan buffer, Taiwan’s neighboring countries now have to deal with China directly and with the possibility of seeing a less sympathetic Taiwan.”

As cross-strait ties improve and the risk of war between China and Taiwan fades, the question now facing the United States is whether or not “Taiwan’s creeping unification might also challenge the future stability of the region,” he said.

But China’s state news agency accused the U.S. of “exaggerating” the threat posed by its military, according to Agence France-Presse. Xinhua said many people in China found it odd that the United States, which spends far more on its military than any other country in the world, should highlight Chinese expenditure.

“The report … exaggerated the threat incurred by China’s military development in 2010 to the Asia-Pacific region,” Xinhua said in a commentary. “For many in China, it is weird that the Pentagon, whose expenditures reached nearly $700 billion and accounted for more than an appalling 40 percent of the world’s total in 2010, routinely points its finger at China.”

The 83-page Pentagon report comes months after its March 1 deadline. The report fails to mention the F-16C/D issue.

“There have been no decisions made on arms sales to Taiwan, but as I said before, this is an issue that we continue to work and, in my office, we work this question on a daily basis,” Michael Schiffer, deputy assistant secretary of defense for East Asia, said at a press briefing.

In January 2010, the Chinese government suspended military­to-military relations with the United States, following U.S. approval of a $6.4 billion arms sale to Taiwan.

“Although the United States and China maintained working level contact during the nine-month suspension that followed, routine military-to-military exchanges did not resume until the final quarter of 2010,” the report says.

According to the report, the United States would now like to see those relationships strengthened.

“This interaction can facilitate common approaches to challenges and serves as a bridge to build more productive working relationships,” the report says.

The report highlights China’s participation in counterpiracy efforts in the Gulf of Aden as one of its important engagements with foreign militaries.

In addition to its growing military might, China also holds about 8 percent of U.S. debt, the largest block in foreign hands. The report contains no discussion of the security implications for the United States of China holding so much of its debt.

Those sorts of issues are not included because they are outside of the report’s congressional mandate and “frankly outside the scope or the expertise of the Department of Defense,” Schiffer said.

“This is obviously an extraordinarily complex economic relationship that we have with China. And I know that that’s receiving a lot of extraordinarily high-level attention from U.S. and Chinese leadership,” he said, citing Biden’s recent trip to the country.

As for military spending, on March 4, Beijing announced a 12.7 percent increase in its military budget, saying it would spend approximately $91.5 billion. However, the Pentagon estimates that China’s total military-related spending for 2010 was more than $160 billion.

The United States continues to urge China to increase transparency when it comes to its military spending. Beijing’s strategy is illustrated by Deng Xiaoping, who said that China must “hide our capabilities and bide our time.” This statement explains a lot about China’s tendency to ignore transparency requests and to simply wait for an opportunity to assert itself.

In the report, an item of major concern is Chinese missile development.

“The [People’s Liberation Army] is acquiring large numbers of highly accurate cruise missiles, many of which have ranges in excess of 185 [kilometers],” the report says. This includes the DH-10 land-attack cruise missile, the ship-launch YJ-62 anti-ship cruise missile and the Russian SS-N-22 Sunburn supersonic anti-ship cruise missiles.

Much of this information is the same as from previous Pentagon reports.

The report also mentions the DF-21D anti-ship ballistic missile, dubbed the “aircraft carrier killer,” but does not discuss how this type of missile might reshape U.S. naval strategy and doctrine.

In another odd section, the report says that China “may also be developing a new road-mobile intercontinental ballistic missile, possibly capable of carrying a multiple independently targetable re­entry vehicle (MIRV).” Then the report drops the issue from discussion. It does not explain the significance of a road-mobile ICBM carrying MIRVed nuclear warheads, or what that potentially could mean to the U.S. West Coast. China also is developing long­range stealthy aircraft capable of challenging U.S. air power in the region.

The January flight of China’s next-generation fighter prototype, the J-20, highlights China’s ambition to produce a fighter aircraft that incorporates stealth attributes, advanced avionics and supercruise-capable engines over the next several years.

The Pentagon report plays down China’s first aircraft carrier, the refurbished ex-Soviet Varyag. No mention is made of the strategic implications the carrier might have on the Philippines and Vietnam with regard to the South China Sea.