The economic and military balance of world power could be altered as China rushes to develop artificial intelligence technology, a US think tank has warned.
The report cites examples of how AI tech is being used in a military setting.
In July, China announced its national plan for AI, calling for the country to catch up with the US.
But one expert said the accusations could be "sabre-rattling".
"China is no longer in a position of technological inferiority relative to the United States but rather has become a true peer that may have the capability to overtake the United States in AI," said the report, from the Center for a New American Security (CNAS), a research arm of the US intelligence community.
"China's People's Liberation Army is also investing in a range of AI-related projects and PLA research institutes are partnering with the Chinese defence industry," the report said, citing publicly available documents.
"The PLA anticipates that the advent of AI could fundamentally change the character of warfare," it added.
Report author Elsa Kania said some PLA thinkers anticipate the approach of a "singularity" on the battlefield, where humans can no longer keep pace with the speed of machine-led decisions during combat.
Pentagon policy currently calls for a human role in offensive actions carried out by machines, while the UN is considering whether to call for a ban on autonomous weapons on the battlefield.
"The PLA may leverage AI in unique and perhaps unexpected ways, likely less constrained by the legal and ethical concerns prominent in US thinking," Ms Kania wrote.
Prof Noel Sharkey, who heads the Campaign to stop Killer Robots, told the BBC that his meeting with Chinese officials suggested there was no desire to develop such weapons.
"They seemed more concerned about what the West was doing and has made noises about the prohibition of such weapons so this could just be sabre-rattling."
That said, he agreed that China was likely to catch up with the West "within five years".
"There are lots of Chinese students in AI research and Baidu, Alibaba and Tencent are all doing interesting things. Baidu has more than 60 different AI platforms and has spent $1bn, buying up Western AI firms."
Eric Schmidt, the chairman of Google parent company Alphabet, has also warned about China's potential in AI. At a recent conference in Washington, hosted by CNAS, he said: "I'm assuming that our lead will continue over the next five years, and that China will catch up extremely quickly. So, in five years we'll kind of be at the same level, possibly."
An unreleased Pentagon document, seen by Reuters, warned earlier this year that Chinese firms were skirting US oversight and gaining access to sensitive US AI technology with potential military applications by buying stakes in US firms.
A recently released OECD report, The Science, Technology and Industry Scoreboard 2017, also pointed to a growth in China's tech power.
According to the report, the number of artificial intelligence technologies patented in the five top IP offices rose by 6% a year on average over 2010-15, led by Japan. Japan, Korea and the US together accounted for more than 62% of AI-related patent applications but it saw a significant rise in filings from China and Taiwan.