The Pentagon believes China could have an indigenous aircraft carrier in 2015 and fifth-generation J-20 stealth fighter jet in 2018, after overcoming obstacles with both development efforts, according to a report released yesterday.

The Department of Defense’s annual report to Congress on Chinese military capability finds that the Chinese People’s Liberation Army (PLA) is “on track” to reach its goal of building a modern, regionally-focused military by 2020. The 84-page report–which notes China’s substantial investment in hardware and technology over the past decade–says the PLA now has multiple systems that have reached maturity or will become operational in the next few years, including the carrier and J-20.

“Following this period of ambitious acquisition (over the past 10 years), the decade from 2011 through 2020 will prove critical to the PLA as it attempts to integrate many new and complex platforms, and to adopt modern operational concepts, including joint operations and network-centric warfare,” the report states.

It notes the PLA Navy’s transformation in recent years “from a large fleet of low-capability, single-mission platforms, to a leaner force equipped with more modern, multi-mission platforms.”

The Chinese Navy notably is working on receiving the aircraft-carrier capability it has wanted for 70 years, as PLA Chief of the General Staff, Chen Bingde, stated in June.

“During the next decade China is likely to fulfill its carrier ambitions, becoming the last permanent member of the UN Security Council to obtain a carrier capability,” the Pentagon report states.

The U.S. document predicts China could start constructing a “fully indigenous carrier” in 2011 that could achieve “operational capability” as soon as 2015. Then, it adds, “China likely will build multiple aircraft carriers with support ships over the next decade.”

China’s aircraft carrier research-and-development program, meanwhile, includes the refurbishment of the ex-VARYAG, which it purchased from Ukraine in 1998. The report says this carrier could begin sea trials this year, which it has, and become operationally available by the end of 2012, though without aircraft.

It “will take several years for an operationally viable air group of fixed and rotary wing aircraft to achieve even a minimal level of combat capability,” the document states.

While China has a land-based training program for carrier pilots, the Pentagon believes the country will need “several additional years” before it has a “minimal level” of combat capability on a carrier.

The Pentagon report also delves into China’s increasingly-advanced air forces, noting it has 490 combat aircraft within unrefueled operational range of Taiwan and airfield capacity for many more, including the technologically tricky J-20.

Images of China’s fifth-generation J-20 stealth fighter circulated on the Internet in January. The prototype that was flight tested is expected to blossom into one with stealth attributes, advanced avionics, and super-cruise capable engines, the report states.

“Although the appearance of this prototype underscores the level of (Chinese) investment in advanced defense systems, the Defense Department does not expect the J-20 to achieve an effective operational capability prior to 2018,” the Pentagon document says. “China faces several hurdles as it moves toward J-20 production, including the mastery of high performance jet engine production.”

The Pentagon report delves into multiple additional systems China is building, including the developmental DF-21D ballistic missile, which could attack aircraft carriers in the western Pacific Ocean, and the J-15 carrier aircraft now in flight testing.

Michael Schiffer, deputy assistant secretary of defense for East Asia, portrayed positive and negative aspects of China’s military building in during a Pentagon press conference yesterday.

“China’s expanding military capabilities have enabled it to contribute to the delivery of international public goods, from peacekeeping and counter-piracy to humanitarian assistance and disaster relief,” Schiffer said. “However, the pace and scope of China’s sustained military investment have allowed China to pursue capabilities that we believe are potentially destabilizing to regional military balances, increase the risk of misunderstanding and miscalculation, and may contribute to regional tensions and anxieties.”

He declined to elaborate on any specific Chinese capabilities the Pentagon found to be “potentially destabilizing” in the region. He instead noted U.S. concerns about the “lack of understanding…that has been created by the opacity of (the Chinese) system.”

“There are very real questions, given the overall trends and trajectory in the scope and the scale of China’s military modernization efforts,” he added. “I wouldn’t put it on any one particular platform or any one particular system. There’s nothing particularly magical about any one particular item. But when you put together the entirety of what we’ve witnessed over the past several decades and we see these trend lines continuing off into the future,…that raises questions….That’s why we think that it’s important to be able to have the sorts of dialogues and discussions that will allow us to understand each other better and will help to contribute to regional stability.”