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China is spending billions of dollars globally to spread disinformation and threatening to cause a "sharp contraction" in freedom of speech around the world, warned a U.S. 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," the report said.

"Unchecked, Beijing's efforts could result in a future in which technology exported by the PRC (People's Republic of China), co-opted 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.

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