July 30 (Bloomberg) -- China is on a path to increase by half over the next few years the number of short-range ballistic missiles arrayed against Taiwan, a Pentagon report says.

China has about 450 CSS-6 and CSS-7 missiles facing Taiwan across the South China Sea. That number is expected to grow by 75 a year ``over the next few years,'' the report said. The missiles are mobile and have ranges of 372 miles (600 kilometers) and 186 miles (300 kilometers), respectively.

``As Beijing increases the accuracy and lethality of its conventional ballistic missile arsenal, a growing and significant challenge is posed to U.S. forces in the Western Pacific, as well as to allies and friends, including Taiwan,'' the report said.

The report is the second unclassified assessment of China's military by the Bush administration. Aside from the missile trend, it rehashes the earlier document. That report described a Chinese policy of intimidating Taiwan by the threat of missiles, Soviet-built submarines and blockade or invasion. That policy continues, said the new document.

Taiwan was taken over by the Nationalist Party after the party lost control of China to the Communists in 1949. China still considers the island a breakaway province and reuniting the two remains a centerpiece of Chinese foreign policy. A 1979 U.S. law requires the U.S. to offer Taiwan the weapons it needs to defend itself against China.

Argument for Missile Defense

The disclosures may provide ammunition for advocates of a robust U.S. missile defense program that would include allies such as Taiwan and Japan in a regional system of air-, sea- and grounded-based defenses.

The report also could add pressure to improve Taiwan's air defense systems with modern weapons such as the Lockheed Martin Corp. and Raytheon Co. PAC-3 anti-missile system that saw its first action in the recent war in Iraq. Taiwan this month formally requested its first batteries of PAC-3s, according to a report in Jane's Missiles & Rockets Report.

``All of China's known short-range ballistic missile assets are believed to be based in the Nanjing Military Region opposite Taiwan,'' and ``the accuracy and lethality of this force is increasing,'' says the ``Annual Report on the Military Power of the People's Republic of China.''

Israeli Sale Disclosed

Among other disclosures, the Pentagon said China ``has procured from Israel a significant number of Harpy anti-radiation systems.'' The Harpy is a kamikaze drone produced by Israel Aircraft Industries Ltd. that's equipped with anti-radar sensors and a bomb capable of attacking Taiwanese air-defense radar. The drone would dive into a radar station.

The Harpy was used during July 2002 Chinese military drills in the region opposite Taiwan, according to press reports but the Pentagon had not previously confirmed the Israeli sale.

``The Harpy detects, attacks and destroys enemy radar emitters, hitting them with high accuracy,'' IAI says on its web site. ``It effectively suppresses hostile surface-to-air missiles and radar sites for long durations, loitering above enemy territory for hours.'' The drone is already in use with several air forces, IAI said.

The report also strengthened a warning in last year's report that China is expected to acquire within the decade ``a significant'' airborne early-warning capability similar to the U.S. AWACS airplane.

The U.S. in 2001 stopped Israel from selling one of their versions to China but the communist government continues to pursue the technology, the report said.

``The technical ability could exist for these aircraft to display a coordinated air picture, with the capability to command and control airborne assets,'' the report says.

This capability combined with aerial refueling aircraft could give China the potential to launch combat missions over a wide area in the Pacific, the Pentagon said.

New Weapons Systems

The report said China also is developing or procuring weapons systems under a program known as ``Assassin's Mace'' to ``counter intervening U.S. forces.'' The report didn't elaborate.

China is now assessed to have deployed Over-the-Horizon Sky- Wave radar that could target large U.S. aircraft carriers, the report disclosed.

The report repeats an earlier assessment that China is developing CSS-6 variants that could employee Global Positioning Satellite navigation to allow attacks of Taiwan and Okinawa.

The new report also repeats U.S. assessments that China's reported $20 billion defense budget put it closer to $65 billion and could increase four-fold by 2020 in real terms.