China is "the most threatening actor in cyberspace," with its hackers increasingly targeting US military computers, according to a draft Congressional report obtained by Bloomberg.
The report by the US China Economic and Security Review Commission found that state backed Chinese hackers are persistently breaching US military equipment and contractors.
The hackers have tried to blind and disrupt US intelligence and communications satellites, which the report says poses a higher risk to military and key industries such as electric utilities, pipelines, and telecommunications.
Although the cyberattacks ventured to date have been basic and mainly designed to collect information rather than attack systems, the US commission is worried that their increasing volume makes them - and China - a threat.
"China's persistence, combined with notable advancements in exploitation activities over the past year, poses growing challenges to information systems and their users," read the draft obtained by Bloomberg.
The report, due to be released on 14 November, noted that the Chinese military lacked the ability to manage sophisticated computer systems. However, it warned that Chinese leaders "recognise this weakness and intend to develop a pool of soldiers" to manage cyber warfare.
The commission also called for the US Congress to "develop a sanctions regime to penalise specific companies found to engage in or benefit from industrial espionage".
The news follows a US report published last month urging American companies to stop doing business with leading Chinese telecommunications manufacturers Huawei and ZTE. The US House of Intelligence Committee's report accused the firms of being a national security threat, stating that their equipment could be used by the Chinese government to spy on the US.
Both firms denied the allegations, calling them "trade protectionism masquerading as national security". China, meanwhile, dismissed the accusations as "groundless".
America goes to the polls today, so all recent macho political posturing has to be understood in context.
Attitudes towards China are one of the key political - and technologically-relevant - issues at stake in the contest, which will decide who goes to - or stays in - the White House. For more, see James Laird's 2012 US presidential election: Barrack Obama vs Mitt Romney tech showdown feature.