China is spending billions of dollars globally to spread disinformation, threatening to cause a "sharp contraction" in freedom of speech around the world, warned a US State Department report published Thursday.

China's "global information manipulation is not simply a matter of public diplomacy — but a challenge to the integrity of the global information space," said the report.

"Unchecked, Beijing's efforts could result in a future in which technology exported by the PRC (People's Republic of China), coopted local governments, and fear of Beijing's direct retaliation produce a sharp contraction of global freedom of expression."

The report, released by the State Department's Global Engagement Center, said Beijing spends billions of dollars annually on "foreign information manipulation" –- through the use of propaganda, disinformation and censorship — while promoting positive news about China and its ruling Communist Party.

At the same time, it said, China suppresses critical information that contradicts its narratives on contentious issues such as Taiwan, human rights, and its flagging domestic economy.

"When you look at the pieces of the puzzle and you put it together, you see a breathtaking ambition on the part of the PRC to seek information dominance in key regions of the world," James Rubin, special envoy and coordinator of the GEC, told reporters.

The report said China's approach to information manipulation includes promoting "digital authoritarianism," exploiting international organizations and exercising control of Chinese-language media.

These efforts could enable Beijing to "reshape the global information environment," it added.

The report comes after Secretary of State Antony Blinken on Thursday said China was seeking to surpass the United States as the "dominant power in the world — militarily, economically, diplomatically."