Washington: Two Chinese students studying in the US supplied China's military with American Defence technology that allowed Beijing to produce a special metal in sensors and weapons, according to the Pentagon's latest annual report on Chinese military power.

The report, quoted by the 'Washington Times', did not identify the students by name but said one of the Chinese students attended Iowa State University, where he worked closely with the department of energy's AMES laboratory on the school's campus.

"This is a classic example of how the Chinese collect dual-use military technology, the paper quoted an FBI official. "Students come here; they get jobs; they form companies."

The espionage, subject of an ongoing investigation, allowed China's military to develop a version of the substance known as terfenol-d, which cost the Navy millions of Dollars in research to create.

The AMES lab developed the material invented by the Navy in the 1970s.

The terfenol-d data, the FBI official said, were stolen within the past three years in a computer-hacking incident.

The Pentagon said, "One of the Chinese students admitted sending this information (on terfenol-d) to (the People's Liberation Army). The Pentagon said, "usually, the connection between (Chinese) academic, commercial and military organizations are not so clear-cut."

PTI