China lashed out at the United States on Sunday, rejecting a Pentagon report about Beijing's defense buildup as exaggerated and misleading and saying that such rhetoric threatened attempts to improve military and trade links. "Once again this (annual) report one-sidedly plays up the 'China threat,"' said an editorial in the People's Daily newspaper. "The report, which attempts to mislead international opinions with falsehoods, obviously runs counter to developing bilateral ties and military relations between the two countries." China's government has yet to publicly respond to the report but the paper is the official mouthpiece of the ruling Communist Party. The annual report from the US Defense Department on China's military, released Friday, said the People's Liberation Army has been acquiring better missiles, submarines and aircraft and should more fully explain the purpose of a military buildup that has led some to view China as a threat. It noted, however, that "the PLA remains untested in modern warfare."