China is using cyber-espionage to acquire technology to fuel its military modernization, the Pentagon reported Monday, for the first time accusing the Chinese of trying to break into U.S. defense computer networks and prompting a firm denial from Beijing, Reuters reports.

In an 83-page annual report to Congress on Chinese military developments, the Pentagon cites progress in Beijing’s effort to develop advanced-technology stealth aircraft and build an aircraft carrier fleet. The report calls China’s cyber spying a “serious concern,” with the skills required similar to those used to conduct network attacks.