Beijing already has deployed two of as many as five of a new class of nuclear-powered ballistic missile submarine. The JIN-class boat is due to carry the JL-2 submarine-launched ballistic missile with an estimated range of about 7,400 km (4,600 miles).

The new submarines and the JL-2 missile will give Chinese forces its “first credible sea-based nuclear capability,” the U.S. Defense Department said in its own 2012 annual report to Congress on military and security developments involving China.

The JL-2 program has faced repeated delays but may reach an initial operating capability within the next two years, according to the Pentagon report, released in May.

The Pentagon declined to comment directly on China’s march toward creating a credible nuclear “triad” involving strategic bombers, intercontinental ballistic missiles and submarine-launched ballistic missiles.

The final version of the report is to be released next Wednesday by the U.S.-China commission, a 12-member bipartisan group set up in 2000 to report to U.S. lawmakers on security implications of U.S.-China trade.

The draft, in its section on cyber-related issues, called on the Congress to develop a sanctions regime to penalize specific companies found to engage in, or otherwise benefit from, industrial espionage.

Congress should define industrial espionage as an illegal subsidy subject to countervailing duties, it added.

Lawmakers also should craft legislation to boost the security of critical supply chains, “particularly in the context of U.S. government and military procurement,” the draft said.

(Additional Writing by Terril Yue Jones; Editing by Lisa Shumaker and Nick Macfie)