The Financial Times, citing former and serving U.S. officials, said Chinese People's Liberation Army hackers broke into a U.S. Defense Department network in June, taking data and prompting the shutdown of a system serving Secretary of Defense Robert Gates.
The report came a week after German Chancellor Angela Merkel raised similar claims that Chinese hackers had infected German government ministries with spying programs.
China deflected the German reports, and now it has flatly rejected the U.S. claims, as well as denying reports that Chinese-made weapons have been used by Taliban fighters in Afghanistan.
"The Chinese government has consistently opposed and vigorously attacked according to the law all Internet-wrecking crimes, including hacking," Foreign Ministry spokeswoman Jiang Yu said.
"Some people are making wild accusations against China ... They are totally groundless and also reflect."
Beijing has devoted a large part of its rising defence budget to developing more advanced technology, including computer capabilities. But Jiang said her government was also the victim of computer attacks.
Hack forces a shutdown
The Financial Times cited one source familiar with the event as saying there was a "very high level of confidence ... trending towards total certainty" .
It said hackers from various locations in China had spent several months trying to tap into the system before breaching its cyber defenses, forcing the Pentagon to.
U.S. President George W. Bush is scheduled to meet Chinese President Hu Jintao in Sydney while the two leaders are there for the APEC regional summit.
The FT quoted a former U.S. official as saying the PLA was now able to disrupt and even disable the Pentagon's computer system.
"The PLA has demonstrated the ability to conduct attacks that disable our system ... and the ability in a conflict situation to," the former official told the newspaper.
The FTFinancial Times reported that the Pentagon was investigating
Spokeswoman Jiang also rejected a BBC report that Chinese-made weapons have been used by Taliban fighters in Afghanistan.
London has complained to Beijing that the weapons were used in Taliban attacks on British and U.S. troops, the BBC reported, citing British officials.
"This accusation is groundless," Jiang said. "The Chinese government has always been prudent and responsible in its military exports."
China did not sell weapons to "non-state" entities, she said.