China's Defense Ministry hit back Sunday, describing the report as "presumptuous speculation".
The report makes "wild guesses" about China's intentions and exaggerates the threat of its nuclear force, defence ministry spokesman Ren Guoqiang said in a statement.
A leaked version of the review, which the Pentagon is set to release soon, shows that military officials in Washington are calling for the development of a low-yield nuclear bomb that is created to be used on the battlefield instead of urban areas.
The review, the first of this kind since 2010, also calls for a "lower-yield" option with less powerful explosive capacity for ballistic and cruise missiles launched from submarines. It also says that nuclear weapons could be used to respond to "extreme circumstances", including non-nuclear attacks.
"We hope the United States will discard its 'cold-war mentality, ' shoulder its own special and primary responsibility for nuclear disarmament, understand correctly China's strategic intentions and take a fair view on China's national defense and military development".
"The European public will see this as another unsafe Trump policy at an already tense time in the transatlantic relationship", he added.
"They are compliant with all treaties and agreements, and together, they will: provide a diverse set of characteristics enhancing our ability to tailor deterrence and assurance; expand the range of credible United States options for responding to nuclear or non-nuclear strategic attack; and, enhance deterrence by signalling to potential adversaries that their limited nuclear escalation offers no exploitable advantage".
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In an introductory statement, Mattis said, "We must look reality in the eye and see the world as it is, not as we wish it to be.in no way does this approach lower the nuclear threshold".
Ren pointed out that the United States holds the world's largest stockpile of nuclear weapons and it needs to shoulder its own responsibility in stopping the proliferation of weapons of mass destruction.
The United States now operates 14 OHIO-class submarines and plans to replace them by the COLUMBIA-class submarines.
The U.S. landbased intercontinental ballistic missiles (ICBM) force consists of 400 single-warhead Minuteman III missiles deployed in underground silos and dispersed across several states.
The ultimatum put pressure on European Union powers - key backers and parties to the 2015 global agreement to curb Iran's nuclear programme - to satisfy Mr Trump, who wants the pact strengthened with a separate agreement.
The review requires an "investment in a credible nuclear deterrent with diverse capabilities", chief Pentagon spokesperson Dana White said one day before its publication.
The spokesman added that his country also wants the U.S. to take a fair view of China's national defense and military development.