China's military has set up an elite Internet security task force tasked with fending off cyberattacks, state media reported Friday, denying that the initiative is intended to create a "hacker army".

The People's Liberation Army has reportedly invested tens of millions of yuan (millions of dollars) in the project -- which is sure to ring alarm bells around the world among governments and businesses wary of Beijing's intentions.

"Cyber attacks have become an international problem affecting both civilian and military areas," the Global Times quoted China's defence ministry spokesman Geng Yansheng as telling a rare briefing this week.

"China is relatively weak in cyber-security and has often been targeted. This temporary programme is aimed at improving our defences against such attacks."

The 30-member "Cyber Blue Team" -- the core of the PLA's cyber force -- has been organised under the Guangdong military command in the country's south, and will carry out "cyber-warfare drills", the newspaper said.

The United States, Australia, Germany and other Western nations have long alleged that hackers inside China are carrying out a wide-range of cyberattacks on government and corporate computer systems worldwide.

But in a commentary, the Global Times hit out at "some foreign media" for interpreting the programme as a breeding ground for a "hacker army".

"China's capability is often exaggerated. Without substantiated evidence, it is often depicted by overseas media as the culprit for cyberattacks on the US and Europe," the paper said.

"China needs to develop its strong cyber defence strength. Otherwise, it would remain at the mercy of others."

China's military has received annual double-digit increases in its budget over much of the last two decades as it tries to develop a more modern force capable of winning increasingly high-tech wars.

In 2007, the Pentagon raised concerns about a successful Chinese ballistic missile test strike on a satellite, a weapon that could be used to knock out the high-tech communications of its enemies.

US computer firm McAfee said in February that hackers from China have also infiltrated the computer networks of global oil companies, stealing financial documents on bidding plans and other confidential information.

According to US diplomatic cables obtained and published by WikiLeaks, the United States believes that China's leadership has directed hacking campaigns against US Internet giant Google and Western governments.

In one cable, the US embassy in Beijing said it learned from "a Chinese contact" that the Politburo had led years of hacking into computers of the United States, its allies and Tibet's exiled spiritual leader, the Dalai Lama.

earlier related report
Microsoft chief says China piracy very costly: WSJ
Beijing (AFP) May 27, 2011 - Microsoft chief executive Steve Ballmer has said rampant software piracy in China has eaten into his company's revenue in what is soon to be the world's top PC market, a report said Friday.

Ballmer said the world's largest software maker's revenue in China was only five percent of that in the United States, even though personal computer sales in the two countries are nearly equal, the Wall Street Journal reported.

The comments underlined the challenges faced by Western firms in protecting their copyrights in China, the largest counterfeit and piracy market in the world. The issue has long been a sticking point in Sino-US relations.

Ballmer told hundreds of employees at the company's new Beijing offices that while PC sales in China in 2011 will roughly equal US sales, "our revenue in China will be about a twentieth of our revenue in the United States".

He said Microsoft's revenue per personal computer sold in China was only a sixth of the amount the company gets in India, and that total revenue in China was less than revenue in the Netherlands, a country of only about 17 million.

"We're literally talking about an opportunity that is billions of dollars today" if China had the same level of copyright protection as India, the newspaper quoted Ballmer as saying.

He rejected the notion that Chinese consumers cannot afford his company's core Office software.

"I'm not saying everybody in China could afford to buy a PC... but if you can, you could afford the software," he said.

Data from market research firm IDC show China is on track to surpass the United States as the world's largest PC market next year, according to the Journal.

PC unit shipments in China are likely to increase 12 percent this year to 71 million as compared with 75 million units in the US, where sales are expected to be flat, IDC said.

A Chinese government-funded survey published earlier this month showed that piracy had cost the global software industry more than $20 billion in losses in the China market last year.

Also this month, the United States said China was making progress on improving protection of intellectual property rights but voiced concern about Beijing's longer term commitment.

It kept the country on this year's "priority watch list" for weak protection of intellectual property rights.