``The Chinese government has always held a very responsible and cautious attitude on the issue of arms sales,'' foreign ministry spokeswoman Zhang Qiyue said here.

China's stand on arms sales to another country is that it should be beneficial to the importing country's defence capability but at the same time should not be detrimental to regional security, peace and stability, she said.

China will not use arms sales to interfere in internal affairs of importing nations, Zhang added refusing to comment on the cia report saying she had not seen it.

In a report to the US Congress, the CIA said it was increasingly concerned that business entities in China as well as Russia were trafficking weapons of mass destruction.

In first six months of 1998, Chinese entities provided avariety of missile-related items and assistance to several countries of proliferation concern, it said.

Despite US sanctions imposed on seven Chinese entities in 1997, the CIA reported some of these organisations continued to supply Iran and Syria with chemical weapons-related materials.

As if retaliation to the former defence, the Pentagon today said China is reportedly strengthening its nuclear missile deployment opposite Taiwan and favouring a Theatre Missile Defence (TMD) system in the country.

``China has deployed both M-9 Missiles, capable of delivering 500 kg payloads over a range of 600 km, and M-11s, which have a shorter range but can carry a larger payload. Both can be fitted with conventional or nuclear warheads,'' a Pentagon statement said.

Military experts in the US have expressed fear that slowly but surely China is preparing for the day when it will take Taiwan if it does not come voluntarily like Hong Kong.

``When that happens, it wants to make sure that the Americans are not able tointimidate China and save Taiwan as they did last time when they sent two aircraft carrier task forces into the Taiwan straits when Beijing began firing missiles over those waters,'' they added.

Media are speculating that the White House and State Department, anxious to salvage the `strategic partnership with Beijing', do not want the Taiwan missile defence issue or threat to Taiwan raised when preparations are being made in Washington for the visit of Chinese premier Zhu Rongji in the spring.