US intelligence agencies and Chinese military officials secretly conducted cyber war games in 2011 to help prevent a sudden military escalation from cyber attacks between the two nations, if either of them felt they were being targeted.
The Guardian has reported that the exercises featured two different scenarios, such as both sides having to describe what they would do if they were attacked by a sophisticated computer virus like Stuxnet, while another exercise had two teams describing their reaction if attacked by the other side.
Organised through the Centre for Strategic and International Studies (CSIS) and the China Institute of Contemporary International Relations, the exercises, also dubbed 'Track 1.5' diplomacy, enabled the two nations to interact in a less formal environment, without resorting to official talks.
The first session took place in Beijing in June 2011 and was followed by another in Washington in December 2011. It involved participation from the US State Department and Department of Defense (DoD) officials.
CSIS director Jim Lewis said China had come to the conclusion that the power relationship had changed, and that it had changed in a way that favours them.
"China's People's Liberation Army (PLA) is very hostile. They see the US as a target. They feel they have justification for their actions. They think the US is in decline," Lewis added.
According to Lewis, China has a "sense that they have been treated unfairly" and tend to think the US has a grand strategy to preserve its hegemony, which they see as a direct challenge.
The games follow recent accusations by US and European governments that China has engaged in state-sponsored espionage and theft, which has stolen billions of dollars' worth of military and industrial secrets from private firms and government agencies.
The US has turned its military focus away from Europe towards the Pacific in recent months, in a bid to protect American interests in the region.
Lewis said of the countries actively involved in cyber espionage, China is the only one likely to be a military competitor to the US.
The two nations are also scheduled to conduct similar exercises in May 2012.